‘New Companies Act would promote better corporate governance’

Ruwanthi ABEYAKOON

SEMINAR: The New Companies Act would promote better corporate governance that will ensure the interests of all stakeholders, including the Directors, major and minority shareholders and creditors, Managing Director, Chemanex Limited, Preethi Jayawardene said at a seminar on the New Companies Act organised by the Ceylon National Chamber of Industries.

“The New Act would also simplify the procedure of company incorporation. It has also introduced a simplified and modernized concept of taking away the Memorandum of Association in Company Incorporation,” Jayawardene said.

Speaking on the important provisions of the New Companies Act, Senior Partner, Murugesu and Neelakandan Associates, Kandiah Neelakandan said every company is compelled to have a registered office in Sri Lanka.

“Every company should have a registered office in Sri Lanka. A company can now have its registered office in any part of Sri Lanka. Under the earlier law it was required to be in the judicial district mentioned in the Memorandum of Association,” he explained.

He also said that the New Act imposes statutory duties on directors of a company. “They should act in good faith and in the best interests of the company.

Directors should comply with the Act and the company’s Articles of Association,” he said.

He pointed out that a court may disqualify Directors if they have persistently failed to comply with the provisions of the Act.

“A public company should have at least two Directors. Other companies should have at least one Director. A person, who is not disqualified under Section 202(2) can be appointed as a Director of a company,” he pointed out.