OVERVIEW OF THE COMPANIES ACT 2002

OVERVIEW OF THE COMPANIES ACT 2002

OVERVIEW OF THE COMPANIES ACT 2002

Introduction

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 The new law repealed the Companies Ordinance (Cap. 212), 1932, an archaic piece of legislation based on the English Companies Act 1929, and aims to put in place a relevant and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.
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