Amendments to The Companies Act
Recently there have been changes to the Companies Act resulting from the Governor General’s Assent to The Companies (Amendment) Act 2017. We would like to bring to your attention two of these that affect Annual Returns and Registers that companies are obliged to maintain.
1. Prohibition on the Issuance of Share Warrants
A company must not issue a share warrant, or have a share warrant entered in its Register of members. The bearer of share warrant will now be deemed to be the owner of the shares specified in the share warrant and so be treated as members of the company in respect of those shares.
Up until December 2018 every company which has issued a share warrant must:
- withdraw the share warrant;
- enter the name of the bearer of the share warrant as a member in the Register of members;
- issue certificates of ownership in relation to the shares owned by the bearer; and
- amend the company’s articles of incorporation to remove any authorization to issue share warrants or prohibit the issue of share warrants as the case may require.
After December 2018 all share warrants will be incapable of transferring ownership of the shares specified in the warrant and will be deemed null and void and accordingly of no legal effect.
2. Obligation to include Information on Beneficial Owners on registration and in Annual Returns
In addition to the names, nationalities, addresses and occupations of all listed members, a company is required to enter in its Register of Members, the names, nationalities, addresses and occupations of all beneficial owners. If the company has a share capital, the Register must also include a statement of the number of shares held by a member and the name of the beneficial owner and the amount paid or agreed to be considered paid for the shares of that member or beneficial owner.
The Register must include an entry specifying the date the person was entered in the register as a beneficial owner and the day they ceased to be a beneficial owner, if applicable.
A company which has notice of a trust affecting the membership of the company, must now enter the particulars of the beneficial owner into the Register of Members.
A legal owner who holds property in, or of a company (including the exercise of any rights or effecting any transaction in relation to the property), on behalf of or at the direction of another individual has an obligation to notify the company of the name and particulars of the beneficial owner of the property and any subsequent change in relation to the legal and beneficial ownership of property within fourteen (14) days of having such knowledge.
The beneficial owner on whose behalf a legal owner holds property in or of the company, is obligated to submit, in writing, to either the legal owner or the company, his/her particulars and any subsequent change, within 14 days.
Where the company has notice of beneficial ownership or a change in the particulars of the beneficial owner but has not been notified, it shall request of its members in writing to confirm whether they hold shares for a beneficial owner and require them to submit the particulars of the beneficial owner.
Additionally, at least once in each year, and also whenever the Registrar so requires, the company must send a written request to its member indicating that they should advise as to whether they hold property in the company on behalf of a beneficial owner and, if so, to supply the particulars of any such beneficial owner.
The prescribed forms for Articles of Incorporation and Annual Returns have been changed to include the requirements for beneficial ownership information.
Who is a beneficial owner?
A beneficial owner:
- In relation to shares, means the individual on whose behalf the shares are held or on whose behalf a share transaction is conducted; and
- In relation to a company, means the individual who exercises ultimate ownership or ultimate effective control.
Ultimate ownership means any situation in which ownership of a company is exercised by means of control other than direct control, and includes any arrangement utilizing one or more persons through which beneficial ownership of a company is established.
Ultimate effective control is defined as control exercised by the individual who-
- Is in a position to determine the policy of the company or to make the final determination as to the decisions to be made by the company; or
- by himself or together with a connected persons (within the meaning of the Act) is in a position to control more than fifty percent of the voting power in the company or would hold an interest in more than fifty percent of the issued shares of the company.
3. Provision of information by companies incorporated outside of Jamaica and carrying on business in Jamaica
With respect to any company incorporated outside of Jamaica and that has a place of business in Jamaica, any alteration made to:
- the list of members, beneficial owners or their particulars;
- changes in the directors or persons authorized to accept service on behalf of the company or their particulars;
- alterations to the company’s constitutive documents
must be delivered to the Registrar for registration within 28 days of the change, along with a copy of the alteration certified by at least two directors, or a director and the secretary of the company, or a notary public, to be a true copy of the alteration.
Within 18 months of a company’s registration and thereafter in every calendar year, every such company shall make out a balance sheet and profit and loss account, containing such particulars and including such documents and put before the company in general meeting and deliver to the Registrar for registration.
An overseas company with a place of business in Jamaica is required to maintain an overseas branch register in Jamaica that must comply with sections 109 to 117 of the Companies Act relating to the contents of the Register of Members (including beneficial owner information).
All companies must keep records and documents in the manner prescribed, for no less than 7 years or for such time period as may be prescribed.
Default fines are imposed on the company in default and each officer of the company that fails to comply with these obligations.
Please note that the COJ is currently accepting the annual return for 2017 in the form utilized in the 2016 annual returns but we will be required to submit the 2018 annual returns in the new prescribed form. The COJ is however insisting that information in relation the beneficial owners be included in the 2017 annual returns, either by a statement confirming that the shareholders listed at item 9 on page 7 of the annual return are the beneficial owners of the said shares or by providing the information regarding each beneficial owner.
Gina Phillipps Black is a Partner at Myers, Fletcher & Gordon. She is the head of the firm's Commercial Department. Gina may be contacted via email@example.com or via www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.