Sierra Leone News: Corporate Affairs Commission to take over Company Registration

The Corporate Affairs Commission (CAC) in Sierra Leone will soon take over the function of re-registering of all companies in the country from the Registrar General’s Office, says CEO of the Commission Micheala Mackay.
Speaking at the opening of a three-day training workshop on ‘corporate governance’ organised by the International Finance Corporation (IFC) at the Shangrila Resort, Lumley Beach, Freetown, on Monday 5th May 2014, Mackay said a recent administrative sorting exercise carried out by the commission revealed that of the 12,000 and odd companies on their register, up to 75% are non-complaint in one area or the other.
As the Commission prepares to re-register all companies in the next couple of months, part of this exercise would include the provision of a handbook on duties and responsibilities of company directors and secretaries; duties in this case meaning duties to the company.
“We enjoy carrying the big titles, but we often ignore or care less about the responsibilities that go with such titles,” said Mackay.
Specifically, according to Mackay, such duties include Directors Duty of care and skill, duty as trustees and agents of the company, duties of directors in connection with sales, conflicts of interest and more specifically the extent of directors disclose to the shareholders, extent of directors liabilities, and shareholders ability to institute legal proceedings against directors be it civil and criminal.
“The umbrella concept on this is referred to as protecting investors,” said Mackay. “It may please you to know that the companies Act which established the Commission caused the Protecting Investor indicator for Sierra Leone to be ranked 22/189 countries in world Bank’s doing business Index. Recent amendments proposed and to be enacted before the end of May 2014 would no doubt improve the ranking further.”
She said information on the date and manner in which companies would be re-registered and handbooks made available would be communicated shortly. She said companies shall re-apply to the Commission and submit their old certificates and they would be issued with new certificates with security features. She said the new registration procedure would be computerised for efficient record keeping and easy access. All companies who do not apply for re-registration, she said, would be struck off the register and cannot continue business as a company.
Among the areas of non-compliance she highlighted are lack of notification of change of business address, failure to file notices on change of directors, transfer of shares or increasing share capital without proper approvals, failures to fail annual returns and submit accounts and even failure to follow processes for exiting the market through voluntary winding up.
CAC was established by virtue of the companies Act 2009 primarily to supervise the incorporation and regulation of all companies and regulating their operations on matters relating to their membership and their liabilities, allotment and transfer of shares, debentures and creating of charges, meeting and proceedings of a company, companies accounts records and annual returns, winding up processes of a company among many others.
The Companies Act 2009 has for the first time offered the opportunity to private companies to incorporate one-Man Company and enjoy the status companies’ hold.
“We are therefore expecting a rapid increase in the number of companies to be incorporated and maintained,” said Mackay.
However, a thorough understanding of the legal and regulatory framework within which you operate and being fully aware of your duties and responsibilities to your businesses, counterparts and other stakeholders is crucial to improving corporate governance, said Mackay.
Depending on turnover and membership of a company, it may be classified as small company and therefore subjected to less rigorous compliance requirements all geared towards sustainable growth and development of the business.
“It goes without saying though that the anti- corruption laws and regulations in Sierra Leone coupled with robust institutional operations of the Anti Corruption Commission is critical to corporate governance if it is to carry the adjective ‘good’,” said Mackay.
She added: “As a commission it is our utmost responsibility to ensure shareholders understand the relation that exists between themselves and their directors in so far as corporate governance is concerned,” said Mackay.
She said the Commission’s focus is primarily on these: are companies more so existing and proposed new companies aware of their rights, duties and responsibilities under the companies Act 2009? How do decisions of boards of directors determine a firm’s performance? Do shareholders suffer loss as a result of breach of director’s duties? What is the relationship between governance policies and companies performance? And of course how can the Commission ensure improved Corporate Governance holding ourselves accountable in relation to the performance of our duties to the public as prescribed by law?
Under a definition more specific to the provision of finance, Mackay said corporate governance focuses on how outside investors protect themselves against expropriation by the insiders. This would include minority rights protections and the strengthening of creditor rights, as reflected in corporate laws and their enforcement. A Companies Memorandum and articles of association and related board resolutions are also guiding tools in the decision making process, she said.
“Even if you only have 5 percent shares in a company, you have a right to demand answers to certain questions relating to the operation of the company,” said Mackay.
Friday May 09, 2014

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