Leader of Government Business in the Senate, Burchell Whiteman has said that amendments to the Companies Act would make a difference in how business was done in Jamaica, as they would afford protection for persons and institutions.
Tabling the 396-clause Bill, which seeks to repeal and replace the present Act, Senator Whiteman said the updated Act would in fact contribute significantly to the development of local business, local and international investments, industry and the quality of life that Jamaicans enjoyed.
He told his colleagues in the Senate yesterday (February 27), that the provisions of the Bill were consistent with what was necessary to facilitate the country’s participation in the Caribbean Single Market and Economy (CSME).
“Right now, the Registrars of companies of the region are meeting and looking at existing legislation. If anything, they may find that Jamaica’s is a little more advanced, more flexible, but we are pretty much on par with them,” he said.
The Bill contains provisions for simplification of company formation by incorporation by a single document and recognition of the ‘sole member’ company; minimum capitalization of companies having a share capital; and shares to be issued without a par value attachment. In this regard, where non-cash consideration is tendered in exchange for shares issued, independent experts should be required to verify that the consideration is at least equal to the value of the shares. In addition, it includes provisions for the operation of stated capital accounts by companies, stated capital being defined; liquidity/solvency tests to be followed for payment or dividends and the redemption of redeemable shares and the purchase by a company of its own shares; and the adoption of pre-incorporation contracts made on a company’s behalf by the company after incorporation.
The Bill also provides for the empowerment of directors to take account of the interests of employees and the community as legitimate objects in their own right on the corporate agenda. Taking the duties of directors and the standard of care and skill required of directors into account, a more vigorous standard is prescribed in the Bill for Managing and Executive Directors.
Also set out in the legislation is the provision for empowerment of the court, upon application, to appoint an administrator for a company facing impending insolvency, who will assume management of the company so as to ensure, among other things, its survival as a going concern or a more beneficial realization of its assets than would result on a winding up.
The Bill also provides for the exemption of certain professionals such as accountants and attorneys-at-law as well as other prescribed groups of professionals from the restrictions regarding the maximum number of persons in a partnership.
The amendments further make provisions for extensive rules to be made with regard to the preparation of balance sheet and profit and loss accounts and setting out the required formats. In addition, the Bill expressly provides that redundancy payments owed to company employees on a winding up constitute preferential debts, regardless of whether the payment falls due before or after the appointment of a receiver.
Debate on the Bill will continue in the Senate next week.