BOVELL
Andrew Green, Staff Reporter
THE NEW Companies Act is the result of Jamaicans working together to make a better country, said the chairman and CEO of Grace, Kennedy and Company, Douglas Orane.
The new Act will replace the existing 1965 Law, after the Governor-General gives it his seal of approval and it is Gazetted. It will provide Jamaica with modern rules for its businesses, Mr. Orane said at the start of the PricewaterhouseCoopers seminar at the Jamaica Conference Centre last week.
"In August 1990, the Cabinet appointed a committee to establish terms of reference for this," Mr. Orane said. "Fourteen years later, at last we have modernised legislation."
The United Kingdom had a similar act from the 1980s, while Trinidad and Barbados introduced such legislation a decade ago, he said.
"It has taken us a very long time, but the good news is that we now have it," he said. "There is a sense in Jamaica that we can't influence anything we are fatalistic. What this demonstrates is that we can do something about it, and we have."
Citizens have had a "huge" input in developing the Act, he said. "Civil society has made written and verbal inputs into what is actually in print today."
REGULATION
And it is this input which has created regulation which "breaks us into the modern globalised world," he said. The input encompassed two key trends which are evident in the wider world.
The Act provides for an increase in the responsibility of directors and increased rights for minority shareholders, he said.
"Under common law, the less you knew as a director, the less liability you incurred," said Debbie-Ann Gordon, Tax Counsel at PriceWaterhouse- Coopers. The new Act makes it clear that directors who sit in ignorance of the affairs of a company have a duty to seek independent professional advice.
Directors now need training to carry out their responsibilities, said Christopher Bovell, senior partner at DunnCox. The Private Sector Organisation of Jamaica has been carrying out training courses for directors for several years.
"Training should be ongoing," Mr. Bovell said. "You need to keep up-to-date with current best practices."
Ms. Gordon said the directors had a duty to act in the interest of their company, but the best interest of the company extended to cover the interests of shareholders, employees and the wider community in which the company operates.
IMPORTANT CHANGE
Minority shareholders are generally subject to the will of the majority, Ms. Gordon said. An important change is that a shareholder may bring an action on behalf of the company where a wrong was done to the company, even though he has not been directly affected.
There has been a significant increase in penalties, said Donovan Walker, a partner at DunnCox. A director failing to take adequate measures to ensure that the company keeps proper records can be subject to a fine of $50,000 or six months imprisonment. Under the 1965 Act, the fine is $400.
Eric Crawford, Pricewaterhouse Coopers partner, said it would cost $100 to register a company, which was far simpler that the previous mechanism based on the company's share capital.
"Ultimately what we want to do is give our Jamaican-based companies a competitive advantage in this world," Mr. Orane said. "You would be amazed at the results you could get if you provide the foundation for our companies and our people to grow."
