PNG’S LEGAL SYSTEM AND LAWS FOR FOREIGN INVESTORS
> a company has perpetual existence (unless it is wound up); and > a company may raise money by issuing additional securities. The principal disadvantages of conducting business through a company are: > a company is subject to a number of disclosure, reporting and record-keeping requirements > a formal procedure must be complied with to incorporate and to wind up a company; and > dividends are taxed once as company income and again as shareholders’ income. foreign company seeking to conduct business in PNG has the A choice of either: > incorporating a subsidiary in PNG; or > registering itself as a foreign company in PNG. Incorporation A company can have one shareholder and one director. It is not necessary to have a secretary as one person can now be responsible. The name of the company must end with the word ‘Limited’ or ‘Ltd’. The steps involved in incorporating a company in PNG are: > reserve the proposed company name on a prescibed form with the Registrar of Companies. It should be noted that the reservation of the proposed company name can be registered simultaneously with the application to register a company. An application can be unsuccessful if the name is likely to be confusing with a similar name which has already been registered. > an application must be made to the Registrar of Companies on the prescribed forms, signed by each applicant. The application must also state:
• the number of proposed directors
• the number of proposed secretaries (if any)
• the number of proposed shareholders; and
• the proposed address for service.
> The following must also accompany the application in prescribed forms:
• Each director’s consent to act
• E ach shareholder’s consent to being a shareholder and the number and class of shares taken
• E ach secretary’s consent to being the secretary (if applicable)
• R eservation of the name (if the proposed name of the company was not previously reserved.
Constitution A Constitution is the rules governing the company, the directors and shareholders in the company and their relationship with each other. It may cover such matters as the
36
rights, duties and powers and obligations of the company, directors and shareholders. The aim was to dispense with the bulky documents like the Memorandum and Article of Association. Any change or alteration to the Constitution, directors or person authorised to accept services, or the place of business, must be notified to the Registrar within one month of the change or alteration. It is common to purchase ‘shelf’ companies from local firms of lawyers, accountants or others. Such companies have never traded and have been incorporated to enable persons to commence business with a minimum of delay. Shelf companies can generally be obtained within 48 hours. Company Officers Under the Act, a company may or may not have a secretary. If it does have a secretary, that secretary must be a natural person ordinarily resident in PNG and shall have the rights, powers and duties given to him by the Act, Constitution or the Board of the company. Every company must have at least one director who is ordinarily a resident of PNG. Any company secretary must also be ordinarily a resident of PNG. Registered Office Every company must have a registered office in the country that is identifiable and easily accessible to the public. The registered office address must be notified to the Registrar. If a company wishes to change its registered office, the change and the date of change must be notified to the Registrar on the prescribed form within one month of the change. Address for Service Every company must have an address for service in the country. This may be the same address as a company’s registered office or it may be elsewhere, but it must not be a postal address. The address for service must have a readily identifiable street address and be at a place that is readily accessible during normal business hours. A company’s address for service must be notified to the Registrar on the prescribed form lodged on application. If a company wishes to change its address for service, the change must be notified to the Registrar on the prescribed form within one month of the change. Reporting Requirements An annual return must be lodged every year with the Registrar of Companies within six months of the end of its financial year. All companies are required to lodge an annual return on a prescribed form with the Registrar within 14 days of the annual general meeting being held together with a prescribed fee of K50.00. The annual return must be made up to the date no later than 14 days of the date of the annual meeting.
THE PNG INVESTORS’ MANUAL - SECOND EDITION