The Companies Act 1997 replaced the old Companies Act and brought Papua New Guinea into line with the modern New Zealand model. It runs to 457 sections and five Schedules.
The structure of the Act
| Part | Subject |
|---|---|
| I | Preliminary — definitions, the solvency test, holding companies and subsidiaries, public notice |
| II | Incorporation — essential requirements, the application, the certificate, separate legal personality |
| III | Capacity, powers and validity of actions — and dealings with outsiders |
| IV | Company names — reservation, requirements, change, direction to change, use of the name |
| V | The constitution — whether one is needed, its form and contents, its effect, and how it is altered |
| VI | Shares — attributes, issue, distributions, buy-backs, redemption, financial assistance, cross-holdings, transfer, the share register, certificates |
| VII | Shareholders — liability, powers, minority buy-out rights, interest groups, meetings |
| VIII | Directors — powers of management, duties, self-interested transactions, appointment and removal |
| IX | Enforcement — injunctions, derivative actions, personal actions, ratification |
| X | Administration — contracting, pre-incorporation contracts, registered office, records, address for service, secretary |
| XI | Financial reporting, accounting records and audit |
| XII | Disclosure by companies — the annual report, the annual return, inspection of records |
| XIII | Registration of charges |
| XIV | Amalgamations |
| XV | Compromises with creditors |
| XVI | Court approval of arrangements, amalgamations and compromises |
| XVII | Receiverships |
| XVIII | Liquidations — ten Divisions, including voidable transactions and creditors’ claims |
| XIX | Removal from the register, and restoration |
| XX | Overseas companies |
| XXI | The Registrar of Companies — the register, inspection and investigation, appeals |
| XXII | Offences and penalties — including disqualification and phoenix companies |
| XXIII | Miscellaneous — service of documents, privileged communications, regulations, repeals |
| XXIV | Transitional provisions for companies existing before the Act |
The definitions that do the most work
- “Solvency test” (s 4) — a company satisfies it where it can pay its debts as they become due in the ordinary course of business and the value of its assets is greater than the value of its liabilities, including contingent liabilities. This is the gateway to distributions, buy-backs, redemptions, financial assistance and amalgamations.
- “Subsidiary” (ss 5–7) — control of the board, more than half the votes, more than half the issued shares, or more than half of every dividend.
- “Director” (s 107) — wider than the people formally appointed; it reaches those on whose instructions the board is accustomed to act.
- “Shareholder” (s 78) — the person entered on the share register, with the specific extensions there set out.
- “Major transaction” (s 110) — assets or liabilities worth more than half the value of the company’s assets, needing a special resolution.
- “Public notice” (s 3) — publication in at least one issue of the National Gazette and a newspaper circulating throughout the country.
The Act warns that interpretation provisions are scattered: “interpretation provisions relevant to a particular Part or a Division may be found at the beginning of that Part or Division”, and “some sections also contain their own interpretation provisions, not necessarily at the beginning”. Sections 141, 171, 249, 254, 290 and 429B are all local definition sections.
Who the Act binds
This Act binds the State.
In relation to banks and financial institutions within the meaning of the Central Banking Act 2000, this Act shall be read subject to that Act and the Banks and Financial Institutions Act 2000.
Section 12 is to the same effect from the other direction: any person may apply for registration of a company, despite anything to the contrary in any other Act.
Legislation that sits alongside it
- Investment Promotion Act 1992 — a foreign enterprise must be certified before carrying on business here.
- Securities Act 1997, Capital Market Act 2015 and Securities Commission Act 2015 — public offers and listed companies.
- Personal Property Security Act 2011 — security interests in personal property, alongside Part XIII charges.
- Insolvency Act (Chapter 253) — personal insolvency, where the Companies Act deals with companies.
- Criminal Code Act (Chapter 262) — fraud and dishonesty offences beyond Part XXII.
- Business Names Act (Chapter 145) — trading names, which are not companies.
Sources
- Companies Act 1997 — ss 3–12, 78, 107, 110, 141, 171, 249, 254, 290, 429B; Parts I to XXIV
- Central Banking Act 2000
- Banks and Financial Institutions Act 2000
- Insolvency Act (Chapter 253)
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.