Applicability of the Companies Act to the existing companies

Kandiah Neelakandan

NEW ACT: An existing company (as defined in the new Act) means a company formed and registered under the Joint Stocks Ordinance 1861, the Joint Stock Banking Ordinance (Cap. 145-LEC 1956 Rev) or the Companies Act No. 17 of 1982.

In the application of the provisions of the Companies Act No. 7 of 2007 (“the Act”) to existing companies, it applies -

(a) in the case of a limited company, other than a company limited by guarantee, as if the company has been formed and registered under the provisions of the new Act as a limited company;

(b) in the case of a company limited by guarantee, as if the company had been formed and registered under

 the provisions of the new Act as a company limited by guarantee;

(c) in the case of a company other than a limited company, as if the company had been formed and registered under the provisions of the new Act as an unlimited company; and

(d) in the case of company which is a people’s company, as if it had been forced and registered under the provisions of the new Act as a limited company.

An existing company which is a private company, will continue under the new Act as a private company to which Part II of the new Act applies.

An existing company which is an offshore company, will continue under the new Act as an offshore company to which Part XI of the new Act applies.

Date of Registration

Any reference, express or implied, to the date of registration of an existing company, will be construed as a reference to the date on which the company was first incorporated under any written law.

Deemed changes in Names of Private Companies and Public Listed Companies

An existing company

(a) which is a private limited company formed, registered under the Joint Stock Companies Ordinance 1861, the Joint Stock Banking Ordinance 1897, and the Companies Ordinance (Cap. 145) will be deemed to have changed its name to include the suffix “(Pvt) Limited” or the abbreviation “(Pvt) Ltd”; and

(b) which is public listed company, will be deemed to have changed its name to include the suffix “Public Limited Company” or the abbreviation “PLC”.

Registration of such deemed changes

(a) the Registrar-General of Companies (“the Registrar”) is required to enter the new name on the register in place of the former name, consequent to the deemed change of name under the provisions of section 485 (5), and issue a fresh certificate of incorporation including the said suffix or the said abbreviation, as the case may be, in such certificate of incorporation.

(b) such fresh certificate will be issued after the Registrar has assigned a company number in terms of the provisions of section 487.

Provisions relating to Articles

Model Articles

The model articles in the new Act will not apply to an existing company unless it resolves that they should apply in terms of section 15 (1) (b). The Memorandum of Association of an existing company is to be deemed to form part of the Articles of the company.

The Articles of an existing company will continue to be the articles of such company for the purposes of the new Act, and where such articles has adopted all or any of the rules set out in Table A of the First Schedule to the Companies Act No 17 of 1982, those rules shall be deemed to be incorporated in such articles of the company, as if set out in full in those articles.

Provisions relating to company numbers Company number

Subject to the provision of section 487 (2), the number which an existing company has been assigned by the Registrar for administrative purposes, will be the company number of that company.

New number within 12 months

Within a period of twelve months from he coming into operation of the new Act, all existing companies should apply to the Registrar to assign a new number as its company number, in a form as may be prescribed by the Registrar. The new number so assigned should be entered in the register and also on the fresh certificate of incorporation to be issued under the provision of section 485 (6)

Striking-off a Company - consequence of failure to apply for new number

Where an existing company fails to comply with the requirements imposed under section 487 (2) within the time specified therein, the Registrar should publish the name of such company in daily newspaper in the Sinhala, Tamil and English language, and where such company continues to fail to comply with those requirements thereafter, the Registrar shall, within six months of the publication of its name in the newspapers, strike off the name of such company from the register maintained by him under the provisions of section 473.

Who can apply for new number?

During the period of six months referred to in section 487 (3), in addition to a director of the company, a shareholder of such company or a person who has registered a charge under section 102, or a person who has a money claim pending before a court in arbitration proceedings will also be entitled to apply to the Registrar to have a new number assigned to such company under section 487 (2).

Consequence of striking off

Where a company’s name is struck off from the register under section 487 (3), all property and right whatsoever vested in or held on trust for the company immediately before the date on which the name is struck off, (including leasehold property but not including property held by the company on trust for any other person), will vest in and be at the disposal of the State.

Transitional provisions and savings

The new Act provides as follows:-

“(a) nothing in the repeal of any former written law relating to companies shall affect any order, rule regulation, scale of fees, appointment, conveyance, mortgage, deed or agreement made, resolution passed, direction given, proceeding taken, instrument issued or thing done under any former written law relating to companies, but any such order, rule, regulation, scale of fees, appointment, conveyance, mortgage, deed, agreement, resolution, direction, proceeding, instrument or thing shall, if in force on the appointed date, continue to be in force, and so far as it could have been made, passed, given, taken, issued or done under this Act, shall have effect as if made, passed, given, taken, issued, or done under the provisions of this Act;

“(b) any document referring to any former written law relating to companies, shall be construed as referring to the corresponding provision of the provisions of this Act;

“(c) any person appointed to any office under or by virtue of any former written law relating to companies, shall be deemed to have been appointed to that office under by virtue of the provisions of this Act;

“(d) any register kept under any former written law relating to companies, shall be deemed part of the register to be kept under the corresponding provisions of this Act;

“(e) all funds and accounts constituted under the provisions of this Act, shall be deemed to be in continuation of the corresponding funds and accounts constituted under the former written law relating to companies.

The expression “former written law relating to companies” means any written law repealed by the Companies Ordinance (Cap. 145) or the Companies Act No. 17 of 1982 or the new Act. (Sec. 530 (2)

All actions, proceedings or matters (other than winding-up which has already commenced) and pending in a District Court on the day preceding the date on which the new Act came into operation, shall stand removed to the Commercial High Court and such court shall have jurisdiction to take cognizance of, hear and determine, or continue and complete, the same.

Provided that, any such actin, proceeding or matter in which the adducing of evidence has commenced on the day preceding the date on which this Act came into operation in the District Court, should be heard and determined by the said District Court.

Savings

Nothing in the new Act affects-

(a) the incorporation of any company registered under any written law repealed by the Companies Ordinance (Cap. 145), Companies Act No. 17 of 1982 or this Act;

(b) Part C of the schedule to the Joint Stock Companies Ordinance, 1861, or any part thereof, so far as the same applies to any company in existence on the appointed date;

(c) Table B in the Schedule to the Joint Stock Banking Ordinance, 1897, or any part thereof, so far as the same applies to any company in existence on the appointed date.

(d) Tables A and C in the First Schedule to the Companies Ordinance (Cap. 145) or any-part thereof, so far as the same applies to any company in existence on the appointed date;

(e) Tables A and C in the First Schedule to the Companies Act No. 17 of 1982 or any part thereof, so far as the same applies to any company in existence on the appointed date.

The provisions of the new Act with respect to winding up will not apply to any company of which the winding up has commenced before the appointed date. Every such company shall be wound up in the same manner and with the same manner and with the same incidents, as if this Act had into been enacted, and for the purposes of the winding-up, the written law under which the winding up commenced shall be deemed to remain in full force.

However, where any company is being wound up in accordance with those provisions, the court may, on application made by the Registrar or by any creditor of the company, and where the court is of opinion that it is expedient to do so in the circumstances of the case, make order that any specified provision of this Act. with respect to liquidation shall apply to the winding up of that company, and may give such incidental or supplemental directions as may appear to the court to be necessary for the purposes of the application of such provision. Where the court makes any such order, any provision of this Act specified in the order will, subject to any such directions, apply accordingly.

Repeals and Amendments

The Companies (Special Provisions) Law, No. 19 of 1974 and the Foreign Companies (Special Provisions) Law, No. 9 of 1975 are repealed by the new Act.

The Act scheduled to the High Court of the Provisions (Special Provisions) Act, No. 10 of 1996 has been amende by the substitution for item (2) of hat schedule, of the following item:-

“(2) All applications and proceedings under the Companies Act, No. 7 of 2007.

Important provisions applicable to Existing Companies at a glance

The new Act will apply to the existing companies in Column A as if they have been formed as companies as indicated in Column B

New Company No.

Exiting companies should apply for and obtain a new company number from the Registrar within 12 months. Otherwise the Company will be struck off. (Directors, shareholders, or a qualified creditors can also apply).

Articles

The articles of an existing company will continue but the Memorandum of Association of an existing company is deemed to form part of the Articles.

Column A						 Column B
Under 1982 Act					Under the 2007 Act
1. A limited Company				A Limited Company
2. A Company limited by guarantee	        A Company limited 
                                                     by guarantee
3. A company other than a limited
   company				      An unlimited company
4. A People’s Company			         A limited company
5. A Private Company				 A Private Company
6. An Offshore company			       An Offshore company

(The writer is an Attorney-at-law, Partner of the law firm of Murugesu & Neelakandan)