Monday, 8 December 2014 00:00
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Review by Dr. Wickrema Weerasooria
Last Thursday, 4 December, I was privileged to speak at the launch of the new book on Company Law authored by the well-known President’s Counsel K. Kanag-Isvaran and Dilshani Wijayawardana.
The launch was witnessed by a very distinguished gathering. Led by Chief Justice Mohan Peiris P.C., there was a galaxy of legal practitioners and legal academics and the big wigs of the country’s corporate sector.
As a person interested in Company Law, I am aware that this text is the fourth to enter the country’s legal literature on the subject since the new Companies Act No. 7 of 2007 was enacted. The other three well-known texts are by Dr. Harsha Cabral P.C., Kandiah Neelakandan and Dr. Aritha Wikramanayake.
What is unique in the latest entrant is its lead author – Kanag-Isvaran. He calls the text “a labour of love”. He and the co-author spent seven years writing it having commenced in August 2007 a few months after the new legislation was enacted in Parliament and became operative.
Kanag-Isvaran was appointed as the Chairman of The Advisory Commission on Company Law in 1994 and continued in that position until 2007 (other than for a brief period between 2002-2003). In September 1995 this Advisory Commission which consisted also of other leading lawyers, many of them President’s Counsel, issued a “Consultation Draft” identifying ten main topics for reform and these ten Position Papers became the foundation for the new law on companies which was ultimately enacted in May 2007 as the Companies Act No. 7 of 2007.
This reviewer is aware that Kanag-Isvaran was invited by Minister Jeyaraj Fernandopulle to be seated in the Officials Box in Parliament when the Bill was tabled and debated in Parliament. Many tributes were paid by the Minister when introducing the Company Bill to Parliament acknowledging the contributions – all voluntary – made by Kanag-Isvaran and the other members of the Advisory Commission and these tributes are recorded for posterity in the Hansard.
Dr. Harsha Cabral P.C. (who as I said earlier has also contributed excellent texts on Company Law) refers to Kanag-Isvaran as his “guru” and mentor. Dr. Cabral states (and I quote) that he “owes a deep debt of gratitude to my guru Mr. Kanag-Isvaran P.C. who initiated me to Company Law.”
With an author of this background, experience and calibre, this book must be good. It is. Rather than describe it as a book or text, I would go further and call it a definitive Treatise on Company Law of Sri Lanka. It is also a hefty treatise running to nearly 1,000 pages with 80 chapters. Its very clear and lucid statement and enunciation of legal principles can be referred to and quoted by legal practitioners and judges. It will also be useful as reference in the board rooms of our big corporates. It will stand the test of time subject of course, like all things legal, to developments through case law and amending legislation.
To the non-lawyer, Company Law has mind boggling concepts and terms. To cite some of them, there are terms such as limited liability company, private company, public company, listed company, guarantee company, off-shore company, overseas company. If that is not enough there are terms such as solvency tests, major transactions, fraudulent preferences, derivative actions, floating charges, crystallization, minority buy-outs, veil of incorporation, takeovers, mergers, amalgamations, injunctions, enjoining orders, restraining orders, stay orders. All these topics are covered in this treatise.
It also noteworthy that the new Companies Act of 2007 is perhaps the longest statute enacted by our Parliament containing 534 Sections and 13 Schedules. It has, to a large extent, departed from the English or Anglophone law and is primarily based on the New Zealand Companies Act of 1993. It has also drawn from the Canadian Business Corporations Act of 1985.
Some of the highlights of the new legislation which are also covered in this treatise are:
Companies are not required to state “principal objects”.
The ultra vires rule is abolished, insofar as third parties are concerned.
Introduction of single shareholder companies.
Private companies prohibited from issuing shares/securities to the public.
Abolition of the par value of shares and the introduction of the stated capital regime.
Provision for financial assistance by a company for the acquisition of its own shares.
Provision for minority buy-outs.
Special provision dealing with directors and company secretaries.
Codification of the present law relating to the duties of directors with a view to added clarity.
Establishment of a Companies’ Disputes Board for settlement of disputes by mediation.
Abolition of People’s Companies and
Giving statutory recognition to derivative actions.
Before I conclude, I must pay a well-deserved tribute to the co-author of this new text – Dilshani Wijayawardana. Dilshani had an excellent track record at Sri Lanka’s Law College, winning a Mahapola Scholarship. Later she obtained a Masters Degree in Commercial law from Cambridge University. Today she is one of the senior lawyers in Kanag-Isvaran’s Chambers and Kanag-Isvaran has indicated in this text that without Dilshani as its co-author, this publication would never have been completed. She was also responsible for the excellent Table of Cases and Index. Very few modern legal texts, even those published in England, can boast of the Table of Cases and Index of this text.
For those involved in companies, this is a “must buy” book. Both authors deserve our congratulations.
[Available at Institute for the Development of Commercial Law and Practice (ICLP), No. 53/1, Ananada Coomaraswamy Mawatha, Colombo 07. Telephone 011-2574146; 0775 375998; Inquires: 0777 306896, 0777 354951 and at [email protected]).]
