Section 28 of the Investment Promotion Act 1992 governs the application for a certificate under Part IV.
Section 28(2) and (3) — what an application must contain
(a) be in the prescribed form; and
(b) contain the prescribed particulars; and
(c) be accompanied by such documents as the Authority may require; and
(d) be accompanied by the prescribed fee.
A foreign enterprise applying under subsection (1) shall provide to the Authority a copy of any agreement or other document relating to the management or proposed management of the foreign enterprise.
Management agreements are how control is often held. Because the definitions of citizen and national enterprise turn on control exercisable in law, by agreement, or in practice, the Authority needs the management documents to determine whether an applicant, or a company it deals with, is really what it says it is.
The obligation is unqualified: any agreement or other document relating to management or proposed management.
What the application should address
The Authority must review the merits of the application against four matters. A well-prepared application addresses each of them directly:
- Correctness — every statement must be verifiable, because section 28(4)(a) requires the Authority to verify it and section 28(4A)(a) makes an incorrect or misleading application a ground of refusal.
- The purposes of the Act — explain which of the nine benefits in section 1(e) the activity will deliver: economic growth, employment, use of domestic resources, skills acquisition, exports, remote area development, citizen ownership, or import replacement.
- Ability to finance, establish and operate — evidence of funding, experience and capacity.
- The merits of the applicant and its people — the Authority reviews every proposed owner, officer, partner or associate.
Describing the activity
Section 29(2) requires the certificate to state the nature of the activity and the location where the foreign enterprise is to carry on business.
Operating outside the certified activity has two consequences:
- It is a failure to comply with the terms of the certificate — section 41(1)(e), K100,000 plus K10,000 a day — and a ground of cancellation or suspension under section 36(1)(a)(ii);
- Contracts whose subject matter relates to business activities outside the nature of the certified activities may be declared unlawful and void under section 41A.
Two things reduce that risk. Section 3 defines activity to include all antecedent and incidental business activities reasonably required to carry on the certified activity. And section 33 allows an application to vary the certificate.
Describe the activity by reference to the ISIC classification, broadly enough to cover the intended business, and vary the certificate before expanding into something new.
Section 28(5) and (6) — the decision period
Written notice of the grant or refusal of an application shall be given to the applicant within 35 working days of the making of a complete and correct application.
Where an application is refused, or a certificate is granted in terms other than those applied for, the notice shall state the grounds.
“Complete and correct”. The clock runs from a complete and correct application. An incomplete one does not start it, which is a reason to file everything at once.
Working days, not calendar days.
Failure to decide is appellable. Section 40(1)(e) gives an appeal to the Minister where an applicant has not received written notice of the grant or refusal — so silence is not an answer.
The duty to state grounds under subsection (6) is what makes an appeal workable, and is also the material for judicial review.
Sections 28(7) to (9) — the deposit
Prior to the issue of a certificate, the Authority may require an applicant to deposit in a bank in the country, in Papua New Guinea currency, the prescribed amount.
(8) The Minister may, on the recommendation of the Authority, grant an exemption from all or part of the requirement, in respect of an application or a class of applications.
(9) An amount deposited is to be utilised for the purposes of the activity for which the enterprise is certified.
The deposit is not a fee or a bond payable to the State. It is the applicant’s own money, held in a local bank in kina, and applied to the certified activity — a demonstration that the enterprise has the resources it claims, answering the section 28(4)(c) criterion.
Section 28(2A) — the continuing duty
Subject to section 32, where there is an alteration in any of the circumstances supplied under subsection (2), the enterprise shall notify the Authority in writing within one month of the alteration.
That covers anything stated in the application: directors, officers, address, shareholders, management arrangements, the nature of operations.
Failure to notify is a contravention of the Act, attracting the section 41B general penalty — a fine up to K25,000 or imprisonment up to two years, or both, plus a default penalty of K2,500 a day.
Where the alteration is a change of ownership of the kind described in section 32, the obligation is more onerous still: a fresh application within 14 days.
Sources
- Investment Promotion Act 1992 — ss 1, 3, 28, 29, 32, 33, 36, 40, 41, 41A, 41B
- Companies Act 1997
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.