Jamaicans Need to Increase Local Saving Funds – Senator Sloley

Government Senator, Noel Sloley has said that Jamaicans needed to substantially increase local saving funds for the country’s development, and the stock market was a good vehicle for ordinary investors to save for the long term.

He said the government could take some credit for improved performance and important developments in the local stock market, as well as the encouragement given to the local capital market, through the abolition of double taxation on dividends.

The Senator pointed out that ordinary Jamaicans already had a substantial stake in the long term performance of the local stock market, through their investments in pension funds for their retirement. Mr. Sloley was lending support to a Bill to repeal and replace the Companies Act in the Senate on February 27.

He said investors had been spoilt by the very high returns that had been available on risk free government paper and should not expect to be rewarded as richly in the future as interest rates declined.

“Rather than speculating against the Jamaican dollar by purchasing United States dollars, invest in Jamaica. In particular, they should look to buy on the local stock market, real estate and most importantly, reinvest or start private businesses to promote wealth creation in Jamaica,” he added.

These opportunities were facilitated by the new Companies Act, the Senator pointed out. Senator Sloley stressed that it was “only by investing in Jamaica that we can create wealth for all Jamaicans and through that wealth creation, create jobs that we need in the country”.

In August 1990, Cabinet appointed a Committee to review the existing state of company law in Jamaica and to make recommendations as to the changes which were necessary or desirable for the modernization of the law, taking into account the harmonization of Company Law in the Commonwealth Caribbean. The recommendations of that committee were accepted by the government as the basis of making the necessary changes in the Act.

The Bill, which was piloted by Leader of Government Business in the Senate, Senator Burchell Whiteman, 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 addition, the Bill contains 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 amendments also provide 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. Also set out in the legislation is the provision to empower the Court, upon application, to appoint an administrator of 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. It 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, which has 396 clauses, will continue in the Senate this week.