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Asian Tribune is published by E-LANKA MEDIA(PVT)Ltd. Vol. 20 No. 110

Registrar of Companies on New Companies Act and its impact on business

By Quintus Perera - Asian Tribune

Colombo, 15 July, ( The Federation of Chambers of Commerce and Industry of Sri Lanka (FCCIS) and Small and Medium Enterprise Developers (SMED) SME arm of the FCCISL jointly organized the Fifth Key Person's Forum at Ceylon Contnental Hotel and it was D K Hettiarachchi, Registrar General of Companies was the Key Person to speak and he spoke on Amendments to the Companies Act and its impact on the Business Community.

SMED was established by Friedrich Naumann Stifftung in 1989.

Hettiarachchi said that the New Companies law in his view has three main objectives such as:

a) To modernize the law relating to companies and bring it up-to-date with corresponding legislations in other countries, particularly other countries in the Asian Region;

b) To liberalize the law to the greatest extent consistent with appropriate safeguards for those dealing with and

c) Investing in companies and to clarify the law relating to companies.

The Forum is targeted for entrepreneurs, corporate heads, bankers, consultants, legal community, company secretaries and representatives of the private sector, professionals, public and private sector academics and civil society representatives.

Inaugurating the fifth Forum, Nawaz Rajabdeen, President, Federation of Chambers of Commerce and Industry of Sri Lanka said that the issues that would be raised on relevant matters would interest the private sector. The New Companies Act could make an impact on the private sector. The general complaint of all the business community is that business registration is considered to be cumbersome. He wished that the participants would get some valuable inputs from the key speaker.

Hettiarachchi categorized the New Act into a number of main features and explained each feature and also the extent of impact on the business community.

He said that some of the main features were: the main features in the new act as he identified were:

* Acceptance of the single shareholder concept;

* Introduction of a single document, the Articles of Association and dispensing with the memorandum and articles as it existed previously;

* The requirement to give public notice of the name after incorporation;

* Elimination of the ultra-vires rule;

* Acceptance of pre-incorporation contracts with certain safeguards;

* Decision making process simplified in the case of private companies;

* Changes to provisions relating to reduction of share capital,

* Introduction of solvency test; stated capital;

* The provision for a company to re-purchase its own shares in certain circumstances.

He said that the new act provided for greater protection for minority shareholders by providing for buy out rights at a fair value and a resolution in writing signed by more than 85 percent of the shareholders with 85 percent voting rights to be valid in lieu of a meeting. He said that a clear statement of director’s responsibilities and accountability in company affairs is provided for in the New Act.

The other features he elaborated were: changes relating to provisions regarding registered offices; special rights attached to golden shares held by the Secretary to the Treasury; private companies need not file financial statements; provisions relating to major transactions; restraining orders and statutory acceptance of derivative actins; easy process of amalgamations; serious loss of capital; appointment of administrators; electronic storage of information at the company registry; introduction of company disputes boards; exceptions to the restrictions on partnerships in the case of professionals and repeal of the companies act.

- Asian Tribune -

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