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The "New Companies Act" would usher in a more vibrant economic era in our country.

The government of President Mahinda Rajapakse is making every effort to promote economic activity and create wealth while developing conditions to ensure that wealth is distributed in an equitable manner. This is clearly enumerated in the "Mahinda Chinthana" said Advisor to the President on Economic Affairs and Secretary, Ministry of Plan Implementation Ajith Nivard Cabraal.

He was addressing a seminar on the "New Companies Act" organised by the International Development Law Organisation on Tuesday.

He said the government has to strengthen the entrepreneurs and commercial and business establishments of our country to move forward and deliver economic benefits.

Towards that end, many steps have already been taken to assist all entrepreneurs and other stakeholders and more would be taken in the years to come. The enactment of the new Companies Act is one such initiative.

In that endeavour, let us hope that the politicians of our country from whichever political party they belong to, would treat efforts and legislation in the form of the New Companies Act as being vital "national" priorities and support the effort.

"I am quite optimistic that would be the case and such a commitment would no doubt provide the platform for the launch of more vibrant economic activity that could only benefit the country.

Let us therefore hope that this long awaited Companies Act would become the law of this country soon and be the platform for the launch of a more vibrant economic era in our country", he said.

Cabraal identified some of the following vital developments that have to be explored:

* Greater flexibility in the formation of corporate entities so as to encourage rapid commercialisation

* Greater flexibility which allows a corporate entity to change course so that corporate entities could respond better to the fast changing commercial and industrial environments

* Improved governance structures that have been designed to stimulate growth of economic activity while safeguarding the capital providers

* Higher degree of accountability and transparency to develop greater trust and confidence between those who are providing resources and those who are managing resources

* Higher usage and reliance on information technology and communication systems which has resulted in new paradigms in marketing, competition, finance

* Significant focus on multi-disciplinary business revival, recovery and creditor arrangements that has resulted in many businesses being turned around effectively

* Quicker and more effective procedures with regard to winding up which allows reasonable values to be generated to stakeholders expeditiously even in instances where the businesses have failed

* Speedier legal remedies leading to a higher degree of confidence in the overall governance systems to enable stakeholders to obtain redress for their grievances quickly

* Clearer and more extensive roles for shareholders and owners thereby encouraging more investors to enter the capital and debt markets

* Clearer operational frameworks for directors and managers so that the best professional talent could be attracted and harnessed while ensuring that such persons are able to manage resources independently and in the best interests of the organizations Identification of more unambiguous roles for the auditors thereby ensuring that the auditors play a pro-active, professional and independent role in reporting on the results and state of affairs of a corporate entity

* Massive developments in capital, debt and other markets, and securities laws which has resulted in the large scale transfer of capital between nations and capital markets on an unprecedented scale

* Widespread transformation of the banking, insurance and consultancy sectors which has had a huge impact on the way corporate entities operate

* Proliferation of the new breeds of specialists in a variety of subjects leading to vast savings in some instances and huge losses in other instances

* Globalis ation of markets, skills, services and cross border business practices where the benchmarks that are being followed are no longer local benchmarks but international standards and practices

There are many more vital developments as well. I am sure all of us identify many more such developments if we have a simple brain-storming session.

In that scenario, we have to readily admit that these new changes have to be quickly given legal and commercial backing in Sri Lanka if we are to position our place as a commercially up to date and responsible nation.

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