3 Important Amendments to the Companies Act 2016
The Companies (Amendment) Bill 2019 was passed on 10 July 2019. Upon receiving royal assent, the law will be gazetted and become law on the appointed date. This is the first amendment made to the Companies Act 2016 ever since it came into operation early 2017. The main amendments cover the following:
1. Execution of documents (Section 66)
Currently, executing a document is to be by way of affixing common seal or obtaining signature of at least 2 authorised officers (one of whom must be a director). This is impractical if interpreted to apply to all documents relevant to the running of a business in the ordinary course.
The Bill clarifies that the above method only applies if written law, resolution, agreement or constitution requires that documents be executed in that specific manner. Subject to this qualification, any contracts, letters and other documents may now also be executed by a non-director employee if authorised to do so.
2. Redemption of preference shares (Section 72)
Preference shares may now be redeemed out of capital, aside from redeeming out of profits and through fresh issue of shares. The Bill clarifies that only shares redeemed out of profits would require a company to transfer an equivalent amount from its profits into the share capital account (transfer requirement). This means that redemption of preference shares out of capital does not need to satisfy the transfer requirement but only the solvency statement obligation.
3. Tabling of appointment and remuneration of auditors in AGM of public company (Section 304)
The appointment and fixing of remuneration of auditors must be one of the matters to be tabled at the AGM of a public company.