Tim Arnold correctly observes some of the implications
arising from this situation and while ‘walking dead’ is probably an apt
description of those companies, now de-registered, for those that are
continuing to trade, it does conjure up that spectre most directors should be
Are those companies which failed to re-register, and now nullities, and whose assets have been
statutorily expropriated, now running
the risk of carrying on business fraudulently (s.394) or incurring debt while
insolvent (s.396) either of which carries on conviction a fine not exceeding $100,000 or to imprisonment for a term not
exceeding 7 years, or both? Technically one might think so.
Could this predicament have been avoided? One would have
expected that 12 months of adequate public pronouncements should normally have
been sufficient notice to companies to get their collective act together but
clearly it was not. Less complacency and closer progress monitoring by the
Ministry on compliance would have produced better results. By the same token
have the professionals failed their clients?
The Saturday piece referred to a proposed salvation in the
form of an amendment to the Act and that
no doubt would be good news for those worried directors and shareholders.
Part and parcel of such backdoor remedial action would,
however, I imagine , necessitate serious consideration of what to many is an offensive
and potentially dangerous legislative tool namely retroactive application and
the forgiveness of offences and one wonders whether there is even an appetite
for this because how could those be circumscribed and contained?
There is perhaps another angle to this. The question is does
the Companies Act 2017, by unilaterally purporting to compulsorily confiscate
the property of delinquent companies, contravene the Constitution and because
the Companies Act was not passed in conformity with Article 41 is it ultra
vires the Constitution?
The lawyers should, in my view, be first addressing this
question before embarking on any amendment because if such an argument can be
sustained some other issues come into play and amending legislation might be a
complete waste of time.
Some years ago, I exchanged some notes with Tim on the
dichotomy existing between Articles 39(4) and Articles 41 (1) of our
Constitution and those could well be relevant here.
If indeed the constitutionality of the Companies Act can be
challenged then the points Tim and I were to engage become very relevant.
One would then need to consider does Article 39(4) allow the
severance only of the offensive provisions of the Companies Act or, does
Article 41(1) deem the entire Act not to have been properly passed and
consequently is itself a nullity?