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Jamaica: Amended Companies Law Requires Transparency

(May 30, 2017) On May 17, 2017, the Jamaican House of Representatives reportedly passed the Companies (Amendment) Act, 2017. (An Act to Amend the Companies Law (Amendment Act), 2017, Jamaica House of Parliament website; Companies Act, Act 10 of 2004 (the Act), Organization of American States website; see also Increased Transparency Provisions in Amended Companies Law, GLEANER (May 22, 2017).)

A significant change introduced by the Amendment Act, according to reports, is the expansion of the disclosure requirements previously applicable to members of the company to “beneficial owners.” (Amendment Act § 8, amending § 109 of the Act.)

According to the Act:

The following persons are members of a company and shall be entered as members on its register of members-

(a) persons who subscribe to the company’s articles whose names shall, on the registration of the company, be entered in the company’s register;

(b) the personal representatives of a deceased member and the trustee in bankruptcy of a bankrupt member;

(c) persons named as a principal account holder or subsidiary account holder, as the case may be, during any period in respect of which eligible securities carrying voting rights are entered against their names in the register of the licensed central securities depository for that company’s shares.

(2) Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company. (Act § 23(1).)

The Amendment Act imposes specific disclosure requirements on beneficial owners. (Amendment Act § 8, amending § 109 of the Act.)

A beneficial owner is defined as either an individual on whose behalf the shares are held or on whose behalf a share transaction is conducted. The term also includes an individual who exercises ultimate ownership or effective control over the company’s policy or decisions or who controls more than 51% of the voting power or holds over 51% of the issued shares of the company. (Amendment Act § 3, amending § 2 of the Act.)

According to the Minister of Industry, Commerce, Agriculture, and Fisheries, Karl Samuda, Jamaica had previously suffered due to the “ hidden hand that controls the management and has control over the operation of the company but not visibly so. [The Amendment Law]… will ensure that those beneficial owners are part of the public record so that they can be viewed and assessed.” (Increased Transparency Provisions in Amended Companies Law, supra.)

Additional changes introduced by the Amendment Law include the a duty to avoid conflict of interest by a company director, except when there is only one director and one shareholder who are the same person. (Amendment Act § 13, adding § 174A to the Act.)

The Amendment Act also requires any company that is incorporated outside of Jamaica but which has established a place of business in Jamaica to keep in Jamaica a register of its members (“overseas branch register”). (Amendment Act § 22, adding § 363A to the Act.)