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The regulations for the Companies’ Rules Resolution 2005, have been approved by the Senate after the debate was deferred to allow for further clarification following concerns raised by Opposition Senators. At the time Opposition Senators Shirley Williams and Arthur Williams expressed concerns over Section Two of the regulations which speaks to the conditions under which applications by companies to be restored to the register would be granted. The Senators were concerned that the requirements in the regulations for the company to own property and to have goodwill attached to its name were beyond the power of section 337 of the Principal Act.
Senator Shirley Williams in her remarks at the time also voiced concern with part two of the provisions stating that given the stringency of conditions facing the manufacturing and private sectors presently that 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 it,” she said, suggesting that the section be amended.
Leader of Government Business in the Senate and Information Minister, Senator Whiteman in his remarks said, while the rule was not ultra vires the Act itself, it was agreed to remove the clauses which were not specifically prescribed in the Act. He however noted that the Act did in fact give the registrar wide powers to determine the fitness of a company to be re-registered.
The rules were brought in view of the Office of the Registrar of Companies (ORC) which has recommended specific rules for the new Companies Act 2004 which supersedes the 1965 Companies Act and the 1966 Companies Forms, and Other Matters Rules of 1966.He said the rules served to inform and guide clients and were expected to improve procedures for the administration of the Act.
In the meantime the rules that were brought before the House concerned the naming of companies and sought 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. Furthermore names which are offensive, outrageous and found to contravene government’s policy on security among other matters will not be allowed. The rules also addressed the matter of the use of the word ‘Limited’ and prohibit the registration of a company whose name does not end with the word Limited unless special approval has been granted by the Minister.
Where misleading names were concerned such companies would not be registered. Furthermore the use of certain words, for example those that suggest a connection with the crown or members of the royal family and those that refer to a particular nationality, will not be permissible without justification. In addition names that refer to a profession will also be dealt with.
The new Companies Act (2004) which was passed by both Houses of Parliament last March exempts certain small private companies from the requirement of conducting annual audits in recognition of the onerous costs which annual audits may entail and also permits a company to raise financing through redeemable shares.
The Bill also makes 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 relation thereto. In addition, the Bill which contains 396 clauses, 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.