Directors and company secretaries must be aware of new procedures for share issues and share buybacks; ensure they understand new rules around the provision of financial assistance; be aware of new provisions related to the rights of shareholders, particularly to call meetings, and new requirements relating to the approval of ‘major transactions’; and comply with changes to filing requirements for annual returns, as well as other documents, such as consent forms for new directors and secretaries.
Directors, company secretaries, and anyone else who may have an interest in the winding up of a company, need to familiarise themselves with changes to the liquidation process.
The main changes to the PNG Companies Act deal with new capital management procedures, shareholders’ rights, directors’ duties and protection for creditors. These are the first substantive amendments to the PNG Companies Act since it was enacted in 1997.
The amendments change capital management under the Companies Act, by:
- introducing new procedures for share issues and buybacks;
- introducing rights of companies to issue treasury shares, and restrictions on dealing with treasury shares held by the issuing company, and on the manner of transfer or reissue of treasury shares; and
- tightening the rules around financial assistance;
- introduce new rules on unanimous shareholder agreements and the requirement for statements of rights;
- amend rules on the calling of shareholder meetings;
- introduce new provisions on public access to certain company records; and
- amend certain aspects of the current requirements for major transactions;
- introduce new sections on directors duties, including what is known in Australia as the ‘Business Judgement Rule’ (ie, a defence for claims for breach of the duty of care and diligence for properly informed business decisions made in good faith, in the rational belief that the decision is in the company’s best interests, and without there being any material personal interest);
- introduce changes for the increased protection of creditors, including to the liquidation process;
- introduce new restrictions on directors of ‘phoenix companies’ (ie, companies using names similar to those of a failed company);
- change sections of the Companies Act, to simplify, or shorten, some filing requirements (as the Office of the Registrar of Companies moves towards online lodgements), as well as to clarify some sections of the Act; andsimplify timing for the lodgement of annual returns.
The term of a business name registration has been reduced from three years to one year; therefore, owners of registered business names must ensure they renew their business name registration annually.
The new Act does not contain transitional provisions, so it is not clear whether this requirement will apply to business names that are currently registered.In addition, there is no longer a restriction on registration of business names by persons convicted of offences relating to the formation of corporations, or involving fraud or dishonesty, or for offences under the Companies Act.
Penalties for offences under the Business Names Act have been greatly increased. Under the new Act, offences can attract penalties of up to K200,000, as opposed to penalties of between K200 and K1000 under the repealed Business Names Act.
Annual fee returns
Annual returns for reporting companies will, from April, 2015, cost K1000 to lodge over the counter and K750 to submit via the IPA’s online filing system, and late submissions will attract a maximum fee of K1500.
In addition, it will cost K3000 to reinstate a deregistered company, and where the company was deregistered for failing to file annual returns, a fee of K1000 will apply to all outstanding annual returns that must be filed before reinstatement of the deregistered company.
Richard Kriedemann is a partner with law firm, Allens, Sydney and Sarah Kuman is a Senior Associate with Allens, Port Moresby.