What's up with Companies Act amendment?
March 20, 2008
February 1, 2008 marked the third anniversary of the coming into force of the Companies Act.
Its enactment marked the introduction of a modern company law regime after many years of protracted debates before parliamentary and Senate review committees initiated by recommendations for reform contained in a report issued by a review committee on the reform of company law chaired by the late Kenneth Rattray.
It would be fair comment for me to say that at the time the act was passed into law, it was recognised that the task was not done and there were several amendments that were urgently needed.
The task of continued review went into full gear by the Companies Office of Jamaica and a sub-committee of the Jamaican Bar Association.
Not surprisingly, that review process produced voluminous submissions for amendments which were submitted to the former minister Phillip Paulwell.
The submissions for amendments were laid before Parliament in an attempt to complete the exercise before a change of government - mindful that upon the election of a new government, all parliamentary submissions would have to be reconsidered and resubmitted.
The act came into force in early 2005, but as it transpired, the amendments were not passed, and a new government was elected in the September 3, 2007 general election.
The question therefore begs itself: How much longer will the amend-ments take this time?
Waiting for amendment
Three years have passed since the 2004 act came into force and five months have passed since there has been a change in government, but the legal fraternity and the business sector which it services have been waiting for at least one fundamental amendment to be made to the act - provision of a legitimate method for companies formed under the repealed 1965 company law to transition to the 2004 act.
This lacuna in the law exists because the current legislation does not provide a procedure by which such companies may elect to come under the operation of the new act.
A serious omission, but not seen as necessary to have sparked immediate amendments by Parliament of the day.
Meanwhile, to keep commerce rolling, the Registrar of Companies has permitted old companies to transition by a method fashioned by the Companies Office which the former minister had promised would be ratified by Parliament.
That did not happen.
Also in urgent need of reform are provisions introduced by the 2004 act, which deal with mutual funds.
Investments in mutual funds are by way of subscription for shares in a mutual fund company.
In the normal course of business mutual fund shares are continuously on offer.
The prospectus requirements of the Companies Act, contemplate normal trading companies which may occasionally offer shares to the public for subscription but do not do so on almost every business day as mutual fund companies do.
The law exempts local mutual companies from the requirements of issuing a prospectus compliant with the act's requirements as to content.
This, on the basis that it would be impractical to issue a prospectus on each occasion an offer is made to the public....
Author: Janet Morrison
Source: Jamaica Gleaner
