Wide acceptance for the new Companies Act
Greater accountability demanded of Governing Boards;
shareholders' rights strengthened :
LEGISLATION: A new Companies Act shortly to come into force
constitutes a bold reformation of the country's present Companies Act.
The new Companies Act specifies the demanding responsibilities and
proportionate accountability imposed on Directors in the governance of
The reformed Companies act will consider the rights of shareholders
as vital. These are some of the findings of the Daily News on the new
Daily News spoke to various members of governing bodies of leading
institutions in the country in this connection.
General Manager Finance, Agalawatte Plantations Limited Senerath
Devendra said that the new Companies Act strengthens the values of
shareholders. Directors and the governing party's decision making powers
are restricted vastly, at a glance. The present Companies Act is based
on the British legal system and the reformation will be on the Canadian
Financial Controller, Korean Spa Industrial Co (Pvt) Ltd Anuja
Srinath said most of the new amendments are acceptable. Managers and
Directors of a company can work on their own without the assistance of
the Company Secretaries and other parties if they are thorough in their
In future, a Memorandum of Companies is not necessary to form a
company. He said that when compared to the present Companies Act in
practice, pre incorporation contract can be rectified in the reformed
new Companies Act. Auditors should issue the certificate and sentence in
the case of insolvency of a company.
Listed Companies can purchase their own shares after the
implementation of the changes. This will enable the companies to
regulate the activities effectively. These are a good lead for change.
"Directors have much judicial power under the roof of the new
Companies Act. This will enable the governing parties to be more
responsible and powerful in their decisions.
Over default of statutory and other payments, if a party wants to sue
a company, they can sue the Director too, on that specific default
payment", said Tax Consultant and Company Secretary, Key Management
Consultant (Pvt) Ltd, H. I. P Imaduwa.
"Through this reformation both parties will be happy and specially
the minority shareholders' rights will be well built.
"To accomplish a new company it's necessary to submit the articles of
the company and a Director will be enough as per the new Companies Act.
This will be a moderate standard when compared to the Companies Act in
practice" Manager Finance, Janashakthi Insurance Dhammika Seneviratne
"Time demands a change in our daily statutory regulations as well.
This reformation of the Companies Act 1989 will make the Directors and
the Managers of Companies more responsible.
"Transparency, accountability and business ethics will be expected of
both parties. The delegation of responsibility is an added advantage of
the new reformed Companies Act, Senior Manager, Finance, Peoples Leasing
Andy Ratnayake said.
Apart from these, many are not aware that these changes in the
Companies Act will be practical since they have been tried several