|
|
|
|
COMPANIES
[ FAQ,s] [ Incorporation] [ Registration] [ Continuance]
[ Company fees] [Corporation tax] [ Making contact]
Frequently asked questions:
General
What legislation governs the operation of companies?
The Companies Act 1991, which came into effect on May 25th, 1995, governs the
formation and operation of all companies. The Securities Act, 1999 makes
provision for the preparation and issuance of Prospectuses by companies.
Who is responsible for the administration of the Companies Act?
The Registrar of Companies, under the supervision of the Minister of Finance, is
responsible for the administration of the Act.
Incorporation
Who can incorporate a company?
One or more persons may incorporate a company by lodging Articles of
Incorporation with the Registrar of Companies.
However, the Act requires every association, partnership, society, body or other
group consisting of more than twenty (20) persons to incorporate before it can
carry on any business or trade for gain.
The following individuals are specifically prohibited from forming or joining in
the formation of a company:
1. One under the age of eighteen (18) years;
2. One of unsound mind; and
3. An undischarged bankrupt.
Is there any way to minimise the cost of incorporation?
When forming a company it is most cost effective to incorporate with a share
capital on which the minimum fee is applicable, that would be with a share
capital of $500,000, and to later increase the company’s capital paying the
applicable percentage of the increase as the fee.
For example, incorporating a company with one class of shares and a share
capital of
$ 10,000,000 would require the payment of 6% of the amount- $600,000 in fees.
This would make the total cost of incorporation in excess of $ 630,000.
On the other hand, if the company were formed using the minimum ceiling,
$500,000, incorporation fees would be approximately $63,000. The company could
later increase its capital to the desired $10,000,000, paying 2% of the
$9,500,000 increase, $190,000, bringing the total cost of incorporation and the
increase in capital to $253,000.
Shares
What is the nature of a share?
A shares is considered movable property and is without nominal or par value.
Are there any restrictions in respect of capital structure?
The capital structure of a company may comprise one or more classes of shares as
permitted by the company’s Articles.
Can a company buy its own shares?
A company is permitted to purchase or otherwise acquire its own shares only
where:
1. its Articles do not prohibit such acquisition,
2. a Statutory declaration is made by the directors of the company and filed
with the Registrar, to the effect that there are no reasonable grounds for
believing that the company is or would be unable to pay its liabilities as they
become due;
3. the value of the company’s assets would, after the acquisition, not be less
than its liabilities and stated capital of all classes of shares; and
4. the purchase would not result in there being no member of the company holding
shares other than redeemable shares.
Directors
How many directors must a company have?
The Act requires a private company to have at least one director, however, a
public company must have a minimum of two directors. The Act does not prescribe
a maximum number of directors. This is determined by the Articles of the
company.
Who is prohibited from being a director?
No one prohibited from forming or joining in the formation of a company may be a
director, that is, an individual under the age of eighteen years, an individual
of unsound mind or an undischarged bankrupt.
What are the duties of the directors?
The directors of a company have both statutory and common law duties. The
directors have a general statutory duty to manage the company. In so managing
they must exercise the powers of the company directly or indirectly through its
employees and agents and direct the management of the business and affairs of
the company.
In exercising their powers and discharging their duties directors are required
to act honestly and in good faith with a view to the best interest of the
company, and exercise the care, diligence and skill that a reasonably prudent
person would exercise in comparable circumstances.
The Act also requires the directors, in determining the best interests of the
company, to have regard to the interests of its employees and shareholders.
In addition to an all-encompassing duty of compliance with the provisions of the
Act directors are more specifically under a duty to appoint officers, disclose
contractual interests, disclose their holdings in the shares and debentures of
the company, ensure that all statutory records prepared are maintained.
To whom are the directors duties owed?
Generally, a director’s duties are owed to the company and not to the individual
members. However, they may sometimes find themselves in circumstances where they
owe duties to individual shareholders, for example, where a director undertakes
to act as the shareholder’s agent.
Although they have a duty to take into consideration the interest of the
employees and members of the company, this is a statutory duty owed to and
enforceable by the company, not by the employees directly, therefore acts
benefiting the employees must also further the interest of the company.
Does resignation release a director from these duties?
The resignation of a director does not in itself release him from his duties as
an officer of the company. Having notified the company of such resignation, the
company must lodge a notice of change of directors with the Registrar. A
director should ensure that this is done.
What are the main liabilities of directors?
1. Directors who vote for or consent to an issue of shares for a consideration
other than money are liable to the company to make good any amount by which the
consideration received is less than the value of the shares.
2. Directors who vote for or consent to a resolution authorising-
i. a purchase, redemption or other acquisition of shares;
ii. a commission;
iii. the payment of a dividend;
iv. financial assistance; or
v. the payment of an indemnity
contrary to the Act, liable to restore to the company any amounts so distributed
or paid and not otherwise recovered by the company.
What defences may a director raise?
A director who votes for or consents to an issue of shares for a consideration
other than money is not liable if he did not, nor could he have reasonably
known, that the share was issued for a consideration equivalent to less than the
amount the company would have received had it been issued for money.
Can a company indemnify a director against personal liability?
A company may indemnify the following persons and their legal representatives
against all costs, charges and expenses reasonably incurred in respect of any
civil, criminal or administrative action or proceeding to which they are made
party by reason of their office:
I. a director;
II. a former director
III. a person who acted at the company’s request as a director of a body
corporate of which the company was or is a shareholder or creditor.
However, such indemnification is not possible in respect of an action by or on
behalf of the company to obtain judgement in its favour.
A director may not be indemnified unless he-
I. acted honestly in good faith, with a view to the best interests of the
company; and
II. had reasonable grounds for believing that his conduct was lawful.
Company Secretary Does a company have to have a company secretary?
Every company is required to appoint a company secretary and furnish the
Registrar with notice of such appointment.
What are the duties of the secretary?
The company secretary is considered an officer of the company. As an officer he
is under a statutory obligation, in exercising his powers and discharging his
responsibilities to act honestly and in good faith, exercise the care, skill and
diligence of a reasonable man in his position and comply with the Act, the
company’s Articles and by-laws.
The Act does not list the specific duties of the company secretary. These vary
and are usually set out in the contract of employment and sometimes the Articles
and or by-laws of the company.
What are the liabilities of the company secretary?
As an officer of the company the secretary is liable for any default of the
company in complying with the requirements of the Act.
Can a company indemnify its corporate secretary against personal liability?
A company may indemnify its company secretary in the same manner and subject to
the same exceptions as apply to indemnifying its directors.
Disclosure
What must a director disclose?
Directors are under a statutory obligation to disclose in writing the nature and
extent of their interests in:
1. any material contract or proposed material contract with the company; or
2. any material contract or proposed material contract with any body of which he
is also a director or in which he has an interest.
Such disclosure is required to be made:
1. at the meeting at which the proposed contract is first considered;
2. at the first meeting after he becomes interested in the contract;
3. if he becomes interested after the contract is made, at the first meeting
after he becomes interested; or
4. if he become a director after acquiring the interest, at the first meeting
after he becomes a director.
A general notice to the Board of Directors by a director declaring a material
interest constitutes a sufficient declaration of interest for the purposes of
the Act.
Insider trading
What is insider trading?
‘Insider Trading’ is the term used to refer to transactions involving trade in
the securities of a company by persons, who by virtue of their office are privy
to price-sensitive information, for their personal advantage.
Who is an insider?
An ‘insider’ includes:
1. an officer of a distributing company;
2. a distributing company that purchases or otherwise acquires, except by means
of redemption, shares issued by it;
3. a distributing company that purchases or otherwise acquires shares issued by
any of its affiliates; or
4. a person who beneficially owns more than 10% of the shares in a distributing
company, or who exercises control or direction over more than ten percent of the
votes attached to shares in the company;
5. a person employed or retained by a company, including professional, technical
or commercial advisors.
A ‘distributing company’ is one where any of the shares or debentures offered to
the public remain outstanding or one which has more than one shareholder or
debenture holder.
What are the liabilities of an insider?
An insider who makes use of confidential information for his own benefit, which
if generally known would materially affect the value of the shares or debentures
of a company, is liable to compensate any person for any direct loss suffered as
a result of his transaction and is accountable to the company for any direct
benefit received as a result of the transaction.
Restraining oppression
To what type of conduct does this ‘restraining oppression’ apply?
The remedy applies to acts or omissions which are oppressive or unfairly
prejudicial to any shareholder, debenture holder, creditor, director or officer
of the company.
Who may invoke this remedy?
1. A shareholder or debenture holder, or a former holder of a share or
debenture;
2. A director or an officer or a former director or officer;
3. The Registrar; or
4. Any other person who the court believes should be allowed to make an
application.
What orders may be granted?
Remedies include orders:
1. restraining the conduct complained of:
2. appointing a receiver or receiver-manager;
3. amending the Articles of by-laws of the company;
4. varying or setting aside a contract or transaction;
5. compensating the aggrieved;
6. that the company be wound-up;
7. directing the issue or exchange of shares or debentures.
Derivative actions
What is a derivative action?
A derivative action is one brought by a complainant for the purpose of
prosecuting, defending or discontinuing an action on behalf of a company.
Who can bring a derivative action?
The following persons may apply to the court for leave to bring an action in the
name of or on behalf of a company or any of its subsidiaries or to intervene in
an action to which they are party:
1. A shareholder or debenture holder, or a former holder of a share or
debenture;
2. A director or an officer or a former director or officer;
3. The Registrar; or
4. Any other person who the court believes should be allowed to make an
application.
When can a derivative action be commenced?
No action can be brought unless the court is satisfied that:
1. the directors of the company were given notice of the complainant’s intention
to apply to the court in their failure to acct appropriately;
2. the complainant is acting in good faith;
3. it appears to be in the interest of the company that the action be brought,
prosecuted, defended or discontinued.
What remedies may be granted?
The court may make any order it thinks fit including:
1. an order authorising the complainant, the Registrar or any other person to
control the conduct of the action;
2. an order giving directions for the conduct of the action;
3. an order directing that any amount adjudged payable by a defendant be paid to
former and present shareholders or debenture holders of the company;
4. an order requiring the company to pay legal fees incurred by the complainant
in connection with the action.
Fundamental amendments & minority protection
Can fundamental changes be made to the corporate instruments?
The articles of Incorporation and the by-laws of a company may be amended.
Articles of incorporation may be amended to:
1. change its name;
2. alter the rights or obligations attaches to shares;
3. add, change or remove restrictions on the transfer of shares;
4. increase or decrease the number of directors ;
5. alter the restrictions on the capacity of the company to carry on any
activity;
6. reduce its share capital; or
7. effect any other amendment permitted by the Act.
To what changes can a shareholder exercise the right to dissent?
A shareholder may exercise his right to dissent to any proposed amendment which
would adversely affect the shares of the kind which he holds.
Examples, include proposed amendments to:
1. increase or decrease the maximum number of authorised shares of a class which
have rights equal or superior to his shares;
2. effect an exchange, reclassification or cancellation of all or part of the
shares of his class;
3. amend the rights, privileges or restrictions attached to shares of the class
he holds;
4. reduce or remove a dividend preference;
5. increase the rights attaching to shares of a class equal or superior to his;
6. create a new class of shares equal or superior to his; or
7. constrain the issue or transfer of the shares of his class or extend or
remove any such restriction.
How is fair value determined?
The ‘fair value’ of the shares of a dissenting shareholder is determined by the
court which may appoint one or more valuers for the purpose of fixing such
value. The value is determined as at the close of business on the day before the
resolution to amend is adopted.
Is the company obliged to pay the fair value?
A company may not make payment to dissenting shareholders if there are grounds
for believing that:
1. the company would , after the payment be unable to pay its liabilities as
they become due; or
2. the realisable value of its assets would be less than its liabilities.
Receiverships
What are the functions of a receiver?
A receiver is responsible for collecting income from property, paying
liabilities connected with property and realising the security interest of those
on behalf of whom he is appointed.
To what liabilities is he exposed?
A receiver is personally liable on any contract entered into by him in the
performance of his functions unless such contract provides otherwise.
What is the position of the Board of Directors on the appointment of a
receiver or a receiver-manager?
The appointment of a receiver does not relieve the board of directors of their
statutory duties, although the management and control of the assets comprised in
the appointment may be taken out of the hands of the directors.
Liquidation or Winding-up
What are the various ways in which a company may be wound up?
A company may be wound-up voluntarily- ‘Members voluntary winding-up’ or
‘Creditors voluntary winding-up’ – or by the court.
A company may be wound-up by the court if:
a special resolution is passed to that effect;
it fails to commence business within one year of being incorporated, or suspends
its business for an entire year;
it is unable to pay its debts;
it is in the interest of the public, the shareholders or the creditors of the
company that it be wound-up; or
the court is of the opinion that it is just and equitable that the company be
wound-up.
When does a winding-up commence?
A voluntary winding-up commences at the time of the passing of the resolution
for such winding –up.
A winding up by the court commences at the time of the presentation of the
petition for winding-up.
What is the priority of debts in a winding up?
1. all local government rates and public taxes due within the period of twelve
months before the commencement of the winding up;
wages and salaries of employees in respect of services rendered during the
period of four months before the commencement of the winding up;
contributions payable under the National Insurance and Social security Act.
Continuance
What is continuance?
‘Continuance’ is the term used to refer to the transition of a corporate entity
from governance by the legislation under which it was formed to governance by a
subsequent Act.
The Companies Act 1991 repealed the Companies Act, Cap. 89:01. It is therefore
necessary for all companies formed under this repealed Act to continue under the
new Act.
How many times does a company need to continue?
A company is required to continue only once.
Do external companies need to continue?
Yes. All companies formed or registered under the Companies Act, Cap.89:01 or
the Companies Ordinance 1864 or 1898 are required to continue under the new Act.
Does continuance affect the corporate instruments?
No. If a provision of the corporate instruments of a company, lawfully in force
before May 25, 1995, is inconsistent with or in any way not in compliance with
the new Act that provision is not deemed illegal by reason of such inconsistency
or non-compliance.
What are the penalties for not continuing?
If a company did not file Articles of Continuance on or before May 25, 1997:
1. it may not, without the leave of the court, bring any action but may be made
a defendant to a suit;
2. it may not pay dividends to shareholders; and
3. every director or manager is liable to a penalty of two hundred dollars
($200) a day for each day its carries on business without having continued.
Corporate records What records is a company required to maintain?
Every company is required, by statute, to prepare and maintain certain records
and its officers and agents are required to take reasonable steps to ensure that
such records are not lost or falsified.
These records include:
1. the Articles and by-laws of the company and all amendments thereto;
2. minutes of meetings and resolutions of shareholders;
3. copies of all notices in relation to the directors and secretary;
4. a register of members/ shareholders;
5. a register of the directors and secretaries;
6. a register of debenture holders;
7. a register or privileges, options and rights;
8. a register of directors holdings;
9. a record of trusts; and
10. a record of all accounts;
What are the penalties for not maintaining these records?
Where a company fails to prepare and maintain some or all of the required
records its officers are guilty of an offence and liable on summary conviction
to a fine of ten thousand dollars.
External companies
Can an external company operate without registering?
External companies are prohibited from carrying on any undertaking or being
party to more than two contracts in Guyana until registered in accordance with
the Act.
Can an external company cancel its registration?
An external company must, within twenty-eight days of the cessation of its
business in Guyana inform the Registrar of this fact. The Registrar, on
receiving such notice, cancels the registration of the company.
Is the cancellation of registration permanent?
The Registrar may revive the registration of an external company. Revival is
evidenced by the issue of a new Certificate of Registration.
Removal from the Register of Companies
On what grounds can a company be struck from the Register of Companies?
The Registrar may strike a company’s name from the Register if:
1. it fails to send any return, notice, document or prescribed fee to the
Registrar as required by the Act;
2. it is dissolved;
3. it is amalgamated with one or more other companies; or
4. its registration is revoked.
Is the striking off irrevocable?
No, where a company has been struck from the register it may apply to the
Registrar for its name to be restored.
Does being stuck off the Register affect a company’s liability?
Where a company has been struck off the register its liability and the liability
of every director, officer and shareholder continues and may be enforced at any
time.
Incorporation:
An application for incorporation of a company must be in the
prescribed form and
must state:
1. the proposed name of the company;
2. that the registered office of the company is to be situated in Guyana;
3. the classes and maximum number of shares that the company is authorised to
issue;
4. the minimum issue price in respect of shares or classes of shares;
5. if the right to transfer shares is restricted, a statement to that effect and
the nature of those restrictions;
6. the minimum and maximum numbers of directors allowable;
7. where, by arrangement before its incorporation, shares of the company are to
be paid for by a consideration other than cash, the nature of the consideration,
its value in monetary terms and the extent to which the shares to be issued will
be credited as paid up. This must be verified by the report of a qualified
accountant, valuer or surveyor stating that the consideration is worth the
amount credited as paid up;
8. any restrictions on the business that the company may carry on.
On submission of this information and payment of the prescribed fee the
Registrar of Companies issues a Certificate of Incorporation which serves as
evidence of the existence of the company as of the date stated on the
Certificate.
Articles of Incorporation must be prepared and signed by and Attorney-at-Law
qualified to practice in Guyana.
Registration:
The term ‘external company’ refers to any body incorporate or unincorporate
formed under the laws of a country other than Guyana.
An external company is required to ‘Register’ under the Act within one month of
commencing business or undertaking in Guyana. The following facts are evidence
of the carrying on of a business or undertaking:
1. The business of he company is regularly transacted from an office in Guyana
used specifically for that purpose;
2. The company establishes or uses a share transfer or share registration office
in Guyana;
3. The company enters into two or more contracts with persons resident in Guyana
or with other companies formed in Guyana;
4. The company appoints an agent who resides or has a place of business in
Guyana; or
5. The company owns or uses assets situated in Guyana for the purpose of
carrying on its business and obtains a profit form the use of those assets.
In order to register the following information must be filed, in duplicate, with
the Registrar of Companies:
1. The name of the company;
2. The jurisdiction within which the company was formed;
3. The date of its incorporation;
4. The manner in which it was incorporated;
5. The particulars of its corporate instruments;
6. The period, if any, fixed by its corporate instruments for the duration of
the company;
7. The extent to which the liability of the shareholders of the company is
limited;
8. The undertaking that the company will carry on in Guyana;
9. The date on which the company intends to commence business in Guyana;
10. The authorised, subscribed and paid-up or stated capital of the company and
the shares that the company is authorised to issue;
11. The nominal or part value of those shares if applicable;
12. The full address of the registered or head office of the company outside
Guyana;
13. The full address of the principal office of the company in Guyana; and
14. The full names, addresses and occupations of the directors of the company
Annexed to this information must be:
1. a Statutory Declaration by two directors verifying the accuracy of the
foregoing information;
2. a copy of the corporate instruments of the company;
3. a Statutory Declaration by an Attorney-at-Law that all relevant information
has been supplied;
4. payment of the prescribed fees; and
5. a Power of Attorney naming a person resident in Guyana as attorney of the
company for the purpose of receiving all lawful notices and service of process
in proceedings by or against the company.
On receipt of the relevant information the Registrar of Companies issues a
Certificate of Registration.
Continuance:
The Companies Act 1991, which commenced on May 25, 1995, repealed the Companies
Act, Cap. 89:01, referred to as the ‘former Act’.
Every company formed, registered or otherwise governed by this ‘former Act’ is
required to continue under the new legislation with two years after its
commencement.
Continuance is effected by lodging an application in the prescribed form and
containing the following information, with the Registrar of Companies:
1. The name of the company;
2. The company number;
3. The classes and maximum number of shares that the company is authorised to
issue;
4. Restrictions of the transfer of shares;
5. The number, minimum and maximum numbers of directors;
6. Restrictions on the business that the company may carry on;
7. If the company is changing its name at the time of continuance, the previous
name of the company;
8. Details of its incorporation; and
9. Any other provisions that may be relevant
Notices of the first directors, first secretary or joint secretaries and the
registered office of the company must accompany the application for continuance.
On receipt of this information the Registrar issues a Certificate of
Continuance.
Company Fees:
The prescribed fees payable by a company are as follows:
Incorporation
| Certificate of Incorporation |
$30,000 |
Stated share capital for each class of shares-
i. up to $500,000
ii. above $500,000 |
$25,000
6% amount |
Stated share capital for each series of
any class of shares-
i. up to $500,000
ii. above $500,000 |
$14,000
3% amount |
Increases in stated capital after incorporation
Further increases in stated capital, series
or class of stated capital-
i. up to $10,000,000
ii. above $10,000,000 |
2% increase
1% increase |
Amendment of Articles
| Certificate of amendment of Articles |
$800 |
Amalgamation
Certificate of amalgamation of two companies
i. Each additional company |
$20,000
$3,500 |
Continuance
| Certificate of Continuance |
$3,500 |
Prospectuses
| Fee to accompany a Prospectus or Statement in Lieu of
Prospectus |
$3,500 |
Miscellaneous
| Certificate of Dissolution |
$800 |
| Uncertified copy of any document |
$35 per page |
| Certification of any document |
$350 |
| Any Certificate for which a fee is not prescribed |
$800 |
| Search, including a name search |
$175 |
| Reservation of company name |
$800 |
| Filing of any other document, including notices |
$800 |
| Certificate of Registration |
$20,000 |
| Fee to accompany annual return |
$3,500 |
Fees applicable only to external companies
Registration of documents-
i. where stated capital exceeds $1,000,000
ii. where capital exceeds $1M but not $3,000,000
iii. where capital exceeds $3,000,000 |
$80,000
$150,000
$300,000 |
| Registration of notice of alteration of any documents
|
$7,000 |
| Filling and registration of any other document |
$3,000 |
| On issuance of any Certificate |
$4,000 |
Registration of charges for all companies
Registration of any charge-
i. up to $500,000
ii. above $500,000 |
$20,000
$40,000 |
Note: All fees are in Guyana Dollars (G$)
Making contact:
Registrar of Companies
Charlotte Street & Avenue of the Republic
Stabroek.
Tel.#: 592. 2. 68641
Deeds Registry
Charlotte Street & Avenue of the Republic
Stabroek.
Tel.#: 592. 2. 63083/ 51129
Disclaimer: The information contained in this website is not intended to
replace the advice of an attorney-at-law. For further information or legal
advice we invite you to contact our office.
|
|
 |
|
