The commencement date of the Amendment Act will come into force on 30th Jan 2006.
Amendments will be made to the following e-forms on 30 Jan 2006 to remove references to the authorised capital, share premium and nominal value, if any of these terms appear therein:
The major amendments include :
The new and amended forms will be uploaded into BizFile menu for use by 30th Jan 2006 at 0001hrs.
Companies will not be required to notify ACRA of the particulars of the authorised capital and the par value of the share. The share capital of the company will be referred to as the Issued Capital in BizFile records and reports. The term Paid-up Capital will be still be used to denote the amount paid on issued shares.
There is no longer the concept of authorized capital. A company can issue more shares if the required approval or authourization under the Act has been obtained. No, there is no need for the company to report the increase in authorized capital.
Companies now have the choice of either getting a Court to approve the special resolution to reduce their share capital under Section 78G or proceed by an alternative mode under Section 78B (for private companies).
There are several procedural steps to be taken and it is advisable that companies obtain professional advice. Directors have to provide the solvency statements (if the nature of reduction requires one) and inform the Comptroller of Income Tax and comply with the publicity requirements. Creditors may apply to court to cancel the resolution. If there is no such objection after 6 weeks but no later than 8 weeks after the resolution date, the company can lodge the relevant form with ACRA for the reduction to take effect. Companies are advised to lodge the relevant form and documents within the time stipulated in the Act ; if not, Bizfile will reject their filing for non-compliance with the Act.Companies may note that an Order of Court is no longer required with effect from 30th Jan 06. The company will need:
-to pass a special resolution for capital resolution,
-notify the Comptroller of Income Tax
-to meet solvency requirements
-to meet publicity requirements
For both private and public companies, the notification must be sent within 8 days beginning with the resolution date.
Public companies may refer the Companies (Amendment) Regulations 2006 which will be issued after 30th Jan 06. They may also refer to Practice Direction No 2 of 2006 which is available on ACRAs website .
Currently, companies can only buy back shares out of their distributable profits. With effect from 30th Jan 06, they can buy back shares out of capital as well as or distributable profits.
Yes, the company must be solvent, which means the company must be able to pay its debts in full at the time of payment and as they fall due in the normal course of business during the period of 12 months immediately after. In addition, the value of the company's assets must not be less than that of its liabilities (including contingent liabilities) before and after the buy-back (please see Section 76F(4) of the Companies Act.).
Treasury shares are ordinary shares or stocks purchased or otherwise acquired by a company in accordance with sections 76B to 76G of the Companies Act. These shares can be held by the company or may be sold, transferred or cancelled in accordance with section S76K.
The maximum limit is 10% of total number of shares or 10% of total number of shares of each class.
The e-new form to be filed online is known as Notice of cancellation or disposal which can be located under Local Company Transactions - Changes to Local Company. in BizFile.
The following conditions are as set out in S76(9A):
- the aggregate amount of financial assistance does not exceed 10% of the companys paid up capital and reserves
- company receives fair value
- requisite board resolution is passed
- all the directors are required to make a solvency statement
- notification to the shareholders within 10 days of the prescribed time
- a lodging of the prescribed form Notice to member on giving financial assistance under S76(9A)(g) and the solvency statement within one 10 business days after the notification is given the receiving financial assistance.
The other relevant provision is S76(9B). The conditions mentioned therein include obtaining the requisite board resolution and getting the shareholders to approve the resolution subsequently.
An amalgamation is referring to the merger of 2 or more existing companies to form a new company or to continue as one of the existing companies.
Currently, any amalgamation has to be approved by the Court under S212 of the Companies Act. The amendments to the Companies Act allow voluntary amalgamation without the need for a Court Order.
The main types of amalgamation are:
Long form amalgamation - 2 or more companies amalgamate and continue as one of the existing companies or 2 or more companies amalgamate to form a new company. The amalgamated company can either have a new name, can retain the same name or adopt the name of one of the amalgamating companies. There will be five options to choose from in Bizfile.
Short form amalgamation - amalgamation of holding company and subsidiaries or amalgamation of wholly owned
With the new Amendment Act coming into force on 30th Jan 06, the company may file an application with the Registrar not more than 2 months before the intended amalgamation date if one is specified in the amalgamation proposal. The form Registration of Amalgamation needs to be lodged with:
- an amalgamation proposal
- declarations required under section 215C or 215D, a declaration by the directors with the memorandum of the amalgamating companies
- solvency statements
- other relevant documents