What legislation governs the operation of companies?
On 15 April 1997, the Republic of Trinidad & Tobago brought into force the Companies Act, 1995 (as amended by the Companies Amendment Act, 1997) (the ‘Companies Act’). This replaced legislation that was 58-years-old and deficient in a modern commercial environment. The Companies Act is one significant step in the Government’s comprehensive overhaul of the legal and regulatory framework for doing business in Trinidad & Tobago, which is intended to increase its attractiveness as a center of business activity in the Caribbean and Latin America. The Companies Act provides a modern legal framework for the operations of companies in Trinidad & Tobago. It is based primarily on the Canadian model but has been adapted to meet local conditions. There have been a number of recommendations made by the Law Association of Trinidad and Tobago with respect to amendments to the Companies Act, but these have not been placed on the legislative agenda to date.
How important is the Companies Act?
Clearly the Companies Act has had a significant impact on the way in which business is conducted in this country. Because Trinidad & Tobago is the most industrialised nation in the Caribbean and has significant hydrocarbon resources, particularly natural gas, the Companies Act has implications not only for the domestic commercial community but also for a significant body of international investors who have commercial interests in the Caribbean region. Some of the ways in which the Companies Act impacts on business practices and opportunities in Trinidad & Tobago include the following:
- the introduction of a number of practical provisions which allow greater flexibility to pursue commercial objectives, including:
- the introduction of “one man companies”;
- the abolition of the ultra vires rule;
- the simplification of the capital structure with the abolition of “par value” shares; and
- the introduction of “amalgamations” as a tool which can facilitate restructuring, mergers and tax planning;
- the extension and re-enforcement of directors’ duties and liabilities; and
- the shifting of the balance of power between controllers of companies and minority shareholders to significantly favor the interests of minorities.
It is not surprising, therefore, that the Companies Act has provoked considerable interest and discussion among local and foreign investors alike. Indeed, in some ways, one of the most significant effects of the Companies Act has been to focus the attention of the business community on issues relating to company law and its impact on their conduct of business in Trinidad & Tobago.