OVERVIEW OF THE COMPANIES ACT 2002
The Companies Act 2002 (The Act) although assented to by the President on 27 June 2002 only came into effect from 1 March 2006. The new law repealed the Companies Ordinance (Cap. 212), 1932, an archaic piece of legislation based on the English Companies Act 1929, and aims to put in place a relevant and modern legal framework.
Brevity is not a feature of this Act, which contains 490 sections, 140 more than its predecessor. Key areas of change include in relation to the following:
· Accounts and audit
· Annual returns (including requirement for audited accounts to be attached, even for private companies)
· Companies in distress (including rescue mechanisms for companies approaching insolvency, and detailed rules on the management of insolvent companies and on winding up of companies)
· Directors and officers (including age limits, increased accountability, increased regulation and disclosure (including of remuneration of individual directors))
· Increased filing fees and penalties
· Meetings and resolutions
· Protection of minority shareholders
· Protection of third parties in relation to company’s and its officers’ capacity to act
· Protection of investors in listed companies
· Reduction of share capital
This article summarizes some of the salient features of the new Act. This article is a guide and therefore not a substitute for professional advice.
Click here to download the Act for further reference.