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| Sunday, 21 December 2003 |
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To keep pace with modern trends : New Companies Act by Hiran H. Senewiratne The Government will introduce a new companies act in the near future to replace the present act, which is 55 years old, so that Sri Lanka can keep pace with competitive local and global economic trends. The present act, the Companies Act of Sri Lanka No 17 of 1982 is almost the blue print of the 1948 UK Companies Act, and does not comply with current economic and technological trends in business, said a leading businessman. Minister of Commerce and Consumer Affairs Ravi Karunanayake has appointed an Advisory Committee headed by Dr M. Sikurajapathi to draft the new act. This committee includes representatives from all business chambers, Colombo Stock Exchange, professional bodies and business leaders. The proposed act will be based on the UK Companies Act of 1985, Minister Karunanayake hinted. "We need to change the Companies Act to keep with modern thinking in business," he added. He said the proposed legislation will make dramatic changes in the entire company procedure. Minister Karunanayake hinted that some of the areas to be taken into consideration are restructuring of companies, leverage, widening of companies and liquidation of companies. The Advisory Committee has nominated two subcommittees - one headed by eminent lawyer Dr Harsha Cabral to study the UK Companies Act and its recent amendments, and the other headed by Mahinda Hardasa to look at European Union directives. Dr Cabral said the proposed act will probably follow the British legal system and European Union directives. According to Dr Cabral, the interim report has already been submitted for Minister Karunanayake's perusal. Amendments made to the UK Companies Act of 1985 such as the Insolvency Act, amendments introduced to the Company Security (Insider Dealings) Act and Company Directors Disqualification Act are some of the matters that have been taken into consideration to be drafted to the proposed act. Dr Cabral said the new law will not overlap existing laws such as the Consumer Authority Act, Anti Competition laws and Colombo Stock Exchange Act. The UK Insolvency Act will be taken into account to introduce a separate Insolvency Act for Sri Lanka, he added. The proposed legislation will focus on protecting stakeholders' interests i.e. confidence for shareholders on the company, protection for minor shareholders, directors' responsibilities, auditors qualifications, role of accountants and adoption of new technology for the registration of companies are some of the new features to be included in the proposed act. Registrar of Companies D.K. Hettiarachchi said since the proposed act follows on the new thinking of the UK system, it will meet future challenges in the business arena. He said that we have to administer the Companies Act in keeping with the technological changes to attract investors both locally and internationally. |
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