Senate Defers Passage of Companies’ Rules Resolution 2005

The Senate yesterday (Oct.7) deferred approval of the Companies’ Rules Resolution 2005 to allow for further clarification of the provisions following concerns raised by Opposition Senators.
Leader of Government Business in the Upper House, Senator Burchell Whiteman, raised the motion seeking approval for the Bill, which recommends specific rules for the new Companies Act 2004. He explained that the rules served to inform and guide clients and were expected to improve procedures for the administration of the Act.
Opposition Senator Arthur Williams expressed difficulties with Section two of the regulations, which dealt with conditions under which applications by companies to be restored to the register of the Office of the Registrar of Companies (ORC) would be granted.
He argued that the requirements that the “company must own property and that there must be goodwill attached to the name of the company” marked a striking departure from the rules, which existed previously and were beyond the power of Section 337 of the Principal Act. “This is now taking it completely outside of what the legislation provides,” the Senator stated.
Furthermore, he pointed out, there were hundreds of companies in the island, which did not own property. “Why can’t that company’s name be restored to the register?” Senator Williams questioned, adding that, “there was no good reason for (the two) provisions to be attached”.
“In modern company legislation, the criteria that is often used, apart from the fact that it (the company) was in operation and carrying on business, is that it is solvent. What more do you want to know than that the company is solvent?” he asked.
Opposition Senator Shirley Williams also voiced concern with the provisions, stating that given the stringency of conditions facing the manufacturing sector, the measures being put in place would “make it difficult to restart business”.
“This Senate could not knowingly pass rules that are in and of themselves ultra vires and the Senate ought to promote legislation that will promote business and not shackle and frustrate,” she said, while calling for the section be amended.
Government Senator Keste Miller, in support of the views expressed, argued that the fact that a company did not own property, was not grounds enough to deny registration.
Senator Whiteman in commenting said he was not prepared to say whether or not the principles were ultra vires, and any conclusion would be deferred until the matter could be further verified.
The Companies’ Rules Resolution 2005, seeks to improve the administration of the Companies Act 2004, which was passed in the Houses of Parliament last March, and deals with the naming of companies and seeks to clarify that where names have been proposed that are identical to an existing company or where they are similar or too close, or where they infringe on registered trademarks, they will not be permitted.
It also addresses the use of the word ‘Limited’ and prohibits the registration of a company whose name does not end with the word Limited, unless special approval has been granted by the Minister.