Company law in Fiji will change significantly during 2013 with the introduction and commencement of an entire new body of law. The new legislation completely replaces the old regime and adopts significant reforms which may, among other things, make it easier for foreign investors to set up companies in Fiji.
The following new pieces of legislation are expected to commence in Fiji during 2013:
- Companies Decree 2012
- Companies Decree Regulations 2012
- Companies (Winding Up) Rules 2012
(the New Companies Law).
The following legislation will be repealed by the New Companies Law:
- Companies Act (Cap. 247) (including regulations and winding up rules) (Existing Act)
- Capital Markets Decree 2009
- Unit Trusts Act (Cap. 228)
- Registration of Business Names Act (Cap. 249).
Types of Companies
The New Companies Law allows for the registration of:
- Private companies (and distinguishes between small and large private companies);
- Public companies; and
- Unlimited liability companies.
A private company is a small private company if the consolidated revenue for the financial year of the company and the entities it controls (if any) is less than FJD1 million. A private company is a large private company if it doesn’t satisfy the test for small private companies.
Small private companies have reduced obligations with respect to the disclosure of financial information to shareholders, appointing auditors and lodging financial statements. All private companies must have “Pte Limited” or “Pte Ltd” at the end of the name (note: these words are completely interchangeable).
A public company must have “Limited” or “Ltd” at the end of its name (note: these words are completely interchangeable).
Companies can’t use the word “Fiji” in any part of its company name except in brackets at the end of the name.
An unlimited liability company must have “An Unlimited Liability Company” at the end of its name.
The two shareholder rule has been the bane of many international companies with Fiji subsidiaries for a long time now. The good news is that this rule has been abolished by the New Companies Law. The New Companies Law provides that all companies (both public and private) must have at least one member.
A company incorporated under the New Companies Law isn’t required to have a memorandum of association, but it must adopt articles of association. Schedule 2 of the New Companies Law sets out the standard articles of association; however, companies may adopt different articles if they prefer.
Companies are no longer required to have a common seal.
The New Companies Law abolishes the concept of “authorised share capital” and shares in a company no longer have a par value.
Officers of the Company
A public company must have:
- at least three directors, two of which must ordinarily reside in Fiji;
- at least one company secretary, and at least one company secretary must ordinarily reside in Fiji.
A private company:
- must have at least one director and at least one director must ordinarily reside in Fiji;
- isn’t required to have a company secretary, but if it does have one or more, at least one company secretary must ordinarily reside in Fiji.
The Existing Act didn’t impose any significant duties on directors and officers (other than duties of disclosure). The New Companies Law now contains the following duties which apply to directors and officers:
- duty to act within powers;
- duty to promote the success of the company;
- duty to exercise independent judgment;
- duty to exercise reasonable care, skill and diligence;
- duty to avoid conflicts of interest;
- duty not to accept benefits from third parties; and
- duty to declare interest in proposed transaction or arrangement.
The last two duties listed above don’t apply to sole director/sole member companies.
The relevant regulators are the Reserve Bank of Fiji (RBF) and the Registrar of Companies (Registrar). The Ministry of Justice also has a small role in the registration of liquidators and auditors.
The RBF is responsible for administration of the following parts of the New Companies Law:
- regulation of securities exchanges and central depository;
- regulation of securities industry licences;
- transactions involving listed securities;
- capital raisings;
- managed investment schemes;
- insider trading;
- offences (in conjunction with the Registrar); and
- investigations and information-gathering (in conjunction with the Registrar).
The Registrar is responsible for administering the remainder of the New Companies Law as well as offences, investigation and information-gathering in conjunction with the Reserve Bank
There are no requirements under the New Companies Law for companies to re-register. Instead, companies that are registered under the Existing Law will be deemed to have been registered under the New Companies Law.
The transitional provisions in the Companies Decree allow a period of three years for a private company to start using the new company name extension; however, they’re not required to change their company name with the Registrar.
Similarly, companies aren’t required to amend or submit new articles of association. Instead, the articles of association of that company will continue. However, those provisions that provide for the issue of, or refer to, Bearer Shares, Bearer Stock or Share Warrants will be null and void as at the commencement date of the New Companies Law.
How will it affect you?
If you’re currently operating a company in Fiji, you’ll need to be aware of the changes to the Companies Law and the transitional provisions to ensure compliance with the new law.
If you’re a foreign investor looking to set up a company in Fiji, now’s a better time than ever, given the New Companies Law is more flexible than the old regime.
Also, check out our article on the changes that occurred in Fiji as a result of the 2013 Budget aimed at encouraging foreign investment in Fiji.