All llan Hans Muhome me Legal Consultant April 2016 +265888304274 - tmuhome@gmail.com
PART RT ONE o Introduction o The Registrar o Types and Company Registration o Shares and shareholders o Common Seal o Valuation of Property and securities o Personal Property Securities Act PART RT TWO Directors qualifications and duties Company secretaries Accounts and Auditors Liquidation of a Company Insolvency Act Allan Hans Muhome Companies Act 2013 2 of 27 Exploring Key Changes April 2016
Change ange is Inevitable! vitable! Com ompanie panies Act 1984 1984 Com ompanie panies Act 2013 2013 Bill of Bill of Sale Sale Act Act 196 967 Pers Personal nal Property roperty Securi curity Act 2013 2013 Farmer’s Stop Stop Ord Order er 19 1955 55 Perso Personal nal Prope Propert rty Securi curity Act 2013 2013 Bankr nkruptcy ptcy Act 1928 1928 Insol olve vency Act 2016 2016 Allan Hans Muhome Companies Act 2013 2 of 27 Exploring Key Changes April 2016
On 19 th July, 2013 the former president of the Republic of Malawi, Dr Joyce Banda, assented to the New Companies Act (CA), No 15 of 2013. The CA 2013 repeals the outdated CA 1984 but will only come into force once notice has been gazetted by the Minister. Meanwhile, the Insolvency Act which will, among others, regulate winding up of companies[S. 329,330] was assented to by the President on 24 th Jan 2016. Regulations by the Minister and Chief Justice [S. 382] and electronic filing systems are being finalised. The CA 2013 is a unique piece of legislation; it introduces a ‘one person company’, strengthens the Office of the Registrar of Companies and in many respects aims at reducing the cost of doing business. [Of cours rse 383 383 secti ctions ns! CA CA 1984 1984 – 348 348 secti ction ons] s] Allan Hans Muhome Companies Act 2013 3 of 27 Exploring Key Changes April 2016
Since its inception in 1844, the co. has become the most important and powerful form of business organisation:- 1. Limited liability. 2. Separate legal personality – Salomon on v Salomon on 3. A co. owns and disposes of property in its own name. 4. A co. can sue and be sued in its own name. 5. Transferable membership is only available in a co. 6. Perpetual succession. 7. Flexible Borrowing facilities - Debenture... 8. A co. is allowed to issue shares to raise capital. 9. Management of a company is entrusted to directors. 10. Stringent disclosure and formality (Major Disadvantage) Allan Hans Muhome Companies Act 2013 4 of 27 Exploring Key Changes April 2016
Office now given prominence as it appears in S. 3 of the CA 2013 rather than S. 324 of the CA 1984 with enhanced functions. FUNCT NCTIO IONS: NS:- Administering the CA 2013 and supervising o incorporation and registration of companies. Various monetary penalties are provided for non-compliance. The Registrar is mandated to establish and maintain o a co. ’s registry in the Malawi Business Registration Database established under the Business Reg. Act. The Registrar performs such other functions as may o be specified by the CA 2013 or any other written law and undertakes such other activities as may be necessary or expedient to give full effect to the CA 2013. [S. 4] e.g. supply info to Min of Lands [S. 380]. Allan Hans Muhome Companies Act 2013 Exploring Key Changes April 2016 5 of 27
The CA 2013 provides for two modes of filing documents; the traditional hard copy filing and the modern electronic mode of filing [S.7]. Dealings in shares may also be electronic [S. 135 -155]. Th The ben enef efits its of of e-filing ing incl clude de:- Improved customer service; Faster turnaround times; Improved accuracy and audit trails; Reduced processing costs … Maj ajor disad advanta vantage ge - cyber crime [Cash-gate/IFMIS] Allan Hans Muhome Companies Act 2013 Exploring Key Changes April 2016 6 of 27
The CA 1984 specifically provided for local participation in companies, the CA 2013 has departed from that arrangement. In fact, Government was slow at implementing local participation. Government may however achieve similar intentions through:- (i) Expropriation under the Constitution (ii) Terms of a concession [Paladin/Kayerekera?] (iii) Indirectly through taxation and corporate social responsibility. ANY ANY BENEFI BENEFITS TS OF OF LOCA LOCAL PA PART RTICI ICIPAT ATION ION (Black Black Empowerm owerment) ent)?? ?? [Page 42 42 of of Book] Allan Hans Muhome Companies Act 2013 Exploring Key Changes 7 of 27 April 2016
1. Private Ltd Liability ( + One Person Company) [S.23] 2. Public Ltd Liability [use of Plc introduced] [S. 24] 3. Companies Ltd by Guarantee [S. 25] 4. State Owned Companies [S. 26] Any co. may change its status by re-registration e.g. private to public (Initial Public Offer - IPO) [S. 56 -62] Companies with un unli limit ited li liabi abili lity ty which were recognized under the CA 1984 are no longer provided for. In practice, investors would rarely form a co. with unlimited liability because it defeats the most single attraction of a limited liability co, namely limited liability of its members. Allan Hans Muhome Companies Act 2013 Exploring Key Changes 8 of 27 April 2016
A minimum of one person (human being) and a maximum of fifty persons. Two or more persons holding shares jointly = one person co. – [S. 23(2)]. Does away with the requirement for shareholders who wished to have 100% shareholding in the co. to appoint a nominee shareholder. Dr HK Banda (99%) and Aleke Banda (1%) in Press Holding Ltd (1982) [Number of partners in a partnership now clearly restricted to 20 members – S. 378]. Private co. under the CA 1984 (with 2 or more members) are prohibited from becoming a single member co. A private co. is prohibited from offering any of its securities (shares, debentures, bonds e.t.c.) to the public. Allan Hans Muhome Companies Act 2013 Exploring Key Changes 9 of 27 April 2016
S. 171 (3) requires every one person company to nominate a person, with his consent, to be the secretary of the company in the event of the death of the sole shareholder & director. The secretary assumes office upon the death of the sole shareholder & director and calls for a meeting of beneficiaries of the deceased's estate for the purpose of appointing a new director or directors, if not the Registrar appoints [S. 171(9)]. Where mentally incapacitated the guardian may act as director or appoint someone [S. 171(10) ] Allan Hans Muhome Companies Act 2013 Exploring Key Changes 10 of 27 April 2016
Advantage ntage Examples Exemption from No need for general and Board meetings compliance No Co secretary, No Minute Book No need to prepare an annual report and accounts. Organised sector One person company will bring the unorganised (Limited Liability) sector of proprietorship into the organised version of a private ltd co – increase in tax band? Legal Status and Sal alomon mon v Salo alomon on to apply. Use of co. terms e.g. Social Recognition Director which is not applicable to partnerships (Perpetual and sole traders. Succession) Easy to Manage Fast decision making. Tax Flexibility may e.g. director’s remuneration being deductable be introduced expenses which reduce profitability of the co hence lower tax. Allan Hans Muhome Companies Act 2013 Exploring Key Changes 11 of 27 April 2016
ICAM and other stakeholders were strongly opposed to the introduction of one person co. during the consultative process, they argued - ‘A key criticism of Malawi entities is the lack of business continuity in the event of death of the owner. The one shareholder one director concept will make this worse and we wonder whether banks and other business partners will have the confidence to deal with entities where this is the case … individuals should be encouraged to operate as sole traders …’ Resistance to change? WHAT’S YOUR UR TAKE? E? Allan Hans Muhome Companies Act 2013 Exploring Key Changes 12 of 27 April 2016
Consists of a minimum of three members (under the CA 1984 S. 4 - two would do); Its Constitution permits it to offer its securities to the public; and Its Constitution permits the transferability of its securities. [S. 24] [does does it it ha have to to be be regist register ered ed on on the Stock ck Exch change? nge? – NO NO – MSCA Hara v AHL (200 009)] )] A public company may be re-registered as a private company. [S. 56] [Real Insurance/Britam??]. Public companies are governed by the Securities Act 2010. Common seal mandatory for Plcs [s. 42,43 ] Allan Hans Muhome Companies Act 2013 Exploring Key Changes 13 of 27 April 2016
The liability of its members is limited to the sum agreed by the members to be contributed to the assets of the company in the event of its being wound up. [S. 25] Formed for the sole purpose of operating as a charity or as a not for profit organization. Therefore no distributions/dividends [S. 37]. Not much difference from what has long been understood as a Company Limited by Guarantee under the CA 1984. Allan Hans Muhome Companies Act 2013 Exploring Key Changes April 2016 14 of 27
Recommend
More recommend
