Companies Act Repealed & Replaced Bill Passed by House With 21 Amendments


A Bill entitled ‘An Act to Repeal and Replace the Companies Act’ was passed in the House of Representatives on Tuesday (Feb. 3) with 21 amendments.
The Bill, piloted during last week’s sitting by Minister of Commerce, Science and Technology, Phillip Paulwell, is aimed at modernizing the legislative framework governing company formation, management and administrations.
The Bill was widely supported by both sides of the House. In her contribution to the debate, Minister of Industry and Tourism, Aloun Ndombet-Assamba said the Bill allowed Jamaica to “catch up with modern methods of conducting business”.
She said that the Bill also facilitated the growth of small businesses, pointing out that the “special and preferential treatment according to small enterprises in the Bill is therefore welcomed and consistent with the policy thrust for the encouragement of the sector.”
Continuing, she said: “The Bill provides for a single document approach to incorporation, which will make it easy. It also recognizes the sole member company and this is strongly endorsed”.
Turning to the par value of shares, she said, “I support the adoption of a no par value system of share holding. The experience has been that par value has been unreliable measure of the true worth of a company. The worldwide trend is for no par value trend.”
The Bill maintains provision for a no par regime but allows a period of two and half years for existing companies to transit to the new regime.
The Bill also requires directors to be more accountable. Throwing his support behind this provision, Karl Samuda, Member of Parliament for North Central St. Andrew, said the measure was important and must be supported.
He said under the new Bill, a director of a company was expected to assume greater responsibility for his actions.
“The people of Jamaica, the professional, budding entrepreneurs who want to form their own companies need to know what are their liabilities as directors and what they are getting into,” he said.
He also cited a provision in the Bill where there was recognition of shadow directors, whose advice was relied on and should now share in the responsibility of the action taken as a result of the advice given. He said this provision was “a new birth . it is very quaint and something of great moment”.
Meanwhile, Delroy Chuck, Member of Parliament for St. Andrew North Eastern recommended that heavier fines be put in place for delinquent directors. “The obligations on directors to know and to ensure that the company is properly managed and operated, I see no problem in imposing heavy fines on those negligent directors.”
“If you don’t have the time, don’t sit as directors, if you don’t have the competence, don’t sit as directors but if you are going to sit as a director make sure that the company is managed and conducted properly. If they have their names as directors then when things go wrong they must accept the blame and the responsibilities,” he argued.
The Companies Act has been under review for more than 10 years, having first been promulgated in 1965.

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