The Statute Laws (Miscellaneous Amendment) Bill, 2019 (“the Bill”) introduced in the National Assembly on 29th March 2019 proposes amendments to several statutes including the Companies Act, Number 17 of 2015 (“the Companies Act”).
The Bill proposes the following amendments to the Companies Act:
1. Clarification on the requirement to maintain a register of beneficial owners In 2017, amendment to the Companies Act included the requirement to maintain information on beneficial owners of a company. However, the provision did not provide the mode in which such information was to be maintained. It thus remained unenforced for vagueness. To cure this, the Bill seeks to delete the 2017 amendment and replace it with a new section 93A which provides that a register of beneficial owners is to be kept in the same manner as other registers (eg members register, directors register) kept under the Companies Act.A company is thus required to maintain the register and update it with any changes as and when they occur. A copy of the register of beneficial owners should be filed with the Registrar within 30 days of completion of its preparation. Further, any changes to the register should be filed with the registrar within 14 days.
2. Single member companies exempted from holding AGMs.
The Bill introduces section 275A which exempts single member companies from holding a general meeting annually. Currently, a company members’ resolution may only be validly passed during a general meeting by members after a valid notice of the meeting has been issued.
3. The squeeze in and sell out rights.
The Bill also proposes amendments to division 4 of Part XXIV on Company Takeovers. Currently the right of a buyer to squeeze in minority shareholders in a buyout is pegged on the buyer acquiring or entering into an unconditional agreement to acquire 90% of the company shares or 90% of the shares with voting rights. The Bill proposes a reduction of this threshold from 90% to 50% of shares/or shares with voting rights. If enacted, this amendment may increase hostile take overs by shareholders immediately after attaining majority shares/or shares with voting rights and may especially affect start-ups who usually sell a substantial stake in their companies to raise funds.
We shall closely follow the Bill’s progression in the Assembly and keep you informed on its fate.
The Bill may be found here.
Please contact us at Info@cfllegal.com should you require further information.
