More protection for shareholders with amendments to Companies Act
The government intends to implement greater protections for company shareholders with amendments to the Companies Act.
In particular, the Companies (Amendment) Bill, 2019 is expected to support the growth of equity capital markets by providing enhanced protection for minority investors, primarily as it relates to conflicts of interest, related party transactions, shareholder governance and related matters.
The bill outlines conditions under which the directors of a company may authorize the issuance of new shares in a company, and seeks to protect shareholders from undue board control and entrenchment by prohibiting a subsidiary company from holding shares issued by its parent company.
The bill also addresses transparency in corporate governance by providing that a detailed notice of a general meeting must be sent to members of the company no less than 21 days before the meeting, and stipulates that any member owning five percent or more of the voting shares in a company may include specified items on the meeting’s agenda.
As for disclosures, the bill requires that all related parties, such as an officer director, employees of the company, founder or shareholder or any person who has made substantial monetary contributions to a company, as well as any direct relative of those parties, must make known any transactions and set aside any undisclosed contracts holding a director or officer liable when a transaction is proven to be unfair or prejudicial to other shareholders.
The bill also addresses shareholders’ rights to inspect internal corporate documents for proper purposes.
Parliamentarians are expected to begin debate on the bill in the House of Assembly today.
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News