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Companies Act 2009

SOLOMON ISLANDS

COMPANIES ACT 2009
(No. 1 of 2009)

PASSED by the National Parliament this 18th day of March 2009.
(This printed impression has been carefully compared by me with the Bill passed by Parliament and found by me to be a true copy of the Bill)

Taeasi Sanga (Mrs)
Clerk to National Parliament

ASSENTED to in Her Majesty's name and on her Majesty's behalf this 2nd day of March 2009.

Sir Nathaniel Rahumaea Waena
Governor General

Date of Commencement: (See section 2)

AN ACT TO PROVIDE FOR THE FORMATION AND GOVERNANCE OF PRIVATE, PUBLIC AND COMMUNITY COMPANIES, AND TO REPEAL THE COMPANIES ACT (CAP. 175), AND FOR RELATED MATTERS

ENACTED by the National Parliament of Solomon Islands.

ARRANGEMENT OF SECTIONS

PART 1 – PRELIMINARY PROVISIONS

1. Short title
2. Commencement
3. Interpretation
4. Purposes of each Part
5. Act binds the Crown

PART 2 – INCORPORATING NEW COMPANIES

Division 1 – Method of Incorporation

6. Application for registration
7. Certificate of incorporation
8. Effect of incorporation
9. Registration as private company, public company or community company

Division 2 – Names

10. Name of company
11. Change of name
12. Direction to change name
13. Use of company name

Division 3 – Company Rules

14. Adoption and alteration of rules
15. Model rules
16. Contents and effect of rules

Division 4 – Registered Office and Postal Address

17. Registered office and postal address
18. Change of registered office and postal address

PART 3 –SHARES

Division 1 – General

19. Legal nature of shares
20. No nominal value
21. Minimum number of shares
22. Rights and powers attached to shares
23. Shares must not impose liabilities on holder

Division 2 – Issue of Shares

24. Issue of initial shares
25. Issue of other shares
26. Time of issue of shares

Division 3 – Distributions – General

27. Distributions prohibited unless solvency test satisfied
28. Recovery of improper distributions

Division 4 – Dividends

29. Dividends

Division 5 – Acquisition of Own Shares

30. Company may acquire its own shares
31. Cancellation of shares acquired by company
32. Enforcement of contract to repurchase shares

Division 6 – Redeemable Shares

33. Redeemable shares
34. Redemption of redeemable shares

Division 7 – Assistance by Company in Purchase of its Own Shares

35. Financial assistance

Division 8 – Cross-holdings

36. Cross-holdings

Division 9 – Transfer of Shares

37. Transfer of shares
38. Transfer of shares by operation of law

Division 10 –Share Register

39. Company to maintain share register
40. Share register as evidence of legal title
41. Power of court to rectify share register
42. Trusts not to be entered on register
43. Registration of personal representative or assignee of bankrupt

Division 11 – Share Certificates

44. Share certificates

PART 4 – SHAREHOLDERS

Division 1 – General

45. Every company must have at least 1 shareholder
46. Liability of shareholders
47. Decisions that must be made by shareholders
48. Decisions that may be made by shareholders
49. Shareholder approval of major transactions
50. Unanimous shareholder approval
51. Shareholder written resolutions
52. Shareholder meetings

Division 2 – Alteration of Shareholder Rights

53. Alteration of shareholder rights
54. Repurchase of dissenter's shares

Division 3 – Disclosure to Shareholders

55. Annual report to shareholders
56. Inspection of company records by shareholders
57. Request for information held by company
58. Company must provide requested information
59. Reasons for refusing information
60. Shareholder may withdraw request
61. Court may order company to provide requested information
62. Investigation at request of shareholder

PART 5 –DIRECTORS

Division 1 – Powers and Duties

63. Management of company
64. Fundamental duties of directors
65. Duty of directors to comply with Act
66. Duty of directors to comply with rules
67. Interest of director in company transactions
68. Use and disclosure of company information
69. Standard of care of directors
70. Obligations of directors in connection with insolvency
71. Effect of unanimous shareholder approval on certain duties of directors

Division 2 – Liabilities

72. Persons deemed to be directors for liability purposes
73. Certain indemnities prohibited
74. Company may indemnify or insure directors
75. Defences for directors

Division 3 – Prohibition and Disqualification of Directors

76. Persons prohibited from managing companies
77. Court may disqualify directors
78. Persons entitled to apply for order under section 77
79. Notice of application for order under section 77
80. Application of section 81
81. Liability for contravening section 76 or 77

Division 4 – Office of Director

82. Qualifications of directors
83. Appointment of directors
84. Director ceasing to hold office
85. Notice of change of directors
86. Remuneration of directors
87. Proceedings of directors

PART 6 –ENFORCEMENT

Division 1 – Injunctions

88. Injunctions to require compliance with Act and rules

Division 2 – Derivative Actions

89. Leave to bring proceedings
90. Who may apply for leave to bring proceedings
91. Matters that court must consider
92. When leave may be granted
93. Procedural matters
94. Powers of Court
95. Costs of derivative action to be met by company

Division 3 – Personal Actions by Shareholders

96. Personal actions by shareholders against company
97. Personal actions by shareholders against directors
98. Representative actions

Division 4 – Prejudiced Shareholders

99. Prejudiced shareholders
100. Certain conduct deemed prejudicial
101. Alteration to rules by Court

Division 5 – Certain Applications

102. Effect of arbitration clause in rules

PART 7 – ADMINISTRATION OF COMPANIES

Division 1 – Dealings with Third Parties

103. Authority to bind company
104. Attorneys
105. Validity of dealings with third parties
106. Assumptions that may be made by third parties
107. Transactions in which directors are interested
108. Transactions entered into by directors in breach of certain duties
109. Effect on third parties
110. Pre-incorporation contracts may be ratified
111. Warranties implied in pre-incorporation contracts
112. Failure to ratify

Division 2 – Company Records

113. Company records
114. Form of records
115. Inspection of records by directors
116. Inspection of records by shareholders
117. Inspection of records by public
118. Manner of inspection

Division 3 – Documents to be sent to Registrar and Shareholders

119. Annual returns
120. Registrar may send annual return form to company
121. Special annual return
122. Annual report to shareholders
123. Other documents to be sent to shareholders

Division 4 – Accounting and Audit

124. Accounting records to be kept
125. Financial statements to be prepared
126. Application
127. Appointment of auditor
128. When auditor ceases to hold office
129. Court may appoint auditor on request of shareholder
130. Qualifications of auditor
131. Statement by auditor in relation to resignation or removal
132. Auditor to avoid conflict of interest
133. Auditor's report
134. Access to information
135 auditor's attendance at shareholders' meeting

PART 8 – AMALGAMATIONS

136. Amalgamations

PART 9 – OFFERS OF SECURITIES TO THE PUBLIC

137. Meaning of advertisement
138. Misleading or deceptive conduct generally

PART 10 – REMOVAL OF COMPANIES FROM REGISTER

Division 1 – Removal

139. Removal from register
140. Grounds for removal from register
141. Request for company to be removed from register
142. Requirements to be met before company must be removed from register

Division 2 – Notices

143. Notice of intention to remove

Division 3 – Objections

144. Objection to removal from Solomon Islands register
145. Powers of court

Division 4 – Effect of Removal from Register

146. Property of company removed from register
147. Disclaimer of property by crown
148. Effect of disclaimer
149. Liability of directors, shareholders, and others to continue

Division 5 - Restoration of Removed Company to Solomon Islands Register

150. Restoration of removed company to Solomon Islands register
151. Restoration to register
152. Vesting of property in company on restoration to register

PART 11 – OVERSEAS COMPANIES

153. Meaning of carrying on business
154. Name must comply with section 10
155. Overseas companies to register under this Act
156. Validity of transactions not affected
157. Application for registration
158. Registration of overseas company
159. Use of name by overseas company
160. Further information to be provided by overseas company
161. Annual return of overseas company
162. Overseas company ceasing to carry on business in Solomon Islands
163. Attorneys of overseas companies
164. Exemption from requirements of this part

PART 12 – COMMUNITY COMPANIES

165. Incorporation of a community company
166. Meaning of community interest
167. Restrictions on distributions, dividends and loans
168. Asset- lock and use of assets of a community company
169. Community company reports

PART 13 – REGISTRAR OF COMPANIES

Division 1 – Registrar

170. Registrar
171. Deputy registrars
172. Transitional
173. Notices: general
174. Notices to individuals
175. Admissibility of notices given by registrar
176. Registrar may require information and copies of documents
177. Registrar may amend registers
178. Registrar's powers of inspection
179. Registrar not to be obstructed
180. Certain acts not affected by registrar's power of inspection
181. Disclosure of information and reports
182. Information and report to be given to registrar
183. Restrictions on disclosing information
184. Inspector's report admissible in liquidation proceedings
185. Appeals
186. Exercise of inspection power not affected by appeal
187. Destruction and admissibility of registrar's documents

Division 2 – Register kept by Registrar

188. Register
189. Inspection of register
190. Certified copies
191. Registration of documents
192. Rejection of documents
193. When document registered
194. No presumption of validity or invalidity

PART 14 – MISCELLANEOUS

Division 1 – Offences

195. Proceedings for offences
196. False statements on documents
197. Fraudulent use or destruction of company property
198. Falsification of records
199. Carrying on business fraudulently

Division 2 – Privileged Communications and Service of Documents

200. Privileged communications
201. Service of documents on companies in legal proceedings
202. Service of other documents on companies
203. Service of documents on overseas companies in legal proceedings
204. Service of other documents on overseas companies
205. Service of documents on shareholders and creditors
206. Additional provisions relating to service

Division 3 – Regulation-Making Powers

207. Regulations
208. Value of penalty units

Division 4 – Repeals, amendments and Transitional Provisions

209. Repeals and revocations
210. Transitional
211. Consequential amendments

Schedule 1 – Interpretation
Schedule 2 – Model rules for private company
Schedule 3 – Model rules for single shareholder company
Schedule 4 – Model rules for public companies
Schedule 5 – Model rules for community company
Schedule 6 – Minority buy-out procedure
Schedule 7 – Amalgamations

______________________________

COMPANIES ACT 2009

PART 1—PRELIMINARY PROVISIONS

Short title

1. This Act may be cited as the Companies Act 2009.

Commencement

2. This Act commences on a date appointed by the Minister by notice published in the Gazette.

Interpretation

3. Definitions and other interpretation provisions that apply to this Act are set out in Schedule 1.

Purposes of each Part

4. The purposes of each Part of this Act are —

(a) Part 1 deals with preliminary matters setting out the title of this Act and words defined for the purpose of this Act, including its application to the Crown;

(b) Part 2 deals with incorporating new companies, including provisions concerning changes to company names, company rules, and changes to the registered office and postal address of companies. Schedules 2 to 5 contain model rules applicable to each category of companies;

(c) Part 3 deals with shares, the legal nature and rights attached to them, including their issuance, dividends, acquisition, redemption, transfer and registration;

(d) Part 4 deals with shareholders and their legal relationship with the company and directors, including the procedure for the minority buy-out procedure set out in Schedule 6;

(e) Part 5 deals with the powers, duties, and liabilities of directors;

(f) Part 6 deals with enforcement;

(g) Part 7 deals with company administration. Division 1 sets out dealings with third parties – how to bind the company. Division 2 relates to company records. Division 3 sets out the documents that must be sent to the Registrar (for example, the annual return) and the shareholders (for example, the annual report). Division 4 sets out requirements concerning accounting records, financial statements, and auditors;

(h) Part 8 together with Schedule 7 deals with amalgamations;

(i) Part 9 deals with offering securities to the public;

(j) Part 10 relates to the removal of companies from the Solomon Islands register;

(k) Part 11 deals with overseas companies;

(l) Part 12 deals with community companies;

(m) Part 13 deals with the Registrar of Companies, the register under this Act, and registration requirements;

(n) Part 14 sets out some miscellaneous provisions, including offence provisions, regulation-making powers, repeals, and transitional and savings provisions.

Act binds the Crown

5. This Act binds the Crown.

PART 2—INCORPORATING NEW COMPANIES

Division 1—Method of Incorporation

Application for registration

6. (1) Any person may, either alone or together with another person, apply for registration of a company under this Act.

(2) An application for registration of a company must be made to the Registrar in the prescribed form.

(3) An application for registration of a company must specify—

(a) the name of the company, which must comply with section 10; and

(b) whether the company is a private company, a public company or a community company; and

(c) whether the rules of the company differ from the model rules set out in Schedule 2 (in the case of a private company) or Schedule 3 (in the case of a single shareholder company) or Schedule 4 (in the case of a public company) or Schedule 5 (in the case of a community company); and

(d) the full name, residential address, and postal address of every director of the proposed company; and

(e) whether each person named as a director of the company has consented to act as a director of the company; and

(f) the full name of every shareholder of the proposed company, and the number of shares to be issued to every shareholder; and

(g) the registered office of the proposed company; and

(h) the postal address of the company, which may be the registered office or any other postal address; and

(i) in the case of a community company, a statement describing the community interest.

(4) An application for registration must be accompanied by—

(a) a copy of the company rules if they differ from the model rules; and

(b) the prescribed fee.

Certificate of incorporation

7. As soon as the Registrar receives an application for registration that complies with section 6, the Registrar must—

(a) enter the company on the Solomon Islands register; and

(b) issue a certificate of incorporation in respect of the company.

Effect of incorporation

8. (1) A certificate of incorporation of a company is conclusive evidence that—

(a) all the requirements of this Act as to incorporation have been complied with; and

(b) on and from the date of incorporation stated in the certificate, the company is incorporated under this Act.

(2) A company incorporated under this Act is a legal entity in its own right separate from its shareholders, and continues in existence until it is dissolved.

Registration as private company, public company or community company

9. (1) A company may be registered as a private company if—

(a) its rules prohibit it from offering its securities to the public; and

(b) its rules restrict the number of shareholders in the company to not more than 50; and

(2) A company that is not registered as a private company is a public company.

(3) A public company may apply to the Registrar to be registered as a private company if—

(a) the company meets the requirements in subsection (1); and

(b) the application has been approved by shareholders by special resolution; and

(4) If a public company applies to the Registrar under subsection (3), the Registrar must—

(a) amend the registration of the company accordingly; and

(b) issue a new certificate of incorporation for the company in the prescribed form.

(5) A private company may apply to the Registrar to be registered as a public company, with the approval of shareholders by special resolution.

(6) A private company must apply to be registered as a public company if it ceases to meet the requirements in subsection (1).

(7) The Registrar must register the company as a public company, and issue a new certificate of incorporation for the company in the prescribed form if—

(a) an application is made to the Registrar in accordance with subsection (5) or (6); or

(b) it comes to the Registrar's attention that a private company has ceased to satisfy the requirements of subsection (1); and

(8) A private company may be registered as a community company under this section where the company has as its principal objective the promotion of the community interest.

Division 2—Names

Name of company

10. (1) The name of a company must end with the word "Limited" or "Ltd".

(2) If the company is a community company the name of the company must end with the words "Community Company Limited" or "CCL".

(3) The Registrar must not register a company with a name—

(a) that is identical or almost identical to the name of another company; or

(b) the use of which would contravene any enactment in relation to the use of names.

Change of name

11. (1) An application to change the name of a company must be—

(a) in the prescribed form; and

(b) signed by a director of the company; and

(2) An application to change the name of a company is not an amendment of the rules of the company for the purposes of this Act.

(3) As soon as the Registrar receives a properly completed application under this section that complies with subsection (1) and with the requirements in section 10, the Registrar must—

(a) enter the new name of the company on the Solomon Islands register; and

(b) issue an amended certificate of incorporation for the company recording the change of name of the company.

(4) A change of name of a company—

(a) takes effect from the date specified in the certificate issued under subsection (3); and

(b) does not affect rights or obligations of the company, or legal proceedings by or against the company.

(5) Legal proceedings that might have been continued or commenced against the company under its former name may be continued or commenced against it under its new name.

Direction to change name

12. (1) If the Registrar believes on reasonable grounds that a company has been registered under a name that contravenes section 10 at the time of registration, the Registrar may serve written notice on the company to change its name by a date specified in the notice that is not less than 20 working days after the date on which the notice is served.

(2) If the company does not change its name within the period specified in the notice, the Registrar may enter on the Solomon Islands register –

(a) in the case of a private or public company, a new name for the company in the form "Number x Company Limited"; or

(b) in the case of a community company a new name for the company in the form "Number x Community Company Limited"

where "x" is a unique number assigned to the company by the Registrar for this purpose.

(3) If the Registrar registers a new name under subsection (2)—

(a) the Registrar must issue an amended certificate of incorporation for the company recording the new name of the company; and

(b) section 11(4) applies in relation to the registration of the new name as if the name of the company had been changed under section 11.

Use of company name

13. (1) A company must ensure that its name is clearly stated in—

(a) every written communication sent by, or on behalf of, the company; and

(b) every document issued or signed by, or on behalf of, the company that evidences or creates a legal obligation of the company.

(2) If—

(a) a document that evidences or creates a legal obligation of a company is issued or signed by or on behalf of the company; and

(b) the name of the company is not correctly stated in the document,

every person who issued or signed the document is liable to the same extent as the company if the company fails to discharge the obligation.

(3) Subsection (2) does not apply if—

(a) the person who issued or signed the document proves that the person in whose favour the obligation was incurred was aware at the time the document was issued or signed that the obligation was incurred by the company; or

(b) the Court is satisfied that it would not be just and equitable for the person who issued or signed the document to be so liable.

(4) If, within the period of 12 months immediately before a company gives public notice of any matter, the name of the company was changed, the company must ensure that the notice states—

(a) that the name of the company was changed in that period; and

(b) the former name or names of the company.

Division 3—Company Rules

Adoption and alteration of rules

14. (1) A company may adopt rules at the time of its incorporation by—

(a) in the case of model rules set out in Schedule 2, 3, 4, or 5 indicating in its application for incorporation that it wishes to adopt those model rules as its rules; or

(b) stating that a copy of the rules of the company, if they differ from the model rules, are held and are available for inspection at the company's registered office.

(2) Subject to any restrictions in its rules, a company may, by special resolution, adopt new rules or alter its rules.

(3) Within 10 working days of the adoption of new rules by a company, or the alteration of the rules of a company, as the case may be, the company must deliver a notice in the prescribed form to the Registrar for registration.

Model rules

15. (1) The model rules set out in Schedule 2 have effect as the rules of a private company except to the extent that the company has—

(a) modified and adopted the model rules set out in Schedule 3, 4, or 5 as its rules; or

(b) adopted rules that exclude, or modify, or are inconsistent with, the model rules.

(2) The model rules set out in Schedule 3 have effect as the rules of a single shareholder company except to the extent that the company has—

(a) modified and adopted the model rules set out in Schedule 2, 4, or 5 as its rules; or

(b) adopted rules that exclude, or modify, or are inconsistent with, the model rules.

(3) The model rules set out in Schedule 4 have effect as the rules of a public company except to the extent that the company has—

(a) modified and adopted the model rules set out in Schedule 2, 3, or 5 as its rules; or

(b) adopted rules that exclude, or modify, or are inconsistent with, the model rules.

(4) The model rules set out in Schedule 5 have effect as the rules of a community company except to the extent that the company has –

(a) modified and adopted the model rules set out in Schedule 2, 3 or 5 as its rules; or

(b) adopted rules that exclude, or modify, or are inconsistent with, the model rules.

(5) A company may resolve to modify and adopt the model rules in Schedule 2, 3, 4, or 5 as its rules in accordance with section 14(2).

Contents and effect of rules

16. (1) The rules of a company may contain—

(a) matters contemplated by this Act for inclusion in the rules of a company;

(b) any other matters that the company wishes to include in its rules.

(2) Subject to subsection (3)—

(a) the rules of a company have effect and may be enforced as if they constituted a contract—

(i) between the company and its shareholders; and

(ii) between the company and each director; and

(b) the shareholders and directors of a company have the rights, powers, duties, and obligations set out in the rules of the company.

(3) The rules of a company are of no effect to the extent that they are inconsistent with this Act.

Division 4—Registered Office and Postal Address

Registered office and postal address

17. (1) A company must always have a registered office and postal address in Solomon Islands.

(2) Subject to section 18—

(a) the registered office of a company at a particular time is the place that is described as its registered office on the Solomon Islands register at that time; and

(b) the postal address of a company at a particular time is the place that is described as its postal address on the Solomon Islands register at that time.

(3) The description of the registered office of a company must describe the location of the registered office in enough detail to enable the registered office to be readily identified for the purposes of this Act.

Change of registered office and postal address

18. (1) Subject to the company's rules and to subsection (3), the directors of a company may change the registered office and postal address of the company at any time.

(2) Notice in the prescribed form of the change must be given to the Registrar for registration.

(3) The change in the registered office or postal address, as the case may be, takes effect on the later of—

(a) the date that is 5 working days after the notice is received by the Registrar; or

(b) any later date specified in the notice as the date on which the change is to be effective.

PART 3—SHARES

Division 1—General

Legal nature of shares

19. A share in a company is personal property.

No nominal value

20. (1) A share must not have a nominal or par value.

(2) Nothing in subsection (1) prevents the issue by a company of a redeemable share.

Minimum number of shares

21. Every company must have at least 1 issued share.

Rights and powers attached to shares

22. (1) Subject to section 167 and the rules of the company and the terms on which it is issued, a share in a company confers on the holder—

(a) the right to 1 vote on a poll at a meeting of the company on any resolution, including any of the following resolutions to—

(i) appoint or remove a director or auditor;

(ii) adopt new rules;

(iii) alter the company's rules;

(iv) approve a major transaction;

(v) approve registration of a public company as a private company, or of a private company as a public company;

(vi) put the company into liquidation;

(vii) approve the transfer of registration of the company to another country;

(viii) approve an amalgamation.

(b) the right to an equal share in dividends paid by the company;

(2) Subject to its rules, a company may issue different classes of shares.

(3) Without limiting subsection (2), shares in a company may—

(a) be redeemable; or

(b) confer preferential rights to distributions of capital or income; or

(d) not confer voting rights.

Shares must not impose liabilities on holder

23. (1) A company must not issue a share that is partly paid, or that otherwise imposes any liability to make a payment to the company on its holder.

(2) Nothing in subsection (1)—

(a) prevents a company from attaching conditions, limits, or restrictions to the rights and powers attached to the share; or

(b) prevents a company from issuing a share on credit terms that provide for a liability to make future payments to the company on the part of the person to whom it is first issued.

Division 2—Issue of Shares

Issue of initial shares

24. A company must immediately after the registration of the company, issue to any person named in the application for registration as a shareholder the number of shares specified in the application as being the number of shares to be issued to that person or those persons.

Issue of other shares

25. (1) A company may issue shares—

(a) in accordance with its rules; or

(b) with the approval of all shareholders under section 50.

(2) A company must deliver to the Registrar for registration, within 10 working days of the issue of any shares, a notice in the prescribed form of the issue of the shares by the company.

(3) If the rights attached to the shares are not set out in full in the rules, the notice must be accompanied by a document setting out the terms of issue of the shares.

(4) If a company fails to comply with subsection (2), every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Time of issue of shares

26. A share is issued when the name of the holder is entered on the share register of the company.

Division 3—Distributions – General

Distributions prohibited unless solvency test satisfied

27. Subject to section 167, a company must not make a distribution to shareholders unless there are reasonable grounds for believing that, after that distribution is made, the company will satisfy the solvency test.

Recovery of improper distributions

28. (1) A distribution made to a shareholder in breach of section 27, 29, or 30 may be recovered by the company from the shareholder unless—

(a) the shareholder received the distribution in good faith and without knowledge of the company's breach of section 27, 29, or 30, as the case may be; and

(b) the shareholder has altered the shareholder's position in reliance on the validity of the distribution; and

(2) If a distribution has been made in breach of section 27, any person who authorised the making of the distribution at a time when that person knew, or ought to have known, that the distribution did not comply with section 27 is liable to repay to the company so much of that distribution as is not reasonably recoverable from the recipients under subsection (1).

(3) If, in an action brought under this section, the Court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the requirements of section 27, the Court may permit a shareholder to retain, or excuse a person who authorised the distribution from liability in respect of, an amount equal to the value of any distribution that could properly have been made.

Division 4—Dividends

Dividends

29. (1) Subject to sections 27 and to 167 and to subsection (2), a company may pay a dividend to shareholders if, and only if, that dividend is authorised—

(a) by all shareholders under section 50; or

(b) if the company's rules so provide, by the directors.

(2) A dividend authorised by the directors must comply with any conditions or restrictions set out in the rules.

(3) Subject to its rules and to the terms of issue of any share, a company must not pay a dividend—

(a) in respect of some, but not all, shares; or

(b) that is of a greater value per share in respect of some shares than of others.

(4) Subsection (3) does not apply if the payment of that dividend in that manner is approved by all shareholders under section 50.

(5) In this section, "dividend" means any distribution other than—

(a) a distribution by way of repurchase or redemption of shares; or

(b) a distribution of the surplus assets of the company in liquidation.

Division 5—Acquisition of Own Shares

Company may acquire its own shares

30. (1) A company may acquire its own shares only—

(a) in accordance with subsection (2) or section 54; and

(b) subject to section 27.

(2) A company may acquire its own shares by agreement with a shareholder—

(a) in accordance with its rules; or

(b) with the approval of all shareholders under section 50.

(3) A company must deliver to the Registrar for registration, within 10 working days of the acquisition of any shares, a notice in the prescribed form of the acquisition of the shares by the company.

(4) The notice required under subsection (3) must also be sent to each shareholder within 20 working days of the acquisition of the shares if an acquisition of shares by a company does not result from an offer made to all shareholders that—

(a) would, if accepted, leave unaffected relative voting and distribution rights; and

(b) affords a reasonable time for acceptance of the offer.

(5) If a company fails to comply with subsection (3) or (4), every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Cancellations of shares acquired by company

31. (1) If a company acquires its own shares, those shares are deemed to be cancelled immediately on acquisition unless the rules of the company expressly provide otherwise.

(2) If a company acquires its own shares and the rules provide that those shares are not cancelled on acquisition, the rights attached to those shares may not be exercised by or against the company at any time at which it would, apart from this section, be entitled to—

(a) exercise those rights; or

(b) give directions to the holder of that share as to the manner in which any of those rights should be exercised.

(3) For the purposes of this section, a company acquires a share at the time at which it would, apart from this section, become entitled to—

(a) exercise the rights attached to that share; or

(b) give directions to the holder of that share as to the manner in which any rights attached to that share should be exercised.

Enforcement of contract to repurchase shares

32. (1) A contract with a company providing for the acquisition by the company of its shares is specifically enforceable against the company except to the extent that performance would breach section 27.

(2) The company has the burden of proving that performance of the contract would breach section 27.

(3) Until the company has fully performed a contract referred to in subsection (1), the other party to the contract retains the status of a claimant entitled to be paid as soon as the company is lawfully able to do so or, before the dissolution of the company, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.

Division 6—Redeemable Shares

Redeemable shares

33. (1) For the purposes of this Act, a share is redeemable if the rules or the terms of issue of the share make provision for the redemption of that share by the company—

(a) at the option of the company; or

(b) at the option of the holder of the share; or

for a consideration that is—

(d) specified; or

(e) to be calculated by reference to a formula; or

(f) required to be fixed by a suitably qualified person who is not associated with, or interested in, the company.

(2) To avoid doubt, the auditor of a company is not associated with, or interested in, the company for the purposes of subsection (1)(f).

Redemption of redeemable shares

34. (1) A company must redeem a redeemable share in accordance with its rules and the terms of issue of the share, except to the extent that the company would, by doing so, breach section 27.

(2) The company has the burden of proving that redemption of a share would breach section 27.

(3) Until the company has fully redeemed a share in accordance with subsection (1), the former holder of the share retains the status of a claimant entitled to be paid as soon as the company is lawfully able to do so or, before the removal of the company from the Solomon Islands register, to be ranked subordinate to the rights of creditors but in priority to the other shareholders.

(4) Redeemable shares are deemed to be cancelled immediately on the date on which the rules or their terms of issue provide for them to be redeemed, unless the rules or terms of issue provide otherwise.

(5) A company must deliver to the Registrar for registration, within 10 working days of the redemption of any shares, a notice in the prescribed form of the redemption of the shares by the company.

(6) If a company fails to comply with subsection (5), a late filing fee must be paid to the Registrar and every director of the company commits an offence and is liable on conviction to a fine not exceeding 10 penalty units.

Division 7—Assistance by Company in Purchase of its Own Shares

Financial assistance

35. Except in the case of a community company as described in Part 12, a company may give financial assistance to a person for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, whether directly or indirectly, only if—

(a) the company gives the assistance in the normal course of its business and on usual terms and conditions; or

(b) the giving of the assistance is authorised by the directors or by all shareholders under section 50, and—

(i) there are reasonable grounds for believing that, after providing the assistance, the company will satisfy the solvency test; and

(ii) the company complies with any conditions or restrictions in its rules.

Division 8—Cross-holdings

Cross-holdings

36. (1) Subject to this section, a subsidiary must not hold shares in its holding company.

(2) An issue of shares by a holding company to its subsidiary is void and of no effect.

(3) A transfer of shares in a holding company to its subsidiary is void and of no effect.

(4) If a company that holds shares in another company becomes a subsidiary of that other company, the subsidiary—

(a) may, despite subsection (1), continue to hold those shares; but

(b) may not exercise any voting rights or other rights attaching to those shares, other than rights to receive distributions and to receive notices and other information from the company.

(5) Nothing in this section prevents a subsidiary holding shares in its holding company in its capacity as a personal representative or a trustee unless the holding company or another subsidiary has a beneficial interest under the trust other than an interest that arises by way of security for the purposes of a transaction made in the ordinary course of the business of lending money.

(6) This section applies to a nominee for a subsidiary in the same way as it applies to the subsidiary.

Division 9—Transfer of Shares

Transfer of shares

37. (1) Subject to any limitation or restriction on the transfer of shares in the rules, a share in a company is transferable.

(2) A share is transferred by entry in the share register in accordance with section 39.

(3) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

Transfer of shares by operation of law

38. (1) Subject to subsection (2), shares in a company may pass by operation of law despite anything in the rules of the company.

(2) The rules of a company may provide that, if a share passes by operation of law, the voting rights attached to that share cease to be exercisable until it is transferred in accordance with the rules of the company.

Division 10—Share Register

Company to maintain share register

39. (1) A company must maintain a share register that records the shares issued by the company and states—

(a) the names, alphabetically arranged, and the last known address of each person who is, or has within the last 7 years been, a shareholder; and

(b) the number of shares of each class held by each shareholder within the last 7 years; and

(c) the date of any issue of shares to, repurchase or redemption of shares from, or transfer of shares by or to, each shareholder within the last 7 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(2) The share register must be kept—

(a) in a form permitted under section 114; and

(b) at the registered office of the company.

(3) The share register of the company may be maintained by an agent on behalf of the company.

(4) If a company fails to comply with the requirements of this section the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Share register as evidence of legal title

40. (1) Subject to section 41, the entry of the name of a person in the share register as holder of a share is evidence that legal title to the share vests in that person.

(2) A company must treat the registered holder of a share as the only person entitled to—

(a) exercise the right to vote attaching to the share; and

(b) receive notices; and

(d) exercise the other rights and powers attaching to the share.

Power of Court to rectify share register

41. (1) If the name of a person is wrongly entered in, or omitted from, the share register of a company, the person aggrieved, or a shareholder, may apply to the Court for rectification of the share register, or compensation for loss sustained, or both.

(2) The Court may, on an application under this section, order—

(a) rectification of the register;

(b) payment of compensation by the company for any loss sustained;

(3) The Court may, on an application under this section, decide—

(a) a question relating to the entitlement of a person who is a party to the application to have his or her name entered in, or omitted from, the register; and

(b) a question necessary or expedient to be decided for rectification of the register.

Trusts not to be entered on register

42. No notice of a trust, whether express, implied, or constructive, may be entered on the share register.

Registration of personal representative or assignee of bankrupt

43. (1) Despite section 42, but subject to section 38, a personal representative of a deceased person whose name is registered in a share register of a company as the holder of a share in that company is entitled to be registered as the holder of that share as personal representative.

(2) Despite section 42, but subject to section 38(2), the assignee of the property of an insolvent natural person registered in a share register of a company as the holder of a share in that company is entitled to be registered as the holder of that share as the assignee of the property of that person.

(3) The registration of a trustee, executor, administrator, or of an assignee under this section does not constitute notice of a trust.

(4) For the purposes of this section, "assignee" means a person in whom the property of an insolvent natural person is vested pursuant to insolvency legislation applicable to that natural person.

Division 11—Share Certificates

Share certificates

44. (1) A shareholder may apply to the company for a share certificate relating to some or all of the shareholder's shares in the company.

(2) On receipt of an application for a share certificate under subsection (1), the company must, within 20 working days after receiving the application —

(a) if the application relates to some but not all of the shares, separate the shares shown in the register as owned by the applicant into separate parcels (1 parcel being the shares to which the share certificate relates, and the other parcel being any remaining shares); and

(b) in all cases send to the shareholder a certificate stating—

(i) the name of the company; and

(ii) the class of shares held by the shareholder; and

(iii) the number of shares held by the shareholder to which the certificate relates.

(3) If a share certificate has been issued, a transfer of the shares to which it relates must not be registered by the company unless the form of transfer required by that section is accompanied by—

(a) the share certificate relating to the share; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form required by the board.

(4) If shares to which a share certificate relates are to be transferred, and the share certificate is sent to the company to enable the registration of the transfer, the share certificate must be cancelled and no further share certificate issued except at the request of the transferee.

(5) If a company fails to comply with subsection (2) the company commits an offence and is liable on conviction to a fine not exceeding 10 penalty units.

PART 4—SHAREHOLDERS

Division 1—General

Every company must have at least 1 shareholder

45. A company must, at all times, have at least 1 shareholder.

Liability of shareholders

46. (1) A shareholder is not liable for an obligation of the company by reason only of being a shareholder.

(2) The liability of a shareholder to the company is limited to—

(a) any liability to repay a distribution that is recoverable under section 28; and

(b) any liability under section 72.

(3) Nothing in this section affects the liability of a shareholder to a company under a contract (including a contract for the issue of shares) or liability incurred in any other capacity (including as a director of the company) or liability for any tort, or breach of a fiduciary duty, or other actionable wrong committed by the shareholder.

Decisions that must be made by shareholders

47. The following powers must be exercised by the shareholders of a company by special resolution, and may not be delegated under the rules or otherwise—

(a) the power to approve registration of a public company as a private company under section 9(3), or of a private company as a public company under section 9(5);

(b) the power to adopt new rules, or to amend the company's rules, under section 14(2);

(d) the power to put the company into liquidation.

Decisions that may be made by shareholders

48. (1) Unless the rules provide otherwise, the following powers are exercised by shareholders—

(a) the power to appoint or remove a director;

(b) the power to appoint an auditor.

(2) The rules may provide for other matters to be decided by shareholders, or approved by shareholders.

(3) Unless the rules provide otherwise, the powers under subsection (1) or (2), may be exercised—

(a) by ordinary resolution; or

(b) in accordance with section 50.

Shareholder approval of major transactions

49. (1) A company must not enter into a major transaction unless—

(a) the rules expressly authorise it to enter into that transaction, or transactions of that class; or

(b) entry into the transaction is approved by shareholders—

(i) by special resolution; or

(ii) in accordance with section 50; or

(2) In this section—

"assets" includes property of any kind, whether tangible or intangible;

"major transaction", in relation to a company, means—

(a) the acquisition of, or an agreement to acquire, whether contingent or not, assets the value of which is more than half the value of the company's assets before the acquisition; or

(b) the disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the company's assets before the disposition; or

(c) a transaction that has, or is likely to have, the effect of the company acquiring rights or interests or incurring obligations or liabilities the value of which is more than half the value of the company's assets before the transaction.

(3) Nothing in paragraph (c) of the definition of "major transaction" in subsection (2) applies by reason only of the company giving, or entering into an agreement to give, a charge secured over assets of the company the value of which is more than half the value of the company's assets for the purpose of securing the repayment of money or the performance of an obligation.

(4) Nothing in this section applies to a major transaction entered into by a receiver appointed under a document creating a charge over property of a company.

Unanimous shareholder approval

50. (1) Except in the case of a community company as defined in Part 12 of this Act, if all the shareholders of a company consent to or concur in any action taken by the company or a director, the taking of that action is deemed to be validly authorised by the company despite—

(a) anything to the contrary in its rules; or

(b) the absence of express authority to take that action in its rules.

(2) The matters that may be authorised in accordance with subsection (1) include, but are not limited to, the following—

(a) the issue of shares;

(b) the making of a distribution;

(d) giving financial assistance for the purpose of, or in connection with, the purchase of shares in the company;

(e) the payment of remuneration to a director, or the making of a loan to a director, or the conferral of any other benefit on a director;

(f) the making of a contract between the company and a director, or of any other contract in which a director has an interest;

(g) entry into a major transaction;

(h) the ratification after the event of any action that could have been authorised under this section.

(3) Subject to section 167 a company must not authorise a distribution under this section unless there are reasonable grounds for believing that, after that distribution is made, the company will satisfy the solvency test.

(4) Section 28 applies to a distribution made in breach of subsection (3) as if—

(a) the distribution had been made in breach of section 27; and

(b) the distribution was authorised by all shareholders.

Shareholder written resolutions

51. (1) Subject to subsection (3), a resolution in writing signed by shareholders who together hold not less than 75% of the votes entitled to be cast on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of those shareholders.

(2) A resolution in writing is made in accordance with this Act or the rules of the company, as the case may be, if the resolution—

(a) relates to a matter that is required by this Act or by the rules to be decided at a meeting of the shareholders of a company; and

(b) is signed by the shareholders referred to in subsection (1).

(3) If, in respect of any matter, the rules of a company—

(a) require approval by a higher majority than 75% of those shareholders entitled to vote and voting, the reference in subsection (1) to 75% is taken to be a reference to that higher majority;

(b) specify additional requirements for approval of such matters, those requirements must also be satisfied in order for the resolution to be valid.

(4) Within 5 working days of a resolution being passed under this section, the company must send a copy of the resolution to every shareholder who did not sign the resolution.

(5) A resolution may be signed under subsection (1) or (2) without any prior notice being given to shareholders.

(6) If a company fails to comply with subsection (4)—

(a) the company commits an offence and is liable on conviction to a fine not exceeding 10 penalty units; and

(b) every director of the company commits an offence and is liable on conviction to a fine not exceeding 10 penalty units.

Shareholder meetings

52. (1) The rules of a company must include provisions—

(a) for holding meetings of shareholders of the company; and

(b) that govern proceedings at meetings of shareholders of the company.

(2) Meetings of the shareholders of a company must be held in accordance with the rules of the company.

(3) A special meeting of shareholders entitled to vote on an issue—

(a) may be called at any time by a director; and

(b) must be called by the directors on the written request of shareholders holding shares carrying together not less than 10% of the votes that may be cast on the issue.

Division 2—Alteration of Shareholder Rights

Alteration of shareholder rights

53. (1) A company must not take action that affects the rights attached to shares unless that action has been approved by—

(a) a special resolution of each interest group; or

(b) all shareholders under section 50.

(2) For the purposes of subsection (1), the rights attached to a share include—

(a) the rights, privileges, limitations, and conditions attached to the share by this Act or the rules, including voting rights and rights to distributions; and

(b) the right to have any provisions of the rules in relation to the issue of further shares observed by the company; and

(c) the right to have the procedure set out in this section, and any further procedure required by the rules for the amendment or alteration of rights, observed by the company; and

(d) the right that a procedure required by the rules for the amendment or alteration of rights not be amended or altered.

(3) In this section —

"class" means a class of shares having attached to them identical rights, privileges, limitations, and conditions;

"interest group", in relation to any action or proposal affecting rights attached to shares, means a group of shareholders—

(a) whose affected rights are identical; and

(b) whose rights are affected by the action or proposal in the same way; and

(4) For the purposes of this section and the definition of "interest group" —

(a) one or more interest groups may exist in relation to any action or proposal; and

(b) holders of shares in the same class may fall into 2 or more interest groups if—

(i) action is taken in relation to some holders of shares in a class and not others; or

(ii) a proposal expressly distinguishes between some holders of shares in a class and other holders of shares of that class.

Repurchase of dissenter's shares

54. (1) A shareholder is entitled to require the company to purchase shares in accordance with the procedure set out in Schedule 6 if—

(a) the shareholder is entitled to vote on the exercise of 1 or more of the powers set out in—

(i) section 47(b) and the proposed alteration imposes or removes a restriction on the activities of the company; or

(ii) section 47(c) or (d); and

(b) the shareholders resolve to exercise the power; and

(c) the shareholder cast all the votes attached to shares registered in the shareholder's name and having the same beneficial owner against the exercise of the power.

(2) A shareholder is entitled to require the company to purchase shares in accordance with the procedure set out in Schedule 6 if—

(a) an interest group of which the shareholder was a member has, under section 53, approved, by special resolution, the taking of action that affects the rights attached to those shares; and

(b) the company becomes entitled to take the action; and

(c) the shareholder cast all the votes attached to the shares registered in that shareholder's name and having the same beneficial owner against approving the action.

(3) If a resolution of shareholders or of an interest group is made in writing in accordance with section 51, subsections (1) and (2) apply as if references to a shareholder who cast all the votes attached to shares registered in the shareholder's name and having the same beneficial owner against the matter in question were references to a shareholder who did not sign the written resolution in respect of those shares.

Division 3—Disclosure to Shareholders

Annual report to shareholders

55. (1) Subject to subsection (2), the directors of every company must, within 20 working days after the date on which the company is required to complete its financial statements under section 125—

(a) prepare an annual report on the affairs of the company during the accounting period ending on that date; and

(b) send a copy of that report to each shareholder.

(2) The rules of a private company may provide that the directors are only required to prepare an annual report in respect of an accounting period if a shareholder has given written notice to the company before the end of that accounting period requiring the annual report to be prepared.

(3) Every annual report for a company must—

(a) be in writing and be dated; and

(b) include financial statements for the accounting period that comply with section 125; and

(c) if an auditor's report is required for the financial statements included in the report, include that auditor's report; and

(d) state the names of the persons holding office as directors of the company as at the end of the accounting period and the names of any persons who ceased to hold office as directors of the company during the accounting period; and

(e) contain any other information that may be required by—

(i) regulations made under this Act; and

(ii) the rules; and

(f) be signed on behalf of the directors by 2 directors of the company or, if the company has only 1 director, by that director.

(4) If the directors of a company fail to comply with subsection (1), every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Inspection of company records by shareholders

56. A shareholder is entitled to inspect company records in accordance with section 116.

Request for information held by company

57. (1) A shareholder may, at any time, make a written request to a company for information held by the company.

(2) The request must specify the information sought in enough detail to enable it to be identified.

Company must provide requested information

58. Within 10 working days of receiving a request under section 57, the company must—

(a) provide the information; or

(b) agree to provide the information within a specified period; or

(c) agree to provide the information within a specified period if the shareholder pays a reasonable charge to the company (which must be specified and explained) to meet the cost of providing the information; or

(d) refuse to provide the information, specifying the reasons for the refusal.

Reasons for refusing information

59. Without limiting the reasons for which a company may refuse to provide information under section 58, a company may refuse to provide information if the—

(a) disclosure of the information would be likely to prejudice the commercial position of the company; or

(b) disclosure of the information would be likely to prejudice the commercial position of any other person, whether or not that person supplied the information to the company.

Stakeholder may withdraw request

60. If the company requires the shareholder to pay a charge for the information, the shareholder may withdraw the request, and is deemed to have done so unless, within 10 working days of receiving notification of the charge, the shareholder informs the company that the shareholder—

(a) will pay the charge; or

(b) considers the charge to be unreasonable.

Court may order company to provide requested information

61. (1) The Court may, on the application of a person who has requested information, make an order requiring the company to provide the information within any time and on payment of any charge that the Court thinks fit if it is satisfied that—

(a) the company does not have sufficient reason to refuse to provide the information; or

(b) the period specified for providing the information is unreasonable; or

(2) If the Court makes an order under subsection (1), it may specify the use that may be made of the information and the persons to whom it may be disclosed.

(2) On an application for an order under this section, the Court may make any order for the payment of costs that it thinks fit.

Investigation at request of shareholder

62. (1) On the application of a shareholder of a company, the Court may make—

(a) an order authorising a person named in the order, at a time specified in the order, to inspect and to make copies of, or take extracts from, the records or other documents of the company, or any of the records or documents of the company specified in the order; and

(b) any ancillary order that it thinks fit, including an order that the accounts of the company be audited by that person.

(2) The Court may make an order under subsection (1) only if it is satisfied that—

(a) in making the application, the shareholder is acting in good faith and that the inspection is proposed to be made for a proper purpose; and

(b) the person to be appointed is a proper person for the task.

(3) A person appointed by the Court under subsection (1) must diligently carry out the inspection and, having done so, must make a full report to the Court.

(4) On receiving the report of an inspector, the Court may make any order in relation to the disclosure and use that may be made of the records and information obtained that it thinks fit.

(5) An order made under subsection (4) may be varied from time to time.

(6) The reasonable costs of the inspection must be met by the company unless the Court orders otherwise.

(7) A person may only disclose or make use of information or records obtained under this section in accordance with an order made under subsection (4) or (5).

(8) A person who discloses or makes use of information or records obtained under this section other than in accordance with an order made under subsection (4) or (5) commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

PART 5—DIRECTORS

Division 1—Powers and Duties

Management of company

63. Except to the extent that this Act or the company's rules provide otherwise—

(a) the business and affairs of a company must be managed by, or under the direction or supervision of, the directors of the company; and

(b) the directors of a company have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

Fundamental duties of directors

64. Every director of a company must, when exercising powers or performing duties as a director, act—

(a) in good faith; and

(b) in a manner that the director believes to be in the interests of the company.

Duty of the directors to comply with Act

65. A director of a company must not act, or agree to the company acting, in a manner that contravenes this Act.

Duty of directors to comply with rules

66. A director of a company must not act, or agree to the company acting, in a manner that contravenes the company's rules.

Interest of director in company transactions

67. (1) A director must not exercise any power as a director if the director is directly or indirectly materially interested in the exercise of that power, unless—

(a) this Act expressly authorises the director to exercise the relevant power despite that interest; or

(b) the director has reasonable grounds for believing that the company will satisfy the solvency test after that power is exercised, and either—

(i) the rules expressly authorise the director to exercise the relevant power despite that interest, following disclosure of the interest in accordance with subsection (2); or

(ii) the exercise of the power by the director has been approved by all shareholders under section 50, following disclosure of the nature and extent of the director's interest to all shareholders who are not otherwise aware of those matters.

(2) A director who is directly or indirectly materially interested in the exercise of any power may only be authorised by the rules to exercise that power if the rules require that, before the exercise of the power, the director discloses the nature and extent of that interest in writing—

(a) if there is at least 1 other director who is not directly or indirectly materially interested in the transaction or proposed transaction, to the directors of the company;

(b) if paragraph (a) does not apply, to all shareholders other than the director.

Use and disclose of company information

68. A director of a company who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or make use of or act on the information, except—

(a) in the interests of the company; or

(b) as required by law; or

(c) if there are reasonable grounds for believing that the company will satisfy the solvency test after the director takes that action and that action—

(i) is authorised by the rules; or

(ii) is approved by shareholders under section 50.

Standard of care of directors

69. Subject to the company's rules, a director of a company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable person would exercise in the same circumstances taking into account, but without limitation—

(a) the nature of the company; and

(b) the nature of the decision; and

Obligations of directors in connection with insolvency

70. (1) A director of a company must call a meeting of directors within 10 working days to consider whether the directors should appoint a liquidator if the director—

(a) believes that the company is unable to pay its debts as they fall due in the normal course of business; or

(b) is aware of matters that would put any reasonable person on inquiry as to whether the company is unable to pay its debts as they fall due in the normal course of business.

(2) At a meeting called under this section, the directors must consider whether to appoint a liquidator or to continue to carry on the business of the company.

(3) A director is liable to any creditor to whom the company incurred an obligation after the time that the director failed to comply with subsection (1) if—

(a) at the time of that failure, the company was unable to pay its debts as they fell due in the normal course of business; and

(b) the company is later placed in liquidation.

(4) Each director who did not participate in the meeting and did not vote in favour of appointing a liquidator is liable to any creditor to whom the company incurred an obligation after the date of the meeting in accordance with subsection (5) if—

(a) at a meeting called under this section, the directors do not resolve to appoint a liquidator; and

(b) at the time of that meeting there were no reasonable grounds for believing that the company was able to pay its debts as they fell due; and

(5) A director who is liable to a creditor under subsection (3) or (4) in respect of an obligation of the company is liable to that creditor for the amount of any loss suffered by that creditor as a consequence of the company's failure to perform that obligation, unless the director establishes that the creditor—

(a) knew or ought to have known of the circumstances that called into question the solvency of the company; or

(b) otherwise assumed the risk of dealing with the company in those circumstances.

(6) If more than 1 director is liable to a creditor under this section, the liability of those directors is joint and several.

Effect of unanimous shareholder approval on certain duties of directors

71. If a director exercises any power or takes any other action in his or her capacity as a director with the consent or concurrence of shareholders under section 50—

(a) the director is deemed to be acting in accordance with the requirements of section 66; and

(b) if, at the time the director so acts, there are reasonable grounds for believing that the company is able to meet its debts as they fall due, the director is deemed to be acting in accordance with the requirements of sections 64 and 69.

Division 2—Liabilities

Persons deemed to be directors for liability purposes

72. (1) A person (principal) in accordance with whose directions or instructions a director is required or is accustomed to act is liable under sections 64 to 70 to the same extent as that director, unless the principal shows that the director was not in fact acting in accordance with the principal's directions or instructions in acting or failing to act in the manner giving rise to liability on the part of the director.

(2) A person who exercises, or who is entitled to exercise, or who controls or who is entitled to control the exercise, of powers that, apart from the rules of the company, would fall to be exercised by the directors, is liable under sections 64 to 69 in connection with the exercise of those powers as if that person were a director.

(3) Without limiting subsection (2), if the rules of a company confer a power on shareholders that would otherwise fall to be exercised by directors under this Act, any shareholder who exercises that power or who takes part in deciding whether to exercise that power is liable under sections 64 to 69 in connection with the exercise of that power as if that person were a director.

(4) A person to whom a power or duty of the directors has been directly delegated by the directors with that person's consent or acquiescence, or who exercises the power or duty with the consent or acquiescence of the directors, is liable under sections 64 to 69 in connection with the exercise of those powers as if that person were a director.

(5) To avoid doubt, if any action is approved by all shareholders under section 50—

(a) no shareholder is liable under section 66 in respect of that action;

(b) if there are reasonable grounds for believing that the company is able to meet its debts as they fall due, no shareholder is liable under section 64, 67, 68 or 69 in respect of that action.

Certain indemnities prohibited

73. (1) A company may not indemnify a director of the company or of any related company in respect of—

(a) any criminal liability; or

(b) any liability to the company or a related company for any act or omission in his or her capacity as a director of the company or of the related company, as the case may be; or

(c) any liability to any person arising out of a breach by that person of a duty to the company or related company, as the case may be, under any of sections 64 to 70.

(2) An indemnity given in breach of this section is void.
In this section —

"director" includes—

(a) a person who is liable under any of sections 64 to 70 by virtue of section 72;

(b) a former director;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; "indemnity" has a corresponding meaning.

Company may indemnify or insure directors

74. Subject to section 73(1)(a), a company may provide an indemnity or purchase insurance for a director of the company or of a related company—

(a) in accordance with its rules; or

(b) with the approval of shareholders under section 50.

Defences for directors

75. (1) It is a defence to a director charged with an offence in relation to a duty imposed on the directors of a company if the director proves that—

(a) the directors took all reasonable and proper steps to ensure that the requirements would be complied with; or

(b) the director took all reasonable and proper steps to ensure that the directors complied with the requirements; or

(c) in the circumstances, the director could not reasonably have been expected to take steps to ensure that the directors complied with the requirements.

(2) It is a defence to a director charged with an offence in relation to a duty imposed on the company if the director proves that—

(a) the company took all reasonable and proper steps to ensure that the requirements would be complied with; or

(b) the director took all reasonable steps to ensure that the company complied with the requirements; or

(c) in the circumstances, the director could not reasonably have been expected to take steps to ensure that the company complied with the requirements.

Division 3—Prohibition and Disqualification of Directors

Persons prohibited from managing companies

76. (1) A person must not, during the period of 3 years after the conviction or the judgment, be a director or promoter of, or in any way, whether directly or indirectly, be concerned or take part in the management of, a company if the person has been convicted of an offence—

(a) in connection with the promotion, formation, or management of a company punishable by imprisonment for a term exceeding 2 years, whether or not a sentence of imprisonment was imposed; or

(b) under any of sections 196 to 199 of this Act or under any of sections 91 to 97, 102 to 103, 105 to 112, 114 to 123, 129 to 130, 257 to 296, 304 to 309, 313 to 314, 332 to 352, 273 to 276 of the Penal Code (Cap 26).

(2) Subsection (1) does not apply if the person first obtains the leave of the Court, which may be given on any conditions that the Court thinks fit.

(3) Any person that the Court thinks fit, may attend and be heard at the hearing of any application under this section.

(4) A person who fails to comply with this section or any order made under this section, commits an offence and is liable on conviction to a fine not exceeding 1000 penalty units or to imprisonment for a term not exceeding 7 years or both.

(5) In this section, "company" includes an overseas company that carries on business in Solomon Islands.

Court may disqualify directors

77. (1) The Court may make an order that a person must not, without the leave of the Court, be a director or promoter of, or in any way, whether directly or indirectly, be concerned or take part in the management of, a company for any period, not exceeding 5 years, that may be specified in the order if the person has—

(a) been convicted of any offence in connection with the promotion, formation, or management of a company punishable by imprisonment for a term exceeding 2 years, whether or not a sentence of imprisonment was imposed; or

(b) been convicted of an offence under any of sections 196 to 199 of this Act or under any of sections 91 to 97, 102 to 103, 105 to 112, 114 to 123, 129 to 130, 257 to 296, 304 to 309, 313 to 314, 332 to 352, 273 to 276 of the Penal Code (Cap. 26); or

(d) while a director of a company, been convicted of fraud in relation to the company or of a breach of duty to the company or a shareholder; or

(e) been convicted of an offence in any other country that corresponds to the offences referred to in paragraphs (a) to (c); or

(f) been prohibited under the law of any other country from acting as a director of a company, or being concerned or taking part in the management of a company; or

(g) become of unsound mind.

(2) An order may be made under this section even though the person concerned may be liable in respect of the matters on the ground of which the order is to be made.

(3) The Registrar of the Court must, as soon as practicable after the making of an order under this section, give notice to the Registrar of Companies that the order has been made.

(4) Every person who fails to comply with an order under this section commits an offence and is liable on conviction to imprisonment for a term not exceeding 7 years or to a fine not exceeding 1000 penalty units, or both.

(5) In this section and sections 78 and 79, "company" includes an overseas company.

Persons entitled to apply for order under section 77

78. (1) An application for an order under section 77 may be made by the liquidator of the company, or by a person who is, or has been, a shareholder or creditor of the company.

(2) The liquidator must appear and call the attention of the Court to any matters that seem to him or her to be relevant, and may give evidence or call witnesses on the hearing of an application for—

(a) an order under section 77 by the liquidator; or

(b) leave under section 77 by a person against whom an order has been made on the application of the liquidator.

Notice of application for order under section 77

79. (1) A person who intends to apply for an order under section 77 must give not less than 10 working days' notice of that intention to the person against whom the order is sought.

(2) On the hearing of the application, the person against whom the order is sought may appear and give evidence or call witnesses.

Application of section 81

80. Section 81 applies to a company—

(a) that has been put into liquidation because of its inability to pay its debts as and when they became due; or

(b) the liquidation of which has been completed, whether or not the company has been dissolved; or

(d) in respect of which execution is returned unsatisfied in whole or in part; or

(e) in respect of the property of which a receiver, or a receiver and manager, has been appointed by the Court or pursuant to the powers contained in a document, whether or not the appointment has been terminated; or

(f) in respect of which, or the property of which, a person has been appointed as a receiver and manager, or a judicial manager, or as a manager, or to exercise control, under an enactment, whether or not the appointment has been terminated.

Liability for contravening section 76 or 77

81. A person who acts as a director of a company in contravention of section 76 or an order made under section 77 is, while that person was so acting, personally liable to—

(a) a liquidator of the company for every unpaid debt incurred by the company; and

(b) a creditor of the company for a debt to that creditor incurred by the company.

Division 4—Office of Director

Qualification of directors

82. (1) A person may be appointed and hold office as a director of a company only if the person—

(a) is a natural person; and

(b) is not disqualified from being a director under subsection (2).

(2) The following persons are disqualified from being a director of a company—

(a) a person who is under 18 years of age;

(b) a person who is an undischarged bankrupt;

(c) a person who is prohibited from being a director or promoter of, or being concerned or taking part in the management of, a company under section 76 or 77;

(d) a person in respect of whom an order of custody is in force under section 18 or 41 of the Mental Treatment Act (Cap 103);

(e) in relation to any particular company, a person who does not comply with any qualifications for directors contained in the rules of that company.

(3) A person who is disqualified from being a director but who acts as a director is treated as a director for the purposes of any provision of this Act that imposes a duty or an obligation on a director of a company.

Appointment of directors

83. (1) A person named as a director in an application for registration or in an amalgamation proposal holds office as a director from the date of registration or the date the amalgamation proposal is effective, as the case may be, until that person ceases to hold office as a director in accordance with this Act.

(2) All subsequent directors of a company may, unless the rules of the company provide otherwise, be appointed by ordinary resolution.

(3) The appointment of a person as a director is not effective until that person has consented in writing to act as a director of the company.

(4) The company must, if required to do so by the Registrar, produce any consent specified in subsection (3).

Director ceasing to hold office

84. (1) The office of director of a company is vacated if the person holding that office—

(a) resigns in accordance with subsection (2); or

(b) is removed from office in accordance with subsection (4) or the rules of the company; or

(d) dies; or

(e) otherwise vacates office in accordance with the rules of the company.

(2) A director of a company may resign by signing a written notice of resignation and delivering it to the registered office of the company.

(3) Subject to subsections (5) and (6), the notice is effective when it is received at that address or at a later time specified in the notice.

(4) Subject to the company's rules, a director may be removed by ordinary resolution.

(5) If a company has only 1 director, that director may not resign office—

(a) until that director has called a meeting of shareholders to receive notice of the resignation; or

(b) if the company has only 1 shareholder, until that director has given not less than 10 working days' notice of the resignation to that shareholder.

(6) A notice of resignation given by the sole director of a company does not take effect, despite its terms, until the earlier of the appointment of another director of the company or—

(a) the time and date for which a meeting of shareholders is called under subsection (5)(a); or

(b) if the company has only 1 shareholder, 10 working days after notice of the resignation has been given to that shareholder.

(7) Despite the vacation of office, a person who held office as a director remains liable under the provisions of this Act that impose liabilities on directors in relation to acts and omissions and decisions made while that person was a director.

Notice of change of directors

85. (1) A company must ensure that the following notices in the prescribed form are delivered to the Registrar for registration—

(a) notice of a change in the directors of a company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both;

(b) notice of a change in the name or the residential address or the postal address of a director of a company.

(2) A notice under subsection (1) must—

(a) specify the date of the change; and

(b) include the full name and residential address and postal address of every person who is a director of the company from the date of the notice;

(i) the change occurring, in the case of the appointment or resignation of a director; or

(ii) the company first becoming aware of the change, in the case of the death of a director or a change in the name or residential address or postal address of a director.

(3) If a company fails to comply with this section, a late filing fee must be paid to the Registrar and the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Remuneration of directors

86. Directors may receive remuneration and other benefits from the company—

(a) in accordance with its rules; or

(b) with the approval of shareholders under section 50.

Proceedings of directors

87. (1) The rules of a company must include provisions—

(a) for holding meetings of directors of the company; and

(b) that govern proceedings at meetings of directors of the company.

(2) Meetings of the directors of a company must be held in accordance with the rules of the company.

PART 6—ENFORCEMENT

Division 1—Injunctions

Injunctions to require compliance with Act and rules

88. (1) Without limiting section 16(2) or this Part, the Court may, on an application under this section, make an order restraining a company that, or a director of a company who, proposes to engage in conduct that would contravene the rules of the company or this Act from engaging in that conduct.

(2) An application may be made by—

(a) the company; or

(b) a director or shareholder of the company.

(3) If the Court makes an order under subsection (1), it may also grant any consequential relief that it thinks fit.

(4) An order may not be made under this section in relation to conduct or a course of conduct that has been completed.

(5) The Court may, at any time before the final determination of an application under subsection (1), make, as an interim order, any order that it is empowered to make under that subsection.

Division 2—Derivative Actions

Leave to bring proceedings

89. Subject to section 93, the Court may, on the application of a person referred to in section 90, grant leave to that person to—

(a) bring proceedings in the name and on behalf of the company or any subsidiary of the company; or

(b) intervene in proceedings to which the company or any subsidiary company is a party for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or subsidiary, as the case may be.

Who may apply for leave to bring proceedings

90. An application for leave to bring proceedings or to intervene in proceedings under section 89 may be made by—

(a) a director of the company; or

(b) a shareholder or shareholders representing not less than 10% of the voting rights of all shareholders entitled to vote on a resolution to amend the rules of the company.

Matters that Court must consider

91. Without limiting section 89, in determining whether to grant leave under that section, the Court must consider—

(a) the likelihood of the proceedings succeeding; and

(b) the costs of the proceedings in relation to the relief likely to be obtained; and

(d) the interests of the company or subsidiary in the proceedings being commenced, continued, defended, or discontinued, as the case may be.

When leave may be granted

92. Leave to bring proceedings or intervene in proceedings may be granted only if the Court is satisfied that either—

(a) the company or subsidiary does not intend to bring, diligently continue or defend, or discontinue the proceedings, as the case may be; or

(b) it is in the interests of the company or subsidiary that the conduct of the proceedings should not be left to the directors or to the determination of the shareholders as a whole.

Procedural matters

93. (1) Notice of the application must be served on the company or subsidiary.

(2) The company or subsidiary—

(a) must inform the Court whether or not it intends to bring, continue, defend, or discontinue the proceedings, as the case may be; and

(b) may appear and be heard.

(3) Except as otherwise provided, a shareholder is not entitled to bring or intervene in any proceedings in the name of, or on behalf of, a company or its subsidiaries.

(4) No proceedings brought or intervened in with leave of the Court may be settled or compromised or discontinued without the approval of the Court.

Powers of Court

94. The Court may, at any time, make any order that it thinks fit in relation to proceedings brought or intervened in with leave of the Court and, without limitation, may—

(a) make an order authorising the person to whom leave was granted or any other person to control the conduct of the proceedings;

(b) give directions for the conduct of the proceedings;

(c) make an order requiring the company or the directors to provide information or assistance in relation to the proceedings;

(d) make an order directing that any amount ordered to be paid by a defendant in the proceedings must be paid, in whole or part, to former and present shareholders of the company or subsidiary instead of to the company or the subsidiary.

Costs of derivative action to be met by company

95. The Court must, on the application of the person to whom leave was granted, order that the reasonable costs of bringing or intervening in the proceedings, including any costs relating to any settlement, compromise, or discontinuance approved by the Court, must be met by the company unless the Court considers that it would be unjust or inequitable for the company to bear those costs, or to bear the whole of those costs.

Division 3—Personal Actions by Shareholders

Personal actions by shareholders against company

96. (1) A shareholder of a company may bring an action against the company for breach of a duty owed by the company to him or her as a shareholder.

(2) The Court may, on the application of a shareholder of a company, if it is satisfied that it is just and equitable to do so, make an order requiring the company to take any action that is required to be taken by the rules of the company or this Act, whether or not the company owes a duty to the shareholder to take that action.

(3) On making an order under this section, the Court may grant any consequential relief that it thinks fit.

Personal actions by shareholders against directors

97. (1) A shareholder or former shareholder may bring an action against a director for breach of a duty owed to him or her as a shareholder.

(2) An action may not be brought under subsection (1) to recover any loss in the form of a reduction in the value of shares in the company or a failure of the shares to increase in value by reason only of a loss suffered, or a gain foregone, by the company.

(3) The Court may, on the application of a shareholder of a company, if it is satisfied that it is just and equitable to do so, make an order requiring a director of the company to take any action that is required to be taken by the directors under the rules of the company or this Act, whether or not the director owes a duty to the shareholder to take that action.

(4) On making an order under this section, the Court may grant any consequential relief that it thinks fit.

Representative actions

98. (1) The Court may appoint a shareholder of a company to represent all or some of the shareholders having the same or substantially the same interest if—

(a) the shareholder brings proceedings against the company or a director; and

(b) other shareholders have the same, or substantially the same, interest in relation to the subject matter of the proceedings.

(2) On making an order under subsection (1), the Court may, for that purpose, make any other order that it thinks fit, including an order—

(a) as to the control and conduct of the proceedings;

(b) as to the costs of the proceedings;

(c) directing the distribution of any amount ordered to be paid by a defendant in the proceedings among the shareholders represented.

Division 4—Prejudiced shareholders

Prejudiced shareholders

99. (1) A shareholder or former shareholder of a company may apply to the Court for an order under subsection (2) if the shareholder considers that the affairs of the company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him or her in that capacity or in any other capacity.

(2) If the Court considers that it is just and equitable to do so, it may make any order that it thinks fit, including an order—

(a) requiring the company or any other person to acquire the shareholder's shares; or

(b) requiring the company or any other person to pay compensation to a person; or

(d) altering or adding to the company's rules; or

(e) appointing a receiver of the company; or

(f) directing the rectification of the records of the company; or

(g) putting the company into liquidation; or

(h) setting aside action taken by the company or the board in breach of this Act or the rules of the company.

(3) No order may be made against the company or any other person under subsection (2) unless the company or that person is a party to the proceedings in which the application is made.

Certain conduct deemed prejudicial

100. Failure to comply with any of the following sections is conduct that is deemed to be unfairly prejudicial for the purposes of section 99—

(a) section 25(1) (which relates to the issue of shares);

(b) section 29 (which relates to dividends);

(d) section 33 (which relates to redeemable shares);

(e) section 35 (which relates to the provision of financial assistance by a company to purchase its own shares);

(f) section 49 (which relates to major transactions);

(g) section 53 (which relates to the alteration of shareholder rights).

Alteration to rules by Court

101. (1) Despite anything in this Act, but subject to the order, if the Court makes an order under section 99 altering or adding to the rules of a company, the rules must not, to the extent that they have been altered or added to by the Court, again be altered or added to without the leave of the Court.

(2) Any alteration or addition to the rules of a company made by an order under section 99 has the same effect as if it had been made by the shareholders of the company under section 14, and this Act applies to the rules as altered or added to.

(3) Within 10 working days of the making of an order under section 99 altering or adding to the rules of a company, the company must ensure that a copy of the order and a copy of the rules as altered or added to are delivered to the Registrar for registration.

(4) If a company fails to comply with subsection (3)—

(a) the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units; and

(b) every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Division 5—Certain Applications

Effect of arbitration clause in rules

102. A shareholder is entitled to apply to the Court for relief under sections 88 to 97 and 99 despite any provision in the rules of a company requiring disputes relating to the affairs of the company to be referred to arbitration, or otherwise seeking to prohibit the shareholder from making the application.

PART 7—ADMINISTRATION OF COMPANIES

Division 1—Dealings with Third Parties

Authority to bind company

103. (1) A contract or other enforceable obligation may be entered into by a company as follows—

(a) an obligation that, if entered into by a natural person, would, by law, be required to be by deed, may be entered into on behalf of the company in writing signed under the name of the company by—

(i) two or more directors of the company; or

(ii) in the case where the company has only 1 director, by that director; or

(iii) if the rules of the company so provide, a director, or other person or class of persons; or

(iv) one or more attorneys appointed by the company in accordance with section 104;

(b) an obligation that, if entered into by a natural person, is, by law, required to be in writing, may be entered into on behalf of the company—

(i) in the manner specified in paragraph (a); or

(ii) in writing by a person acting under the company's express or implied authority;

(c) an obligation that, if entered into by a natural person, is not, by law, required to be in writing, may be entered into on behalf of the company by a person acting under the company's express or implied authority.

(2) Nothing in subsection (1) prevents a company from affixing its common seal to a contract or document, if it has one. But despite anything in the rules of the company, the absence of a seal does not affect the enforceability of an obligation entered into in accordance with subsection (1).

(3) Subsection (1) applies to a contract or other obligation whether or not—

(a) that contract or obligation was entered into in Solomon Islands; and

(b) the law governing the contract or obligation is the law of Solomon Islands.

Attorneys

104. (1) Subject to its rules, a company may, by an instrument in writing executed in accordance with section 103(1)(a), appoint a person as its attorney either generally or in relation to a specified matter.

(2) An act of the attorney in accordance with the instrument binds the company.

Validity of dealings with third parties

105. (1) Subject to sections 107 and 108, the validity of a transaction entered into by a company is not affected by—

(a) a failure to comply with this Act (except section 103); or

(b) a failure to comply with the company's rules; or

(d) a failure by the company or its directors to take any steps required by the company's rules to authorise entry into the transaction; or

(e) the fact that the transaction is not in the interests of the company; or

(f) a breach of duty by a director in connection with entry into the transaction.

(2) Subsection (1) does not limit—

(a) section 88 (which relates to injunctions to restrain conduct by a company that would contravene its rules); or

(b) sections 89 to 95 (which relate to derivative actions); or

(d) section 97 (which relates to actions by shareholders against directors); or

(e) the obligations and the liabilities of directors of a company in respect of any contract or other obligation, or transfer of property to or by the company.

(3) In this section and sections 107 to 109, "transaction"—

(a) includes any contract or other obligation entered into by a company, or any transfer of property to or by a company; but

(b) does not include—

(i) a distribution to shareholders; or

(ii) an indemnity provided to a director under section 74; or

(iii) remuneration or other benefits given to a director in accordance with section 86.

Assumptions that may be made by third parties

106. (1) Without limiting section 105, neither a company nor any person claiming under or through a company, nor a guarantor of an obligation of a company, may assert against a person dealing with the company or against a person who has acquired property, rights, or interests from the company that—

(a) a person named as a director of the company in the most recent notice received by the Registrar under section 85 or in the most recent annual return delivered to the Registrar—

(i) is not a director of a company; or

(ii) has not been duly appointed; or

(iii) does not have authority to exercise a power that a director of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

(b) a person held out by the company as a director, employee, or agent of the company—

(i) has not been duly appointed; or

(ii) does not have authority to exercise a power that a director, employee, or agent of a company carrying on business of the kind carried on by the company customarily has authority to exercise;

(c) a person held out by the company as a director, employee, or agent of the company with authority to exercise a power that a director, employee, or agent of a company carrying on business of the kind carried on by the company does not customarily have authority to exercise, does not have authority to exercise that power;

(d) a document issued on behalf of a company by a director, employee, or agent of the company with actual or usual authority to issue the document is not valid or not genuine,

unless the person has, or ought to have by virtue of his or her position with or relationship to the company, knowledge of the matters referred to in any of paragraphs (a) to (d).

(2) Subsection (1) applies even though a person of the kind referred to in that subsection acts fraudulently or forges a document that appears to have been signed on behalf of the company, unless the person dealing with the company or with a person who has acquired property, rights, or interests from the company has actual knowledge of the fraud or forgery.

(3) A person is not affected by, or deemed to have notice or knowledge of the contents of, the rules of, or other documents relating to, a company merely because the rules or documents are—

(a) registered on the Solomon Islands register; or

(b) available for inspection by that person under Division 2.

Transaction in which directors are interested

107. (1) A transaction entered into by a company in which a director is directly or indirectly materially interested is voidable at the option of the company, unless—

(a) this Act or the company's rules expressly authorise entry into the transaction despite such an interest; or

(b) the transaction has been entered into with the approval of shareholders under section 50 following disclosure of the nature and extent of the director's interest to all shareholders who were not otherwise aware of the transaction; or

(c) the other party to the transaction is a person other than the director or a person associated with the director and either—

(i) that person did not know of the interest of the director; or

(ii) the company received fair value under the transaction.

(2) For the purposes of this section and section 108, a person is "associated with a director" if the director—

(a) is the parent, child, or spouse of that person; or

(b) is a director, employee, or trustee of that person; or

Transactions entered into by directors in breach of certain duties

108. A transaction entered into by a company as the result of action taken by a director in breach of section 64, 65, or 66 is voidable at the option of the company if—

(a) the other party to the transaction is the director or a person associated with the director; or

(b) the other party to the transaction is a person with knowledge of the circumstances giving rise to the breach of section 64, 65, or 66, and the company did not receive fair value under the transaction.

Effect on third parties

109. The setting aside of a transaction under section 107 or 108 does not affect the title or interest of a person in or to property that the person has acquired if the property was acquired—

(a) from a person other than the company; and

(b) for valuable consideration; and

(c) without knowledge of the circumstances that entitle the company to set aside the transaction under which the property was acquired from the company.

Pre-incorporation contracts may be ratified

110. (1) In this section and in sections 111 and 112, "pre-incorporation contract" means—

(a) a contract purporting to be made by a company before its incorporation; or

(b) a contract made by a person on behalf of a company before, and in contemplation of, its incorporation.

(2) Despite any written law or other law, a pre-incorporation contract may be ratified by the company within any period that may be specified in the contract, or if no period is specified, within a reasonable time after the incorporation of the company in the name of which, or on behalf of which, it has been made.

(3) A pre-incorporation contract that is ratified is as valid and enforceable as if the company had been a party to the contract when it was made.

(4) A pre-incorporation contract may be ratified by a company in the same manner as a contract may be entered into on behalf of a company under section 103.

(5) Despite any other Act, if a pre-incorporation contract has not been ratified by a company, or validated by the Court under section 112, the company may not enforce it or take the benefit of it.

Warranties implied in pre-incorporation contracts

111. (1) Despite any written law or other law, in a pre-incorporation contract, unless a contrary intention is expressed in the contract, there is an implied warranty by the person who purports to make the contract in the name of, or on behalf of, the company—

(a) that the company will be incorporated within the period specified in the contract or, if no period is specified, within a reasonable time after the making of the contract; and

(b) that the company will ratify the contract within the period specified in the contract or, if no period is specified, within a reasonable time after the incorporation of the company.

(2) The amount of damages recoverable in an action for breach of a warranty implied by subsection (1) is the same as the amount of damages that would be recoverable in an action against the company for damages for breach by the company of any unperformed obligations under the contract if the contract had been ratified.

(3) If, after its incorporation, a company enters into a contract in the same terms as, or in substitution for, a pre-incorporation contract (not being a contract ratified by the company under section 110), the liability of a person under subsection (1) (including any liability under an order made by the Court for the payment of damages) is discharged unless a contrary intention is expressed in the pre-incorporation contract.

Failure to ratify

112. (1) A party to a pre-incorporation contract that has not been ratified by the company after its incorporation may apply to the Court for an order—

(a) directing the company to return to that party property of any kind acquired by the company from that party by virtue of the contract; or

(b) for any other relief in favour of that party relating to the property.

(2) The Court may, if it considers it just and equitable to do so, make any order or grant any relief that it thinks fit and may do so whether or not an order has been made under section 111(2).

Division 2—Company Records

Company records

113. (1) A company must keep the following documents at its registered office—

(a) the rules of the company;

(b) minutes of all meetings and resolutions of shareholders within the last 7 years;

(d) a consent by each person named as a director to act as a director of the company in the prescribed form as well as the full names and residential and postal addresses of the current directors;

(e) copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports;

(f) the accounting records required by section 124 for the current accounting period and for the last 7 completed accounting periods of the company;

(g) copies of all financial statements required to be completed under section 125 for the last 7 completed accounting periods of the company;

(h) the share register.

(2) The references in subsection (1)(b), (c), and (e) to 7 years and the references in subsection (1)(f) and (g) to 7 completed accounting periods include any lesser periods that the Registrar may approve by notice in writing to the company.

(3) The company records referred to in this section may be kept at a place in Solomon Islands other than the company's registered office, provided that notice of that place is given to the Registrar in accordance with subsection (4).

(4) If any company records are not kept at the registered office of the company, or the place at which they are kept is changed, the company must ensure that within 10 working days of their first being kept elsewhere or moved, as the case may be, notice is given to the Registrar of the places where the records are kept.

(5) If a company fails to comply with subsection (1) or (4), the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Form of records

114. (1) The records of a company must be kept—

(a) in written form; or

(b) in a form or in a manner that allows the records to be readily accessible so as to be usable for subsequent reference, and convertible into written form.

(2) The directors must ensure that adequate measures exist to—

(a) prevent the records being falsified; and

(b) detect any falsification of them.

Inspection of records by directors

115. (1) Subject to subsection (2), every director of a company is entitled to inspect the records of the company—

(a) in written form; and

(b) without charge; and

(2) The Court may, on application by the company, direct that the records need not be made available for inspection or limit the inspection of them in any manner it thinks fit if it is satisfied that—

(a) it would not be in the company's interests for a director to inspect the records; or

(b) the proposed inspection is for a purpose that is not properly connected with the director's duties.

Inspection of records by shareholders

116. (1) A company must keep the following records available for inspection in the manner prescribed in section 118 by a shareholder of the company, or by a person authorised in writing by a shareholder for the purpose, who serves written notice of intention to inspect on the company—

(a) minutes of all meetings and resolutions of shareholders;

(b) copies of written communications to all shareholders or to all holders of a class of shares during the preceding 7 years, including annual reports and financial statements;

(2) If a company fails to comply with subsection (1) —

(a) the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units; and

(b) every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Inspection of records by public

117. (1) A company must keep the following records available for inspection in the manner prescribed in section 118 by any person who serves written notice of intention to inspect on the company—

(a) the certificate of incorporation or registration of the company;

(b) the rules of the company, if they differ from the model rules;

(d) the full names and residential addresses of the directors;

(e) details of the registered office of the company and of its postal address, if different from the registered office.

(2) If a company fails to comply with subsection (1), the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Manner of inspection

118. (1) Documents that may be inspected under section 116 or 117 must be available for inspection at the place at which the company's records are kept between the hours of 8.00 am and 4.00 pm on each working day during the inspection period.

(2) In this section, "inspection period" means the period commencing on the third working day after the day on which notice of intention to inspect is served on the company by the person or shareholder concerned and ending with the eighth working day after the day of service.

(3) A person may require a copy of, or extract from, a document that is available for inspection by him or her under section 116 or 117 to be sent to the person—

(a) within 5 working days after he or she has made a request in writing for the copy or extract; and

(b) if he or she has paid a reasonable copying and administration fee specified by the company.

(4) If a company fails to provide a copy of, or extract from, a document in accordance with a request under subsection (3), the company commits an offence and is liable on conviction to a fine not exceeding 10 penalty units.

Division 3—Documents to be sent to Registrar and Shareholders

Annual returns

119. (1) The directors of a company must ensure that there is delivered to the Registrar each year, for registration, during the month allocated to the company for the purpose, an annual return—

(a) in the prescribed form; and

(b) containing the prescribed information; and

(2) The annual return must be dated as at a day within the month during which the return is required to be delivered to the Registrar, and the information required to be contained in it must be compiled as at that date.

(3) The annual return must be signed by a director of the company or by a legal practitioner or chartered accountant authorised for that purpose.

(4) On registration of a company under Part 2, the Registrar must allocate a month to the company for the purposes of this section.

(5) The Registrar may, by written notice to a company, alter the month allocated to the company under subsection (4).

(6) Despite subsection (1)—

(a) a company need not make an annual return in the calendar year of its incorporation; and

(b) a subsidiary may, with the written approval of the Registrar, make an annual return during the month allocated to its holding company instead of during the month allocated to it.

(7) Different forms of annual return may be prescribed by the Registrar in respect of different classes of companies.

Registrar may send annual return form to company

120. (1) The Registrar may send to a company an annual return form that sets out the prescribed information as it appears on the Solomon Islands register—

(a) for approval in accordance with section 119(3) if the information set out in the form is current as at a date in the month in which the return is required to be made; or

(b) for such correction as may be required, and approval of the corrected information in accordance with section 119(3).

(2) If the annual return contains—

(a) an address of the registered office of the company; or

(b) a postal address of the company,

that is different from the address of the registered office or the postal address of the company entered on the Solomon Islands register, the Registrar may alter the Solomon Islands register accordingly.

(3) For the purposes of this section the Registrar may make provision for electronic submission of the annual return.

Special Annual Return

121. (1) The directors of a company must ensure that there is delivered to the Registrar a special annual return—

(a) in the prescribed form or in a form approved by the Registrar by public notice; and

(b) containing the prescribed information.

(2) The special annual return must be filed within 10 days of the occurrence of any of the following specified events—

(a) the adoption of new rules by a company, or the alteration of the rules of a company, under section 14;

(b) a change in the registered office or postal address of the company under section 18;

(d) the acquisition by the company of its own shares under section 30;

(e) the redemption of a share under section 34;

(f) a change in the directors of the company, or of a change in the name or residential address of a director, under section 85;

(g) the making of an order under section 99 altering or adding to the rules of a company;

(h) any documents requested by the Registrar under section 176.

Annual report to shareholders

122. An annual report must be sent to shareholders in accordance with section 55.

Other documents to be sent to shareholders

123. In addition to any annual report required under section 55, a company must send the following documents to shareholders—

(a) notice of any repurchase of shares to which section 30(4) applies;

(b) notice of a written resolution approved under section 51;

(d) a written statement by an auditor under section 131;

(e) a report by an auditor under section 133.

Division 4—Accounting and Audit

Accounting records to be kept

124. (1) The directors of a company must ensure accounting records are kept that—

(a) correctly record and explain the transactions of the company; and

(b) will at any time enable the financial position of the company to be determined with reasonable accuracy; and

(c) will enable the directors to ensure that the financial statements of the company comply with section 125 and with any regulations made under this Act; and

(d) will enable the financial statements of the company to be readily and properly audited.

(2) Without limiting subsection (1), the accounting records must contain—

(a) entries of money received and spent each day and the matters to which it relates; and

(b) a record of the assets and liabilities of the company; and

(i) a record of goods bought and sold, and relevant invoices; and

(ii) a record of stock held at the end of the financial year together with records of any stocktaking during the year; and

(d) if the company's business involves providing services, a record of services provided and relevant invoices.

(3) If a company sells goods or provides services for cash in the ordinary course of carrying on a retail business—

(a) invoices need not be kept in respect of each retail transaction for the purposes of subsection (2); and

(b) a record of the total money received each day in respect of the sale of goods or provision of services, as the case may be, is sufficient to comply with subsection (2) in respect of those transactions.

(4) The accounting records must be kept in a form permitted under section 114.

(5) If the directors of a company fail to comply with the requirements of this section, every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Financial statements to be prepared

125. (1) The directors of any public or community company must ensure that—

(a) within 4 months after the balance date of the company, or within any extended period applicable under subsection (3), financial statements that comply with subsection (2) are completed in relation to the company and that balance date; and

(b) within 20 working days of the date on which the financial statements must be completed under paragraph (a), those financial statements are sent to all shareholders (this requirement may be satisfied by sending the financial statements to shareholders in an annual report in accordance with section 55).

(2) The financial statements of a company must—

(a) give a true and fair view of the matters to which the statements relate; and

(b) comply with any applicable regulations made under this Act; and

(c) be dated and signed on behalf of the directors by 2 directors of the company or, if the company has only 1 director, by that director.

(3) The following periods must not exceed 15 months—

(a) the period between the date of incorporation of a company and its first balance date;

(b) the period between any 2 balance dates of a company.

Application

126. (1) This section and sections 127 to 129 apply to a company in respect of an accounting period if—

(a) it is registered as a public company at any time during that accounting period; or

(b) the company's rules require it to appoint an auditor in respect of that accounting period; or

(c) a shareholder or shareholders holding shares that together carry the right to receive more than 20% of distributions made by the company give written notice to the company before the end of the accounting period requiring the financial statements of the company for that period to be audited.

(2) If this section and sections 127 to 129 apply to a company in respect of an accounting period, but do not apply in respect of a subsequent accounting period—

(a) the financial statements of the company for the accounting period in respect of which this section applies must be audited; and

(b) the directors may give notice to all shareholders within 4 months of the commencement of a subsequent accounting period that this section and sections 127 to 129 no longer apply to the company, and that the auditor will cease to hold office unless a notice is given by shareholders under subsection (1)(c) by a date specified in the notice, which must be not less than 30 working days from the date on which the notice is given; and

(c) if a notice has been given under paragraph (b), and no notice under subsection (1)(c) is received by the company by the date specified in that notice, the auditor ceases to hold office on the later of—

(i) the date specified in the notice; or

(ii) the date on which the audit of the financial statements of the company for the previous accounting period is completed.

Appointment of auditor

127. (1) A company to which this section applies must appoint an auditor—

(a) to hold office as auditor until the auditor ceases to hold office under section 128; and

(b) to audit the financial statements of the company.

(2) A company must appoint an auditor—

(a) within 30 working days of the date on which this section first applies to the company;

(b) within 30 working days of any vacancy arising in the office of auditor.

When auditor ceases to hold office

128. An auditor ceases to hold office if he or she—

(a) ceases to hold office under section 126(2); or

(b) resigns by delivering a written notice of resignation to the registered office of the company not less than 20 working days before the date on which the notice is expressed to be effective; or

(d) is replaced as auditor by an ordinary resolution appointing another person as auditor in his or her place, following notice to the auditor in accordance with section 131(2); or

(e) dies; or

(f) a person in respect of whom an order of custody is in force under section 18 or 41 of the Mental Treatment Act (Cap 103).

Court may appoint auditor on request of shareholder

129. (1) The Court may, at the request of any shareholder, appoint an auditor if—

(a) this section applies to a company; and

(b) the company has neglected or failed to appoint an auditor.

(2) If the Court appoints an auditor, the Court may determine the fees to be paid by the company to the auditor.

(3) Any fees determined by the Court may be recovered as if the fees were provided for in a contract between the company and the auditor.

Qualifications of auditor

130. (1) A person must not be appointed or act as an auditor of a company unless—

(a) the person is entitled to practise and certified by an association of accountants constituted in Solomon Islands, as an accountant in Solomon Islands, and meets any further requirements in respect of practice as an auditor in Solomon Islands that may be prescribed by regulations made under this Act; or

(b) if the audit is to be carried out outside Solomon Islands for an overseas company, the person is eligible to act as an auditor in the country, state, or territory in which the audit is to be carried out.

(2) The following persons must not be appointed or act as auditor of a company—

(a) a director or secretary or employee of the company, or any other person responsible for keeping the accounting records of the company;

(b) a person who is a partner, or in the employment, of a person referred to in paragraph (a);

(d) a corporation;

(e) a person who, by virtue of any of paragraphs (a) to (c), may not be appointed or act as auditor of a related company.

(3) For the purpose of this Act, the Auditor General is deemed qualified auditor of a company.

Statement by auditor in relation to resignation or removal

131. (1) If an auditor resigns from office, the directors must, if requested to do so by that auditor—

(a) distribute to all shareholders, at the expense of the company, a written statement of the auditor's reasons for resigning; or

(b) permit the auditor or his or her representative to explain at a shareholders' meeting the reasons for the resignation.

(2) A company must not appoint a new auditor in the place of an auditor who is qualified to hold that office, unless—

(a) at least 20 working days' written notice of a proposal to do so has been given to the auditor; and

(b) the auditor has been given a reasonable opportunity to make representations to the shareholders on the appointment of another person either in writing or by the auditor or his or her representative speaking at a shareholders' meeting (whichever the auditor may choose).

(3) An auditor is entitled to be paid reasonable fees and expenses by the company for making the representations to shareholders referred to in subsection (1) or (2).

Auditor to avoid conflict of interest

132. An auditor of a company must ensure, in carrying out the duties of an auditor under this Part, that his or her judgment is not impaired by reason of any relationship with, or interest in, the company or any related company.

Auditor's report

133. (1) The auditor of a company to which sections 126 to 129 apply must make a report to the shareholders on the financial statements audited by him or her that states—

(a) the work done by the auditor; and

(b) the scope and limitations of the audit; and

(c) the existence of any relationship (other than that of auditor) that the auditor has with, or any interests that the auditor has in, the company or any related company; and

(d) whether the auditor has obtained all information and explanations that he or she has required; and

(e) whether, in the auditor's opinion, as far as appears from an examination of them, proper accounting records have been kept by the company; and

(f) whether, in the auditor's opinion and having regard to any information or explanations that may have been added by the company, the financial statements—

(i) give a true and fair view of the matters to which they relate; and

(ii) comply with any applicable regulations made under this Act,

and, if such statements do not, the respects in which they fail to give such a view or comply with such requirements, as the case may be; and

(g) any other matter prescribed for the purposes of this section by regulations made under this Act.

(2) Any audit report made by a person not qualified under section 130 is deemed not to be a report required under this Act.

Access to information

134. (1) The directors of a company must ensure that an auditor of the company has access at all reasonable times to the accounting records and other documents of the company.

(2) An auditor of a company is entitled to require from a director or employee of the company such information and explanations that he or she thinks necessary for the performance of his or her duties as auditor.

(3) If the directors of a company fail to comply with subsection (1), every director commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

(4) A director or employee who fails to comply with subsection (2) commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

(5) It is a defence to an employee charged with an offence against subsection (4) if the employee proves that—

(a) he or she did not have the information required in his or her possession or under his or her control; or

(b) by reason of the position occupied by him or her or the duties assigned to him or her, he or she was unable to give the explanations required.

Auditor's attendance at shareholders' meeting

135. (1) The directors of a company must ensure that the auditor of the company—

(a) is permitted to attend a meeting of shareholders of the company; and

(b) receives the notices and communications that a shareholder is entitled to receive relating to meetings and resolutions of shareholders; and

(c) may be heard at a meeting of shareholders that the auditor attends on any part of the business of the meeting that concerns him or her as auditor.

(2) If the directors of a company fail to comply with subsection (1), every director of the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

PART 8—AMALGAMATIONS

Amalgamations

136. With the exception of a community company any two or more companies may amalgamate, and continue as 1 company, in accordance with Schedule 7.

PART 9—OFFERS OF SECURITIES TO THE PUBLIC

Meaning of advertisement

137. In this Part, unless the context otherwise requires, "advertisement" means a form of communication—

(a) that—

(i) contains or refers to an offer of debt or equity securities to the public; or

(ii) is reasonably likely to induce persons to subscribe for debt or equity securities of an issuer, being securities to which the communication relates and that have been, or are to be, offered to the public; and

(b) that is authorised or instigated by, or on behalf of, the issuer of the debt or equity securities or prepared with the co-operation of, or by arrangement with, the issuer of the securities; and

Misleading or deceptive conduct generally

138. (1) A person must not engage in conduct in relation to any advertisement or generally for any debt and equity securities or any dealings in debt and equity securities that is misleading or deceptive or likely to mislead or deceive.

(2) This section applies more broadly than the rest of this Part and so applies to all dealings in debt and equity securities including trading.

(3) Any person who contravenes this section commits an offence and is liable on conviction to a fine of 1000 penalty units or a term of imprisonment not exceeding 5 years.

(4) Any person who suffers loss or damage as a result of a contravention of this section may apply to the Court for a civil remedy in damages as against the company and the directors jointly and severally at the time of the publication of the advertisement.

PART 10—REMOVAL OF COMPANIES FROM REGISTER

Division 1 – Removal

Removal from register

139. A company is removed from the Solomon Islands register when a notice is registered by the Registrar stating that the company is removed from the Solomon Islands register under this Act.

Grounds for removal from register

140. Subject to section 142, the Registrar must remove a company from the Solomon Islands register if—

(a) the company fails to file its annual return within a period of 6 months after the date allocated; or

(b) the company has been put into liquidation, and the prescribed documents confirming that the liquidation of the company has been completed have not been sent or delivered to the Registrar within 6 months after the completion of the liquidation; or

(c) there is sent or delivered to the Registrar a request that the company be removed from the Solomon Islands register on either of the grounds specified in section 141 made by—

(i) a shareholder or any other person authorised to make the request by a special resolution of shareholders entitled to vote and voting on the question; or

(ii) a director or any other person, if the rules of the company so require or permit; or

(d) a liquidator sends or delivers to the Registrar the prescribed documents confirming that the liquidation of the company has been completed.

Request for company to be removed from register

141. A request that a company be removed from the Solomon Islands register under section 140(c) may be made on the grounds that the company—

(a) has ceased to carry on business, has discharged in full its liabilities to all its known creditors, and has distributed its surplus assets in accordance with its rules and this Act; or

(b) has no surplus assets after paying its debts in full or in part, and no creditor has applied to the Court for an order putting the company into liquidation.

Requirements to be met before company must be removed from register

142. The Registrar must remove a company from the Solomon Islands register under section 140(c) or (d), only if the Registrar is satisfied that no person has objected to the removal under section 144.

Division 2 – Notices

Notice of intention to remove

143. (1) If a company is to be removed from the Solomon Islands register under section 140(b), the Registrar must give public notice.

(2) If a company is to be removed from the Solomon Islands register under section 140(c) or (d), the applicant, or the liquidator, as the case may be, must give public notice.

Division 3 – Objections

Objectives to removal from Solomon Islands register

144. (1) If a notice is given of an intention to remove a company from the Solomon Islands register, any person may apply to the Court, not later than the date specified in the notice, and lodge a notice of objection to the removal on any 1 or more of the following grounds—

(a) that the company is still carrying on business or there is other reason for it to continue in existence;

(b) that the company is a party to legal proceedings;

(d) that the person is a creditor, or a shareholder, or a person who has an undischarged claim against the company;

(e) that the person believes that there exists, and intends to pursue, a right of action on behalf of the company under Part 6;

(f) that, for any other reason, it would not be just and equitable to remove the company from the Solomon Islands register.

(2) For the purposes of subsection (1)(d) —

(a) a claim by a creditor against a company is not an undischarged claim if—

(i) the claim has been paid in full; or

(ii) the claim has been paid in part under a compromise entered into under Division 1 of Part 2 of the Companies (Insolvency and Receivership) Act or by being otherwise compounded to the reasonable satisfaction of the creditor; or

(iii) the claim has been paid in full or in part by a receiver or a liquidator in the course of a completed receivership or liquidation; or

(iv) a receiver or a liquidator has notified the creditor that the assets of the company are not sufficient to enable any payment to be made to the creditor; and

(b) a claim by a shareholder or any other person against a company is not an undischarged claim if—

(i) payment has been made to the shareholder or that person in accordance with a right under the company's rules to receive or share in the company's surplus assets; or

(ii) a receiver or liquidator has notified the shareholder or that person that the company has no surplus assets.

Powers of Court

145. On an application for an order under section 144, the Court may make an order that the company is not to be removed from the Solomon Islands register if the Court is satisfied that the company should not be removed from the Solomon Islands register on any of those grounds.

Division 4 –Effect of Removal from Register

Property of company removed from register

146. (1) Property that, immediately before the removal of a company from the Solomon Islands register, had not been distributed or disclaimed, vests in the Crown with effect from the removal of the company from the Solomon Islands register.

(2) For the purposes of this section, "property of the former company"—

(a) includes leasehold property and all other rights vested in or held on trust for the former company; but

(b) does not include property held by the former company on trust for any other person.

(3) The Minister must, immediately on becoming aware of the vesting of the property, give public notice of the vesting, setting out the name of the former company and details of the property.

(4) If property is vested in the Crown under this section, a person who would have been entitled to receive all or part of the property, or payment from the proceeds of its realisation, if it had been in the hands of the company immediately before the removal of the company from the Solomon Islands register, or any other person claiming through that person, may apply to the Court for an order—

(a) vesting all or part of the property in that person; or

(b) for payment to that person by the Crown of compensation of an amount not greater than the value of the property.

(5) On an application made under subsection (4), the Court may—

(a) decide any question concerning the value of the property, the entitlement of any applicant to the property or to compensation, and the apportionment of the property or compensation among 2 or more applicants; or

(b) order that the hearing of 2 or more applications be consolidated; or

(c) order that an application be treated as an application on behalf of all persons, or all members of a class of persons, with an interest in the property; or

(d) make an ancillary order.

(6) Compensation ordered to be paid under subsection (4) must be paid out of the Consolidated Fund without further appropriation than this section.

Disclaimer of property by Crown

147. (1) The Minister may, by notice in writing, disclaim the Crown's title to property vesting in the Crown if the property is onerous property.

(2) The Minister must immediately give public notice of the disclaimer.

(3) Property that is disclaimed under this section is deemed not to have vested in the Crown.

(4) Subject to any order of the Court, the Minister is not entitled to disclaim property unless—

(a) the property is disclaimed within 12 months after the vesting of the property in the Crown first comes to the notice of the Minister; or

(b) if before the expiry of that 12 month period, any person gives notice in writing to the Minister requiring the Minister to elect, before the close of such date as is stated in the notice, not being a date that is less than 60 working days after the date on which the notice is received by the Minister, whether to disclaim the property, the property is disclaimed before the close of that date.

(5) A statement in a notice disclaiming property under this section that the vesting of the property in the Crown first came to the notice of the Minister on a specified date is, in the absence of proof to the contrary, evidence of the fact stated.

(6) For the purposes of this section, "onerous property" means—

(a) an unprofitable contract; or

(b) property of the company that is unsaleable, or not readily saleable, or which may give rise to a liability to pay money or perform an onerous act.

Effect of disclaimer

148. (1) A disclaimer under section 147—

(a) brings to an end on and from the date of the disclaimer the rights, interests, and liabilities of the Crown in relation to the property disclaimed; and

(b) does not, except so far as necessary to release the Crown from a liability, affect the rights or liabilities of any other person.

(2) A person suffering loss or damage as a result of a disclaimer under section 147 may—

(a) claim as a creditor of the company for the amount of the loss or damage, taking account of the effect of any order made by the Court under paragraph (b); or

(b) apply to the Court for an order that the disclaimed property be delivered to or vested in that person.

(3) The Court may make an order under subsection (2)(b) if it is satisfied that it is just that the property should be vested in the applicant.

Liability of directors, shareholders, and others to continue

149. The removal of a company from the Solomon Islands register does not affect the liability of any former director or shareholder of the company or any other person in respect of any act or omission that took place before the company was removed from the Solomon Islands register and that liability continues and may be enforced as if the company had not been removed from the Solomon Islands register.

Division 5—Restoration of Removed Company to
Solomon Islands Register

Restoration of removed company to Solomon Islands register

150. (1) The Registrar must, on the application of a person referred to in subsection (3)(a)(i), restore a company that has been removed from the Solomon Islands register under section 140(a). The application must be accompanied by all outstanding annual returns and associated filing fees, and a late filing fee for each outstanding annual return.

(2) The Court may, on the application of a person referred to in subsection (3), order that a company that has been removed from the Solomon Islands register be restored to the Solomon Islands register if it is satisfied that—

(a) at the time the company was removed from the Solomon Islands register—

(i) the company was still carrying on business or other reason existed for the company to continue in existence; or

(ii) the company was a party to legal proceedings; or

(iii) the company was in receivership, or liquidation; or

(iv) the applicant was a creditor, or a shareholder, or a person who had an undischarged claim against the company; or

(v) the applicant believed that a right of action existed, or intended to pursue a right of action, on behalf of the company under Part 6; or

(b) for any other reason it is just and equitable to restore the company to the Solomon Islands register.

(3) The following persons may make an application under subsection (1) or (2) —

(a) any person who, at the time the company was removed from the Solomon Islands register—

(i) was a shareholder or director of the company; or

(ii) was a creditor of the company; or

(iii) was a party to any legal proceedings against the company; or

(iv) had an undischarged claim against the company; or

(v) was the liquidator, or a receiver of the property of, the company;

(b) the Registrar;

(4) Before the Court makes an order restoring a company to the Solomon Islands register under this section, it may require any provisions of this Act or any other written law, being provisions with which the company had failed to comply before it was removed from the Solomon Islands register, to be complied with.

(5) The Court may give any directions or make any orders that may be necessary or desirable for the purpose of placing the company and any other persons as nearly as possible in the same position as if the company had not been removed from the Solomon Islands register.

Restoration to register

151. (1) A company is restored to the Solomon Islands register when a notice is registered by the Registrar stating that the company is restored to the Solomon Islands register.

(2) A company that is restored to the Solomon Islands register is deemed to have continued in existence as if it had not been removed from the register.

Vesting of property in company on restoration to register

152. (1) Subject to this section, property of a company that is, at the time the company is restored to the Solomon Islands register, vested in the Crown pursuant to section 146, vests in the company on its restoration to the Solomon Islands register as if the company had not been removed from the Solomon Islands register.

(2) Nothing in subsection (1) applies to any property vested in the Crown under section 146 if the Court has made an order for the payment of compensation to any person under section 146(4)(b) in respect of that property.

(3) Nothing in subsection (1) applies to land or any estate or interest in land that has vested in the Crown if transmission to the Crown of the land or that estate or interest in land has been registered under the Land and Titles Act (Cap. 133).

(4) If transmission to the Crown of land or any estate or interest in land that has vested in the Crown under section 147 has been registered under the Land and Titles Act (Cap. 133), the Court may, on the application of the company, make an order—

(a) for the transfer of the land or the estate or interest to the company; or

(b) for the payment by the Crown to the company of compensation—

(i) of an amount not greater than the value of the land or the estate or interest as at the date of registration of the transmission; or

(ii) if the land or the estate or interest has been sold or contracted to be sold, of an amount equal to the net amount received or receivable from the sale.

(5) On an application under subsection (4), the Court may decide any question concerning the value of the land or the estate or interest.

(6) Compensation ordered to be paid under subsection (4) must be paid out of the Consolidated Fund without further appropriation than this section.

PART 11—OVERSEAS COMPANIES

Meaning of carrying on business

153. For the purposes of this Part —

(a) a reference to an overseas company carrying on business in Solomon Islands includes a reference to the overseas company—

(i) establishing or using a share transfer office or a share registration office in Solomon Islands; or

(ii) administering, managing, or dealing with property in Solomon Islands as an agent, or personal representative, or trustee, and whether through its employees or an agent or in any other manner;

(b) an overseas company does not carry on business in Solomon Islands merely because in Solomon Islands it—

(i) is or becomes a party to a legal proceeding or settles a legal proceeding or a claim or dispute; or

(ii) holds meetings of its directors or shareholders or carries on other activities concerning its internal affairs; or

(iii) maintains a bank account; or

(iv) effects a sale of property through an independent contractor; or

(v) solicits or procures an order that becomes a binding contract only if the order is accepted outside Solomon Islands; or

(vi) creates evidence of a debt or creates a charge on property; or

(vii) secures or collects any of its debts or enforces its rights in relation to securities relating to those debts; or

(viii) conducts an isolated transaction that is completed within a period of 30 working days, not being one of a number of similar transactions repeated from time to time; or

(ix) invests its funds or holds property.

Name must comply with section 10

154. (1) An overseas company must not carry on business in Solomon Islands on or after the commencement of this Act under a name that could not be registered under section 10.

(2) If an overseas company contravenes this section, the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Overseas companies to register under this Act

155. (1) An overseas company that, on or after the commencement of this Act, commences to carry on business in Solomon Islands must –

(a) comply with any requirements under the Foreign Investment Act 2005 or any other law of Solomon Islands; and

(b) apply for registration under this Part in accordance with section 157 within 20 working days of commencing to carry on business.

(2) An overseas company that, immediately before the commencement of this Act, was carrying on business in Solomon Islands and, on the commencement of this Act, continues to carry on business in Solomon Islands, is deemed to be registered under this Part.

(3) An overseas company that changes its name must send or deliver to the Registrar a notice in the prescribed form of the change of name within 10 working days of the change of name.

(4) If an overseas company fails to comply with this section, the overseas company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Validity of transactions not affected

156. A failure by an overseas company to comply with section 154 or 155 does not affect the validity or enforceability of any transaction entered into by the overseas company.

Application for registration

157. (1) An application for registration of an overseas company under this Part must be delivered to the Registrar and must be—

(a) in the prescribed form; and

(b) signed by or on behalf of the overseas company.

(2) Without limiting subsection (1), the application must—

(a) state the name of the overseas company and if the company's name does not comply with section 10, state the name adopted by the company under which it will be conducting business in Solomon Islands; and

(b) state the full names and residential addresses and postal addresses of the directors of the overseas company at the date of the application; and

(c) state the full address of the place of business in Solomon Islands of the overseas company or, if the overseas company has more than 1 place of business in Solomon Islands, the full address of the principal place of business in Solomon Islands of the overseas company; and

(d) state the postal address in Solomon Islands of the overseas company; and

(e) have attached evidence of incorporation of the overseas company, and, if not in English, a certified translation of that document; and

(f) state the full name of 1 or more persons resident or incorporated in Solomon Islands who are authorised to accept service in Solomon Islands of documents on behalf of the overseas company, and the postal address and residential or business address of each of those persons; and

(g) have attached any other documents which may be required under the laws of the Solomon Islands including any certificates which may be required under the Foreign Investment Act 2005.

Registration of overseas company

158. (1) If the Registrar receives a properly completed application for registration under this Part of an overseas company, the Registrar must immediately register the overseas company on the Solomon Islands register.

(2) If the Registrar receives a notice of a change of name of an overseas company in accordance with section 155(3), the Registrar must register the change of name on the Solomon Islands register.

Use of name by overseas company

159. Any overseas company that carries on business in Solomon Islands must ensure that its full name, and the name of the country where it was incorporated, are clearly stated in—

(a) written communications sent by, or on behalf of, the company; and

(b) documents issued or signed by, or on behalf of, the company that evidence or create a legal obligation of the company.

Further information to be provided by overseas company

160. (1) An overseas company that carries on business in Solomon Islands must ensure that, within 20 working days of the change, notice in the prescribed form is given to the Registrar of—

(a) a change in the directors or in the names or residential addresses or postal addresses of the directors of the overseas company; or

(b) a change in the address of the place of business or principal place of business of the overseas company; or

(d) a change in any person or in the postal address or residential or business address of any person authorised to accept service in Solomon Islands of documents on behalf of the overseas company.

(2) If an overseas company fails to comply with subsection (1), the overseas company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Annual return of overseas company

161. (1) Any overseas company that carries on business in Solomon Islands must ensure that the Registrar receives each year, during the month allocated to the overseas company for the purposes of this section, an annual return in the prescribed form confirming that the information on the Solomon Islands register in respect of the overseas company referred to in the return is correct at the date of the return.

(2) The annual return must be dated as at a day within the month during which the return is required to be received by the Registrar.

(3) On registration of an overseas company under this Part, the Registrar must allocate a month to the company for the purposes of this section.

(4) The Registrar may, by written notice to an overseas company, alter the month allocated to the company under subsection (3).

(5) Despite subsection (1), an overseas company that is deemed to be registered under this Part need not make an annual return in the calendar year of its registration under this Part.

(6) If an overseas company fails to comply with subsection (1) or (2) within 6 months, the overseas company must be removed from the register.

(7) The Registrar must, on the application of a director or shareholder, restore an overseas company that has been removed from the Solomon Islands register under subsection (6).

(8) The application under subsection (7) must be received within 7 years and be accompanied by all outstanding annual returns and associated filing fees, and a late filing fee for each outstanding annual return.

Overseas company ceasing to carry on business in Solomon Islands

162. (1) An overseas company that intends to cease to carry on business in Solomon Islands must—

(a) give public notice of that intention; and

(b) give notice to the Registrar in the prescribed form stating the date on which it will cease to carry on business in Solomon Islands.

(2) The Registrar must remove an overseas company from the Solomon Islands register as soon as practicable after—

(a) the date specified in the notice given in accordance with subsection (1)(b); or

(b) receipt of a written notice given by a liquidator that the liquidation of the assets in Solomon Islands of the overseas company has been completed.

Attorneys of overseas companies

163. (1) The relevant real property legislation applies, with the necessary modifications, to a power of attorney executed by an overseas company registered under this Part to the same extent as if the company were a person and as if the commencement of the liquidation of the company was the death of a person within the meaning of any such legislation.

(2) A declaration endorsed on or annexed to a document appointing, or appearing to appoint, an attorney of an overseas company, made or appearing to be made by one of the directors before a person authorised to take a sworn statement for use in Solomon Islands, in the country concerned, to the effect that—

(a) the company is incorporated under the name stated in the document in accordance with the law of the country in which it is so incorporated, the name of which is stated in the declaration; and

(b) the document has been executed, and the powers appearing to be conferred on the attorney are authorised to be conferred under the constitution of the company, or under this Act or document under which the company is incorporated, or by any other document constituting or defining the constitution of the company; and

is conclusive evidence of those facts.

Exemption from requirements of this Part

164. Regulations may be made providing for any class or classes of overseas company to be exempted from the application of any or all of the requirements of this Part, or modifying the application of this Part to such overseas companies, on such terms and conditions as may be prescribed in those regulations.

PART 12—COMMUNITY COMPANIES

Exemption from requirements of this Part

165. (1) A private company may be registered as a community company under this Act where the company has as its principal objective the promotion of the community interest.

(2) An application for a community company must be completed under section 6 and must state the community interest the community company intends to promote.

(3) The provisions which relate to private companies under this Act shall apply to community companies except where inconsistent with this Part.

(4) Any company which has as its principal objective the promotion of a political purpose may not be registered as a community company under this Act.

(5) Any shareholder of a community company must be a member of the relevant community and the shareholder holds the share or shares on trust for the community and is accountable to the community as provided for in this Act.

Meaning of community interest

166. (1) For the purposes of this Act community interest means any community interest which benefits the community and which a reasonable person might consider are being carried on for the benefit of the community.

(2) For the purposes of this Act a community means any group of individuals which share a readily identifiable characteristic.

Restriction on distributions, dividends and loans

167. (1) Community companies under this Act must not make distributions or pay dividends to shareholders.

(2) Community companies under this Act must not make loans to directors or shareholders.

Asset- lock and use of assets of a community

168. (1) The assets of a community company may be used in the ordinary course of business subject to the provisions of this Act and any restrictions which may be stated in the rules of the community company.

(2) All assets of a community company may only be disposed of –

(a) in the ordinary course of business; or

(b) for full consideration and with the approval of 75% of all registered shareholders.

(3) Any disposition under subsection (2) may only be approved by registered shareholders after the proposed disposition has been outlined to all members of the community as defined in section 166(2).

(4) Any disposition of assets made in contravention of this section is voidable by the community company.

(5) For the avoidance of doubt sections 107 to 109 apply to community companies.

Community company reports

169. (1) The directors of a community company must prepare in respect of each financial year a report about the company's activities during the financial year.

(2) Every community company report must contain—

(a) all information about the remuneration of directors;

(b) a fair and accurate description of the manner in which the company's activities during the year have benefited the community;

(c) a description of the manner in which the company has consulted with the community during the course of the year and the outcome of these consultations; and

(d) if any assets have been disposed of other than in the ordinary course of business the details of the transaction.

(3) If the directors of a community company fail to comply with subsections (1) and (2), every director of the community company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

PART 13—REGISTRAR OF COMPANIES

Division 1—Registrar

Registrar

170. This section establishes the Registrar of Companies who shall be a legally qualified person and shall be appointed pursuant to section 118 of the Constitution.

Deputy Registrars

171. (1) This section establishes such number of Deputy Registrars of Companies as may be necessary for the purposes of this Act, appointed pursuant to section 116 of the Constitution.

(2) Subject to the control of the Registrar, a Deputy Registrar has and may exercise the powers, duties, and functions of the Registrar under this Act.

(3) The fact that a Deputy Registrar exercises those powers, duties, or functions is conclusive evidence of his or her authority to do so.

Transitional

172. The person holding office as Registrar of Companies under the Companies Act (Cap 175) immediately before the commencement of this Act continues in such appointment and is deemed to have been appointed as Registrar of Companies under section 170 of this Act.

Notices general

173. Section 206 applies, with the necessary modifications, to the giving of notices by the Registrar.

Notices to individuals

174. (1) A notice that the Registrar is required by this Act to give to an individual, must be given in writing and in a manner that the Registrar considers appropriate in the circumstances.

(2) Without limiting subsection (1), the Registrar may give notice to an individual by—

(a) having it delivered to that person; or

(b) posting it to that person at his or her last known postal address; or

(d) having it published in a newspaper or other publication in circulation in the area where that person lives or is believed to live.

Admissibility of notices given by Registrar

175. A document is admissible in legal proceedings if the document—

(a) appears to be a copy of a notice given by the Registrar; and

(b) is certified by the Registrar, or by a person authorised by the Registrar, as having been derived from a device or facility that records or stores information electronically or by other means.

Registrar may require information and copies of documents

176. (1) The Registrar may give notice to a company requiring that company to provide, by the date specified in the notice—

(a) corrected or updated details of any matter entered on any of the registers for that company; or

(b) a certified copy of any document that has been or ought to have been delivered to the Registrar for registration under this Act, or under any other written law for that company.

(2) The date specified in the notice must not be less than 10 working days from the date on which the notice is sent to the company.

(3) If a company fails to comply with a notice given under subsection (1), the company commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

(4) In this section and section 177, "company" includes an overseas company.

Registrar may amend registers

177. If information provided to the Registrar by a company under section 176 differs from the information shown on any of the registers for that company, the Registrar may amend the registers accordingly.

Registrar's powers of inspection

178. (1) Any director, shareholder, creditor or aggrieved person may apply to the Court to request the Registrar to exercise the powers specified in this Part.

(2) The Registrar may, in complying with the Court order referred to in subsection (1), do any of the following—

(a) require a person, including a person carrying on the business of banking, to produce for inspection relevant documents within that person's possession or control;

(b) inspect and take copies of relevant documents;

(c) take possession of relevant documents and remove them from the place where they are kept, and retain them for a reasonable time, for the purpose of taking copies;

(d) retain relevant documents for a period that is, in all the circumstances reasonable, if there are reasonable grounds for believing that they are evidence of the commission of an offence.

(3) Every person who fails to comply with subsection (2)(a) commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

(4) In this section—

"company" includes an overseas company;

"relevant document", in relation to a company, means a document that contains information relating to—

(a) the company; or

(b) money or other property that is, or has been, managed, supervised, controlled, or held in trust by or for the company.

Registrar not to be obstructed

179. (1) A person must not obstruct or hinder the Registrar, or a person authorised by the Registrar, while exercising a power conferred by section 178.

(2) A person who fails to comply with subsection (1) commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Certain Acts not affected by Registrar's power of inspection

180. (1) Nothing in sections 178 and 179 limits or affects the Income Tax Act (Cap 123).

Disclosure of information and reports

181. (1) A person authorised by the Registrar for the purpose of section 178 must, if directed to do so by the Registrar, give the following documents, information, or reports to the persons described in subsection (2)—

(a) any document or information obtained in the course of making an inspection under that section; or

(b) any report prepared in relation to an inspection under that section.

(2) The persons referred to in subsection (1) are—

(a) the Minister; or

(b) any person authorised by the Registrar to receive the document, information, or report for the purposes of, or in connection with, the exercise of powers conferred by this Act; or

(d) any person authorised by the Registrar to receive the document, information, or report for the purposes of detecting or investigating offences against any Act.

(3) A person who fails to comply with this section commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Information and report to be given to Registrar

182. (1) A person authorised by the Registrar for the purposes of section 178 must give the following documents, information, or reports to the Registrar or a Deputy Registrar when directed to do so by any person who holds any of those offices:

(a) any document or information obtained in the course of making an inspection under that section; or

(b) any report prepared in relation to an inspection under that section.

(2) A person who fails to comply with this section commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Restrictions on disclosing information

183. (1) A person authorised by the Registrar for the purposes of section 178 must not disclose any of the documents, information, or reports referred to in that section except—

(a) in accordance with that section; or

(b) subject to the approval of the Registrar, with the consent of the person to whom it relates; or

(c) subject to the approval of the Registrar, for the purposes of, or in connection with, the exercise of powers conferred by this Act; or

(d) to the extent that the information, or information contained in the document or report, is available under any Act or in a public document; or

(e) subject to the approval of the Registrar, to a liquidator for the purposes of the liquidation of a company or the assets of an overseas company; or

(f) in the course of criminal proceedings; or

(g) subject to the approval of the Registrar, for the purpose of detecting offences against any Act.

(2) Every person who fails to comply with this section commits an offence and is liable on conviction to a fine not exceeding 50 penalty units.

Inspector's report admissible in liquidation proceedings

184. Despite any other Act or rule of law, a report prepared by a person in relation to an inspection carried out by him or her under section 178 is admissible in evidence at the hearing of an application to the Court to appoint a liquidator.

Appeals

185. (1) A person who is aggrieved by an act or decision of the Registrar under this Act may appeal to the Court within 15 working days after the date of notification of the act or decision, or within any further time that the Court may allow.

(2) On hearing the appeal, the Court may—

(a) approve the Registrar's act or decision; or

(b) give any directions that the Court thinks fit; or

Exercise of inspection power not affected by appeal

186. Subject to section 187, but despite any written law or other law, if a person appeals or applies to the Court in relation to an act or decision of the Registrar or a person authorised by the Registrar under section 178, until a decision on the appeal or application is given—

(a) the Registrar, or that person, may continue to exercise the powers under that section as if no such appeal or application had been made; and

(b) no person is excused from fulfilling an obligation under that section by reason of that appeal or application.

Destruction and admissibility of Registrar's documents

187. If an appeal or application to which section 186 applies is allowed or granted, as the case may be—

(a) the Registrar must ensure that, immediately after the decision of the Court is given, any copy of a document taken or retained by the Registrar, or by a person authorised by the Registrar in respect of that act or decision, is destroyed; and

(b) no information acquired under that section in relation to that act or decision is admissible in evidence in any proceedings unless the Court hearing the proceedings in which it is sought to adduce the evidence is satisfied it was not obtained unfairly.

Division 2—Register kept by Registrar

Register

188. (1) The Registrar must ensure that a register of companies is kept and maintained in any place in Solomon Islands or overseas that the Registrar determines from time to time.

(2) The register may be kept in any manner that the Registrar thinks fit including, either wholly or partly, by means of a device or facility—

(a) that records or stores information electronically or by other means; and

(b) that permits the information so recorded or stored to be readily inspected or reproduced in usable form.

Inspection of register

189. (1) A person may, on payment of any prescribed fees, inspect—

(a) a registered document that is part of the register referred to in section 188(1) ("registered document"); or

(b) details of any registered document that have been entered on any device or facility referred to in section 188(2); or

(2) The inspection must take place during the hours when the office of the Registrar is open to the public for the transaction of business on a working day.

Certified copies

190. A person may, on payment of any fees that are prescribed, require the Registrar to give or certify—

(a) a certificate of incorporation of a company; or

(b) a copy of, or extract from, a registered document; or

(c) details of any registered document that have been entered in any device or facility referred to in section 188(2); or

(d) a copy of, or extract from, a registered document details of which have been entered in any such device or facility.

Registration of documents

191. As soon as a document is received for registration under this Act, the Registrar must—

(a) subject to section 192, register the document in the register; and

(b) in the case of a document that is not an annual return, give written advice of the registration to the person from whom the document was received.

Rejection of documents

192. (1) The Registrar may refuse to register a document that—

(a) is not in the prescribed form, if any; or

(b) does not comply with this Act or regulations made under this Act; or

(d) if the relevant register is kept wholly or partly by means of a device or facility referred to in section 188(2), is not in a form that enables details to be entered directly by electronic or other means in the device or facility; or

(e) has not been properly completed; or

(f) contains material that is not clearly legible; or

(g) is not accompanied by the prescribed fee.

(2) If subsection (1) applies, the Registrar may require either that—

(a) the document is submitted for registration again, appropriately amended or completed, or accompanied by the prescribed fee; or

(b) a fresh document is submitted in its place.

When document registered

193. For the purposes of this Act, a document is registered when—

(a) the document itself becomes part of the register to which it relates; or

(b) details of the document including the time and date of its registration are entered in any device or facility referred to in section 188(2).

No presumption of validity or invalidity

194. Neither registration, nor refusal of registration, of a document by the Registrar affects, or creates a presumption as to, the validity or invalidity of the document or the correctness or otherwise of the information contained in it.

PART 14—MISCELLANEOUS

Division 1—Offences

Proceedings for offences

195. (1) Despite anything to the contrary in the Penal Code (Cap 26), any information for an offence under this Act may be laid at any time within 3 years after the date of the offence.

(2) Nothing in this Act affects the liability of any person under any other Act, but no person may be convicted of an offence against this Act and any other Act in respect of the same conduct.

False statements on documents

196. (1) A person commits an offence who, with respect to a document required by or for the purposes of this Act—

(a) makes, or authorises the making of, a statement in it that is false or misleading in a material particular knowing it to be false or misleading; or

(b) omits, or authorises the omission from it of, any matter knowing that the omission makes the document false or misleading in a material particular.

(2) A director or employee of a company commits an offence who makes or provides, or authorises or permits the making or providing of, a statement or report that relates to the affairs of the company and that is false or misleading in a material particular, to—

(a) a director, employee, auditor, shareholder, debenture holder, or trustee for debenture holders of the company; or

(b) a liquidator, liquidation committee, or receiver or manager of property of the company; or

knowing it to be false or misleading.

(3) A person who commits an offence against subsection (1) or (2) is liable on conviction to a fine not exceeding 1000 penalty units or to imprisonment for a term not exceeding 7 years, or both.

(4) For the purposes of this Act, a person who voted in favour of the making of a statement at a meeting is deemed to have authorised the making of the statement.

Fraudulent use or destruction of company property

197. A director, employee, or shareholder of a company who—

(a) fraudulently takes or applies property of the company for his or her own use or benefit, or for a use or purpose other than the use or purpose of the company; or

(b) fraudulently conceals or destroys property of the company,

commits an offence and is liable on conviction to a fine not exceeding 1000 penalty units or to imprisonment for a term not exceeding 7 years, or both.

Falsification of records

198. (1) A director, employee, or shareholder of a company commits an offence who, with intent to defraud or deceive a person—

(a) destroys, parts with, mutilates, alters, or falsifies, or is a party to the destruction, mutilation, alteration, or falsification of any register, accounting records, book, paper, or other document belonging or relating to the company; or

(b) makes, or is a party to the making of, a false entry in any register, accounting records, book, paper, or other document belonging or relating to the company.

(2) A person commits an offence who, in relation to a mechanical, electronic, or other device used in connection with the keeping or preparation of any register, accounting or other records, index, book, paper, or other document for the purposes of a company or this Act—

(a) records or stores in the device, or makes available to another person from the device, matter that the person knows to be false or misleading in a material particular; or

(b) with intent to falsify or render misleading any such register, accounting or other records, index, book, paper, or other document, destroys, removes, or falsifies any matter recorded or stored in the device, or fails or omits to record or store any matter in the device.

(3) A person who is convicted of an offence against subsection (1) or (2) is liable to a fine not exceeding 1000 penalty units or to imprisonment for a term not exceeding 7 years, or both.

Carrying on business fraudulently

199. (1) A person commits an offence who is knowingly a party to a company carrying on business with intent to defraud creditors of the company or any other person or for a fraudulent purpose.

(2) A director of a company commits an offence who—

(a) by false pretences or other fraud induces a person to give credit to the company; or

(b) with intent to defraud creditors of the company—

(i) gives, transfers, or causes a charge to be given on, property of the company to any person; or

(ii) causes property to be given or transferred to any person; or

(iii) caused or was a party to execution being levied against property of the company.

(3) A person who is convicted of an offence against subsection (1) or (2) is liable to a fine not exceeding 1000 penalty units or to imprisonment for a term not exceeding 7 years, or both.

Division 2—Privileged Communications and Service of Documents

Privileged communications

200. (1) Nothing in this Act requires a legal practitioner to disclose a privileged communication.

(2) For the purposes of this Act, a communication is a privileged communication only if—

(a) it is a confidential communication, whether oral or written, passing between—

(i) a legal practitioner in his or her professional capacity and another legal practitioner in that capacity; or

(ii) a legal practitioner in his or her professional capacity and his or her client—

whether made directly or indirectly through an agent; and

(b) it is made or brought into existence for the purpose of obtaining or giving legal advice or assistance; and

(c) it is not made or brought into existence for the purpose of committing or furthering the commission of an illegal or wrongful act.

(3) If the information or document consists wholly of payments, income, expenditure, or financial transactions of a specified person (whether a legal practitioner, his or her client, or any other person), it is not a privileged communication if it is contained in, or comprises the whole or part of, a book, account, statement or other record prepared or kept by the legal practitioner in connection with a trust account of the legal practitioner.

(4) The Court may, on the application of any person, determine whether or not a claim of privilege is valid and may, for that purpose, require the information or document to be produced.

Service of documents on companies in legal proceedings

201. A document, including a writ, summons, notice, or order, in any legal proceedings may be served on a company as follows—

(a) by delivery to a person named as a director of the company on the Solomon Islands register; or

(b) by delivery to an employee of the company at the company's head office or principal place of business; or

(d) by serving it in accordance with any directions as to service given by a court having jurisdiction in the proceedings; or

(e) in accordance with an agreement made with the company; or

(f) by serving it at an address for service given in accordance with the rules of the court having jurisdiction in the proceedings or by such means as a legal practitioner has, in accordance with those rules, stated that the legal practitioner will accept service.

Service of other documents on companies

202. A document, other than a document in any legal proceedings, may be served on a company as follows—

(a) by any of the methods set out in section 201(a), (b), (c), or (e);

(b) by posting it to the company's postal address;

Service of documents on overseas companies in legal proceedings

203. A document, including a writ, summons, notice, or order, in any legal proceedings may be served on an overseas company in Solomon Islands as follows—

(a) by delivery to a person named in the overseas register as a director of the overseas company and who is resident in Solomon Islands;

(b) by delivery to a person named in the overseas register as being authorised to accept service in Solomon Islands of documents on behalf of the overseas company;

(c) by delivery to an employee of the overseas company at the overseas company's place of business in Solomon Islands or, if the overseas company has more than 1 place of business in Solomon Islands, at the overseas company's principal place of business in Solomon Islands;

(d) by serving it in accordance with any directions as to service given by a court having jurisdiction in the proceedings;

(e) in accordance with an agreement made with the overseas company.

Service of other documents on overseas companies

204. A document, other than a document in any legal proceedings, may be served on an overseas company as follows—

(a) by any of the methods set out in section 203(a), (b), (c), or (e);

(b) by posting it to the postal address in Solomon Islands of the overseas company;

(c) by posting it to the postal address of a person named in the overseas register as being authorised to accept service in Solomon Islands of documents on behalf of the overseas company;

(d) by faxing it to a fax number at the principal place of business in Solomon Islands of the overseas company.

Service of documents on shareholders and creditors

205. (1) A notice, statement, report, accounts, or other document to be sent to a shareholder or creditor who is a natural person may be—

(a) delivered to that person; or

(b) posted to that person's postal address; or

(2) A notice, statement, report, accounts, or other document to be sent to a shareholder or creditor that is a company or an overseas company may be sent by any of the methods of serving documents referred to in section 203 or 204, as the case may be.

(3) A notice, statement, report, accounts, or other document to be sent or given to a creditor that is a body corporate, not being a company or an overseas company, may be—

(a) delivered to a person who is a principal officer of the body corporate; or

(b) delivered to an employee of the body corporate at the principal office or principal place of business of the body corporate; or

(d) delivered in accordance with an agreement made with the body corporate; or

(e) posted to the postal address of the body corporate; or

(f) faxed to a fax number at the principal office or principal place of business of the body corporate.

Additional provisions relating to service

206. (1) Subject to subsection (2), for the purposes of sections 201to 205—

(a) if a document is to be served by delivery to a natural person, service must be made—

(i) by handing the document to the person; or

(ii) if the person refuses to accept the document, by bringing it to the attention of, and leaving it in a place accessible to, the person;

(b) a document that is posted is deemed to be received 5 working days after it is posted;

(d) in proving service of a document by post, it is sufficient to prove that—

(i) the document was properly addressed; and

(ii) all postal or delivery charges were paid; and

(iii) the document was posted;

(e) in proving service of a faxed document, it is sufficient to prove that the document was properly faxed to the person concerned.

(2) A document is not to be deemed to have been served or sent or delivered to a person if the person proves that, through no fault on the person's part, the document was not received within the time specified.

Division 3—Regulation-Making Powers

Regulations

207. (1) The Minister may make regulations to give effect to the provisions of this Act and in particular for all or any of the following purposes—

(a) prescribing fees or other amounts payable to the Registrar in respect of the performance of functions and the exercise of powers under this Act;

(b) prescribing amounts payable to the Registrar by way of penalty for failure to deliver a document to the Registrar within the time prescribed by this Act;

(d) prescribing fees or other amounts payable to the Registrar of the High Court in respect of any Court proceedings under this Act;

(e) prescribing forms (including Court forms) for the purposes of this Act; and those regulations may require—

(i) the inclusion in, or attachment to, forms of specified information or documents;

(ii) forms to be signed by specified persons;

(f) prescribing requirements with which documents delivered for registration must comply;

(g) prescribing requirements which relate to the re-registration of companies under this Act;

(h) regulating the financial reporting of a company, overseas company, or class of companies or overseas companies, including (without limitation)—

(i) prescribing requirements in respect of the adoption by directors of a balance date for a company;

(ii) regulating changes to the balance date of a company;

(i) prescribing requirements, in relation to the form or content of financial statements, or any other matters in respect of financial statements, including (without limitation)—

(i) prescribing different requirements in respect of different classes of company;

(ii) requiring compliance with standards issued or published by a specified body or bodies, with or without modifications;

(j) providing for any class or classes of overseas company to be exempted from the application of any or all of the requirements of Part 11, or modifying the application of Part 11 to such overseas companies, on any terms and conditions;

(k) prescribing transitional and savings provisions relating to the coming into force of this Act;

(l) amending the model rules in Schedules 2, 3, 4 and 5;

(m) replacing all or any of the model rules in Schedules 2, 3, 4 and 5;

(n) specifying the class or classes of companies to which the amended model rules or replaced model rules will apply;

(o) specifying the date or occasion on which the amended model rules or replaced model rules take effect or will apply;

(p) without limiting paragraphs (m) and (n), specifying whether the amended model rules or replaced model rules apply to all companies to which the relevant model rules apply, or only to companies incorporated after the date on which the amended model rules or replaced model rules take effect;

(q) providing for any other matters, necessary for the administration of this Act.

(2) The Registrar may refuse to perform a function or exercise a power until the prescribed fee or amount is paid.

(3) Any regulations made under subsection (1) may authorise the Registrar to waive, in whole or in part and on any conditions that may be prescribed, payment of any amount referred to in paragraph (b) of that subsection.

(4) If the Registrar requires a company to change its name, no fee is payable in respect of an application to change the name of the company.

(5) Any fee or amount payable to the Registrar is recoverable by the Registrar in a court of competent jurisdiction as a debt due to the Crown.

Value of penalty units

208. The value of one penalty unit under this Act is $50.

Division 4—Repeals, Amendments and Transitional Provisions

Repeals and revocations

209. (1) The Companies Act (Cap. 175) is repealed except Part III which shall be repealed on the date of commencement of the Secured Transactions Act 2008.

(2) When the Secured Transactions Act 2008 commences, any reference to "company charge" or "charge", in such context, in this Act, the Companies (Insolvency and Receivership) Act 2009 or any other written law shall be replaced with "security interest" as defined in the Secured Transactions Act 2008.

(3) Any regulations made under the Companies Act (Cap. 175) are revoked except as they affect Part III of the Companies Act (Cap. 175).

Transitional

210. (1) Every existing company must apply for re-registration under this Act no later than 9 months from the date of the commencement of this Act.

(2) Any existing company that does not re-register under this Act pursuant to subsection (1) is removed from the register.

(3) The re registration of an existing company under this section does not—

(a) create a new legal entity; or

(b) affect the property, rights, or obligations of the company; or

(4) An application for re-registration of an existing company must be made to the Registrar in the prescribed form.

(5) The application for re-registration of a company must specify—

(a) the name of the company, which must comply with section 10; and

(b) whether the company is a private company, or a public company; and

(d) the full name, residential address, and postal address of every director of the proposed company; and

(e) whether each person named as a director of the company has consented to act as a director of the company; and

(f) the full name of every shareholder of the proposed company, and the number of shares to be issued to every shareholder; and

(g) the registered office of the proposed company; and

(h) the postal address of the company, which may be the registered office or any other postal address.

(6) An application for re-registration must be accompanied by a copy of the company rules if they differ from the model rules.

(7) As soon as the Registrar receives an application for re-registration that complies with subsection (5) the Registrar must –

(a) enter the company on the Solomon Islands register; and

(b) issue a certificate of re-registration in respect of the company in the prescribed form.

(8) A certificate of re-registration of a company issued under subsection (7) is conclusive evidence that –

(a) all the requirements as to re-registration have been complied with; and

(b) on and from the date of re-registration stated in the certificate, the company is registered under this Act.

(9) No fee shall be payable on an application under this section for re-registration made under this section.

(10) At the commencement of this Act, the Institute of Solomon Islands Accountants is recognised as an association of accountants constituted in Solomon Islands for the purposes of section 130(1)(a).

Consequential amendments

211. (1) The Criminal Procedure Code (Cap.7) is amended by repealing section 83 and substituting the following section –

"Service on company"

"83. Service of a summons on an incorporated company or other body corporate may be effected by the means specified in Division 2 of Part 14 of the Companies Act 2009."

(2) The New Georgia Timber Corporation Act (Cap.43) is amended –

(a) in clause 8 of Part II of the Third Schedule, by deleting "sections 153, 154, 155 and 156 of the Companies Act" and substituting "sections 127 to 135 of the Companies Act 2009"; and

(b) in clause 4(1) of Part II of the Fourth Schedule, by deleting "section 191 of the Companies Act" and substituting "Companies Act 2009".

(3) The Petroleum (Exploration) Act (Cap. 44) is amended –

(a) in section 10(a)(ii) by deleting "foreign" and substituting "overseas"; and

(b) in section 10 by deleting "Companies Act" and substituting "Companies Act 2009" wherever it appears in that section.

(4) The Banking Act (Cap.48) is amended in section 22(c) by deleting "committee of inspection" and substituting "liquidation committee".

(5) The Insurance Act (Cap. 82) is amended –

(a) in section 2 in the definition of "auditor" by deleting "section 155 of the Companies Act" and substituting "section 130 of the Companies Act 2009"; and

(b) in section 9 by repealing subsection (9) and substituting the following subsection –

"(9) When an investigation is made under subsection (1) or (2) of this section, sections 178 to 187 of the Companies Act 2009 shall apply to the investigation with such modifications, adaptations, qualifications and exceptions as may be necessary to bring them into conformity with this Act and all expenses of and incidental to such investigation shall be defrayed by the insurer and shall have priority over the other debts due from the insured."; and

(i) in paragraph (a) by inserting "2009" after "Companies Act"; and

(ii) in paragraph (a)(ii) by deleting "Part VII of the Companies Act"; and substituting "Part 11 of the Companies Act 2009"; and

(d) in section 35(2) by deleting "section 156 of the Companies Act" and substituting " the Companies Act 2009"; and

(e) in section 51 is amended –

(i) in subsection (2), by deleting "section 210(e) of the Companies Act" and substituting "section 18(2)(a) of the Companies (Insolvency and Receivership) Act 2009"; and

(ii) in subsection (3), by deleting "section 210 of the Companies Act" and substituting "section 18 of the Companies (Insolvency and Receivership) Act 2009"; and

(f) in section 64(1) by deleting "Part VII of the Companies Act" and substituting "Part 11 of the Companies Act 2009".

(6) The Credit Union Act (Cap. 165) is amended –

(a) in section 48(2) by deleting "section 156 of the Companies Act" and substituting "the Companies Act 2009";

(b) in section 51 by repealing subsection (6) and substituting the following subsection –

"(6) When an investigation is made under subsection (1) or (2) of this section, sections 178 to 187 of the Companies Act 2009 shall apply to the investigation with such modifications, adaptations, qualifications and exceptions as may be necessary to bring them into conformity with this Act."

(7) The Registration of Business Names Act (Cap. 178) is amended in section 2 in the definition of "Registrar" by deleting "section 2 of the Companies Act" and substituting "Schedule 1 to the Companies Act 2009".

(8) The Shipping Act 1998 is amended in section 19(3) by deleting "be under the common seal of the company" and substituting "conform to section 103 of the Companies Act 2009".

(9) Reference in any other written law to "Companies Act (Cap.175)" shall be reference to "Companies Act 2009" or the "Companies (Insolvency and Receivership) Act 2009", as the case may be.

——————————

SCHEDULE 1
(section 3)

INTERPRETATION

Definitions

1. In this Act, unless the context otherwise requires—

"accounting period", in relation to a company, means a year ending on a balance date of the company and, if as a result of the date of the registration of the company or a change of the balance date of the company, the period ending on that date is longer or shorter than a year, that longer or shorter period is an accounting period;

"allot" includes but is not limited to sell, issue, assign, and convey; and allotment has a corresponding meaning;

"arrangement" includes a reorganisation of the share capital of a company by the consolidation of shares of different classes, or by the division of shares into shares of different classes, or by both those methods;

"assignee" means the person to whom the benefit of a registered charge is assigned;

"balance date", in relation to a company, means the close of 31 March or of any other date that the directors of the company adopt as the company's balance date in accordance with any regulations made under this Act;

"board" and "board of directors", in relation to a company, means—

(a) directors of the company who constitute the required quorum acting together as a board of directors; or

(b) if the company has only 1 director, that director;

"broadcasting" means any transmission of programmes, whether or not encrypted, by radio waves or other means of telecommunication for reception by the public by means of broadcasting receiving apparatus; but does not include any such transmission of programmes—

(a) made on the demand of a particular person for reception only by that person; or

(b) made solely for performance or display in a public place;

"company" means a company registered or re-registered under this Act;

"compromise" means a compromise between a company and its creditors, including a compromise—

(a) cancelling all or part of a debt of the company; or

(b) varying the rights of its creditors or the terms of a debt; or

(c) relating to an alteration of a company's rules that affects the likelihood of the company being able to pay a debt;

"Court" means the High Court of Solomon Islands;

"court officer" means a constable or the Registrar or other officer of the Court

"creditor" —

(a) in Division 1 of Part 2 of the Companies (Insolvency and Receivership) Act 2009 includes—

(i) a person who, in a liquidation, would be entitled to claim that a debt is owing to that person by the company; and

(ii) a secured creditor;

(b) in Division 2 of Part 2 of the Companies (Insolvency and Receivership) Act 2009 —

(i) means a person who, in a liquidation, would be entitled to claim in accordance with Part 2 of Schedule 8 of the Companies (Insolvency and Receivership) Act 2009 that a debt is owing to that person by the company; and

(ii) includes a secured creditor only—

(A) for the purposes of sections 66, 70, and 101 and clause 5 of Schedule 5 of the Companies (Insolvency and Receivership) Act 2009; or

(B) to the extent of the amount of any debt owing to the secured creditor in respect of which the secured creditor claims under Part 2 of Schedule 8 of the Companies (Insolvency and Receivership) Act 2009 as an unsecured creditor.

"debt security" —

(a) means any interest in or right to be paid money that is, or is to be, deposited with, lent to, or otherwise owing by, any person (whether or not the interest or right is secured by a charge over any property); and

(b) includes—

(i) a debenture, debenture stock, bond, note, certificate of deposit, and convertible note; and

(ii) an interest or right that is declared by regulations to be a debt security for the purposes of this Act; and

(iii) a renewal or variation of the terms or conditions of any interest or right or of a security referred to in subparagraph (i) or (ii); but

(c) does not include any interest or right or a security referred to in paragraph (b)(i) or (iii) that is declared by regulations not to be a debt security for the purposes of this Act;

"director", in relation to a company—

(a) includes a person occupying the position of director of the company by whatever name called; but

(b) does not include a receiver;

"directors" has the same meaning as the definitions of "board" and "board of directors";

"distribute" includes—

(a) make available, publish, and circulate; and

(b) communicate by letter, newspaper, broadcasting, sound recording, television, cinematographic film, video, or any form of electronic or other means of communication;

"distribution", in relation to a distribution by a company to a shareholder, means—

(a) the direct or indirect transfer of money or property, other than the company's own shares, to or for the benefit of the shareholder; or

(b) the incurring of a debt to or for the benefit of the shareholder,

in relation to shares held by that shareholder, whether by means of a dividend, a purchase, redemption or other acquisition of shares, a distribution of indebtedness, or some other means;

"document" —

(a) means information in written or electronic form, or both; and

(b) includes anything from which information may be reproduced (with or without the aid of anything else);

"electronic" includes electrical, digital, magnetic, optical, electromagnetic, biometric, and photonic;

"essential service" means—

(a) the retail supply of electricity; or

(b) the retail supply of fuel and other similar consumable items necessary for the generation of electricity; or

(c) the retail supply of gas; or

(d) the supply of water; or

(e) telecommunications services;

"equity security" —

(a) means any interest in or right to a share in, or in the share capital of, a company; and

(b) includes—

(i) a preference share, and company stock; and

(ii) a security that is declared by regulations to be an equity security for the purposes of this Act; and

(iii) a renewal or variation of the terms or conditions of any interest or right or a security referred to in subparagraph (i) or (ii); but

(c) does not include any interest or right or a security referred to in paragraph (b) (i) or (iii) that is declared by regulations not to be an equity security for the purposes of this Act;

"financial institution" has the same meaning as in section 2 of the Central Bank of Solomon Islands Act (Cap 49);

"financial statements", in relation to a company and a balance date, means—

(a) a statement of financial position for the company as at the balance date; and

(b) in the case of—

(i) a company trading for profit, a statement of financial performance for the company in relation to the accounting period ending at the balance date; and

(ii) a company not trading for profit, an income and expenditure statement for the company in relation to the accounting period ending at the balance date; and

(c) if required by regulations made under this Act, a statement of cash flows for the company in relation to the accounting period ending on the balance date; and

(d) any other financial statements in relation to the company or any group of companies of which it is the holding company as may be required by regulations made under this Act; and

(e) any notes or documents giving information relating to the statement of financial position and other statements;

"information" includes information (whether in its original form or otherwise) that is in the form of a document, a signature, a seal, data, text, images, sound, or speech;

"issuer" means in relation to an equity security or a debt security, the person on whose behalf any money paid in consideration of the allotment of the security is received;

"liquidator" means a liquidator appointed under Division 2 of Part 2 of the Companies (Insolvency and Receivership) Act 2009;

"major transaction" has the meaning set out in section 49(2);

"model rules" means the model rules of incorporation set out in Schedule 2, 3, 4, or 5;

"money" includes money's worth;

"Minister" means the Minister responsible for the administration of this Act;

"offer" includes an invitation, and any proposal or invitation to make an offer; and to offer has a corresponding meaning;

"onerous property" means—

(a) an unprofitable contract; or

(b) property of the company that is unsaleable, or not readily saleable, or which may give rise to a liability to pay money or perform an onerous act;

"overseas company" means a corporation that is incorporated outside Solomon Islands, whether or not it is registered under Part 11;

"person" includes a corporation sole, a company or other body corporate (whether incorporated in Solomon Islands or elsewhere), an unincorporated body of persons, a public body, and a Government department;

"preferential claim" means a claim referred to in Part 3 of Schedule 8 of the Companies (Insolvency and Receivership) Act 2009 (except clause 15 of that Schedule);

"prescribed form" means a form prescribed by regulations or, if no form is prescribed by regulations, a form approved by the Registrar;

"private company" means a company that is registered as a private company on the Solomon Islands register;

"property" includes—

(a) real and personal property; and

(b) an estate or interest in real or personal property; and

(c) a debt; and

(d) any thing in action; and

(e) any other rights, interests, and claims of any kind in relation to property;

"proponent" means a person who proposed a compromise in accordance with Division 1 of Part 2 of the Companies (Insolvency and Receivership) Act 2009;

"public company" means a company that is registered as a public company on the Solomon Islands register;

"receiver" means a receiver, or a manager, or a receiver and manager in respect of any property appointed—

(a) by or under any deed or agreement; or

(b) by the Court in the exercise of a power conferred on the Court or in the exercise of its inherent jurisdiction,

whether or not the person appointed is empowered to sell any of the property in receivership; but does not include—

a mortgagee who, whether personally or through an agent, exercises a power—

to receive income from mortgaged property; or

to enter into possession or assume control of mortgaged property; or

to sell or otherwise alienate mortgaged property; or

an agent of any such mortgagee;

"registered accountant" means company auditor or a person registered and certified by an association of accountants constituted in Solomon Islands;

"registered document" means a document—

(a) that forms part of any of the registers referred to in section 188; or

(b) details of which have been entered in any device or facility referred to in section 188(2);

"registered office", in relation to a company, has the meaning set out in section 17;

"Registrar" means the Registrar of Companies appointed under section 170;

"shareholder" means a person whose name is entered on the share register of a company as the holder of 1 or more shares in the company;

"signature" means either the name of a person affixed with his or her own hand on a document or, in the case of a document submitted to the registry via electronic means, the name of a person affixed to the document by a method deemed acceptable by the Registrar;

"Solomon Islands register" means the register kept by the Registrar under section 188;

"solvency test" means the solvency test referred to in clause 5 of this schedule;

"special resolution" means a resolution—

(a) approved in accordance with section 51; or

(b) approved at a meeting of shareholders called to consider that resolution on not less than 10 working days' notice—

(i) by a majority of 75% (or such higher majority as may be specified in the rules) of the votes of shareholders entitled to vote and voting on the question; and

(ii) in accordance with any additional requirements specified in the rules in respect of such resolutions;

"subscribe" includes purchase and contribute to, whether by way of cash or otherwise; and "subscription" and "subscriber" have corresponding meanings;

"subscriber" in relation to an offer of securities, means a person who subscribes for the securities;

"telecommunications services"—

(a) means the conveyance by electromagnetic means from 1 device to another of any encrypted or non-encrypted sign, signal, impulse, writing, image, sound, instruction, information, or intelligence of any nature, whether for the information of any person using the device or not; but

(b) does not include any conveyance that constitutes broadcasting;

"working day" means a day of the week other than—

(a) Saturday and Sunday; and

(b) a day that is defined as, or declared to be, a public holiday under any Act;

"writing" includes representing or reproducing words, figures, or symbols—

(a) in a visible and tangible form by any means and in any medium;

(b) in a visible form in any medium by electronic means that enables them to be stored in permanent form and be retrieved and read.

Meaning of subsidiary

2. (1) For the purposes of this Act, a company is a subsidiary of another company if, but only if—

(a) that other company—

(i) controls the composition of the board of the company; or

(ii) is in a position to exercise, or control the exercise of, more than one-half the maximum number of votes that may be exercised at a meeting of the company; or

(iii) holds more than one-half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

(iv) is entitled to receive more than one-half of every dividend paid on shares issued by the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital; or

(b) the company is a subsidiary of a company that is that other company's subsidiary.

(2) In subsection (1), "company" includes a corporation.

Meaning of holding company

3. (1) For the purposes of this Act, a company is another company's holding company if that other company is its subsidiary.

(2) In subsection (1), "company" includes a corporation.

Meaning of related company

4 (1) For the purposes of this Act, a company is related to another company if—

(a) the other company is its holding company or subsidiary; or

(b) more than half of the issued shares of the company, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital, is held by the other company and companies related to that other company (whether directly or indirectly, but other than in a fiduciary capacity); or

(c) more than half of the issued shares, other than shares that carry no right to participate beyond a specified amount in a distribution of either profits or capital, of each of them is held by members of the other (whether directly or indirectly, but other than in a fiduciary capacity); or

(d) the businesses of the companies have been so carried on that the separate business of each company, or a substantial part of it, is not readily identifiable; or

(e) there is another company to which both companies are related;—

and "related company" has a corresponding meaning.

(2) In subsection (1), "company" includes a corporation.

Solvency test

5. (1) For the purposes of this Act, a company satisfies the solvency test if—

(a) the company is able to pay its debts as they become due in the normal course of business; and

(b) the value of the company's assets is not less than the value of its liabilities.

(2) A person required to consider whether a company satisfies the solvency test in subsection (1) may have regard to—

(a) financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances; and

(b) valuations of assets or liabilities; and

(c) such other information in relation to the financial position of the company as is reasonable in all the circumstances.

(3) If the rules of a company provide for a solvency margin that must be maintained by the company, subsection (1)(b) applies in relation to that company as if that solvency margin were a liability of the company, except where the surplus assets of the company are being distributed—

(a) in a liquidation; or

(b) before the removal of the company from the Solomon Islands register in accordance with Part 9.

SCHEDULE 2
(Section 15(1))

MODEL RULES FOR PRIVATE COMPANY

Part 1—General Provisions

Name of company

1. (1) The name of the company at the time of registration under the Act appears on the application for registration or for re-registration, as the case may be.

(2) The name of the company may be changed in accordance with section 11 of the Act only with the prior approval of all shareholders.

Private company

2. (1) The company is a private company.

(2) The company must not offer any of its shares or other securities to the public.

(3) The company must not have more than 50 shareholders.

(4) If a share transfer is presented to the company for entry on the share register that would result in a breach of this restriction, the directors must decline to register the transfer.

Rules

3. (1) The company may adopt new rules in place of these rules by special resolution, in accordance with section 14(2) of the Act.

(2) Subject to the Act—

(a) these rules have effect and may be enforced as if they constituted a contract—

(i) between the company and its shareholders; and

(ii) between the company and each director; and

(b) the shareholders and directors of the company have the rights, powers, duties, and obligations set out in these rules.

Part 2—Shares and Shareholders

Division 1 – General provisions

Number of shares

4. (1) At the time of registration under the Act, the company has the number of shares specified in the application for registration or re-registration, as the case may be.

(2) If the company was first registered under Part 2 of the Act, the company must immediately after its registration issue to any person named in the application for registration as a shareholder the number of shares specified in the application as being the number of shares to be issued to that person or those persons.

Rights attaching to shares

5. Subject to clause 7(2), each share carries the following rights—

(a) the right to 1 vote on a poll at a meeting of the company on any resolution, including any resolution to—

(i) appoint or remove a director or auditor;

(ii) adopt new rules;

(iii) alter the company's rules;

(iv) approve a major transaction;

(v) put the company into liquidation;

(vi) approve the transfer of registration of the company to another country;

(b) the right to an equal share in dividends paid by the company;

(c) the right to an equal share in the distribution of the surplus assets of the company in a liquidation.

Issue of shares

6. The directors may issue shares—

(a) in accordance with clause 7; or

(b) to shareholders or any other persons on any other basis, with the prior approval of all shareholders.

Process for issuing shares

7. (1) The directors may issue shares in accordance with the following process—

(a) the shares must first be offered to all shareholders proportionally, on such terms as the directors think fit, pursuant to an offer that, if accepted by all shareholders, would not affect relative voting or distribution rights. The shareholders must have a reasonable opportunity to consider and respond to the offer;

(b) any shares not accepted by the shareholders to whom they were offered under paragraph (a) must then be offered to those shareholders who did accept the shares offered to them under paragraph (a), on a fair and equitable basis determined by the directors and on the same terms and conditions as the offer made under paragraph (a);

(c) any shares offered under paragraph (b), but not taken up by shareholders may then be offered by the directors to shareholders or any other persons in such manner as the directors think fit, on the same terms and conditions as the offer made under paragraph (a).

(2) With the prior approval of all shareholders, the company may issue more than 1 class of shares. In particular, shares may be issued that—

(a) are redeemable; or

(b) confer preferential rights to distributions of capital or income; or

(c) confer special, limited, or conditional voting rights; or

(d) do not confer voting rights.

(3) If the company issues shares, it must give the prescribed notice to the Registrar under section 25(2) of the Act within 10 working days of the issue of any shares.

(4) If the rights attached to the shares differ from those set out in clause 5, the notice must be accompanied by a document setting out the terms of issue of the shares.

Transferability of shares

8. The shares of the company are, subject to clauses 12(1) and 21(4) and their terms of issue, transferable by entry in the share register in accordance with subclauses 21(1) to (3).

Division 2—Share register

Company to keep share register

9. (1) The company must maintain a share register that records the shares issued by the company and states—

(a) the names, alphabetically arranged, and the last known address of each person who is, or has within the last 7 years been, a shareholder; and

(b) the number of shares of each class held by each shareholder within the last 7 years; and

(i) issue of shares to; or

(ii) repurchase or redemption of shares from; or

(iii) transfer of shares by or to—

(b) each shareholder within the last 7 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(2) No notice of a trust, whether express, implied, or constructive, may be entered on the share register.

(3) The company may appoint an agent to maintain the share register.

Form and location of share register

10. The share register must be kept—

(a) in a form that complies with clause 65; and

(b) at the company's registered office.

Status of registered shareholders

11. (1) The company must treat the registered holder of a share as the only person entitled to—

(a) exercise the right to vote attaching to the share; and

(b) receive notices; and

(d) exercise the other rights and powers attaching to the share.

(2) If a joint holder of a share dies, the remaining holders must be treated by the company as the holders of that share.

(3) If the sole holder of a share dies, that shareholder's legal representative is the only person recognised by the company as having any title to, or interest in, the share.

(4) Any person who becomes entitled to a share as a consequence of the death, bankruptcy or insolvency, or incapacity of a shareholder may be registered as the holder of that shareholder's shares on making a request in writing to the company to be so registered, accompanied by proof satisfactory to the directors of that entitlement.

Division 3—Pre-emptive rights

Restriction on selling shares

12. (1) A shareholder is not entitled to sell or otherwise dispose of his or her shares in the company without first offering to sell them to the other holders of shares of the same class in accordance with the procedure set out in clauses 13 to 20, unless all the other shareholders agree otherwise.

(2) Any share transfer delivered to the company by a shareholder who has not complied with subclause (1) is of no effect, and the transfer must not be entered on the share register.

Selling shareholder to give written notice to company

13. A shareholder who wishes to dispose of some or all of his or her shares ("selling shareholder") must give written notice to the company of—

(a) the number of shares to be sold; and

(b) the price at which the selling shareholder is willing to sell the shares.

Company to give written notice to shareholders

14. The company must, within 10 working days, give a copy of the written notice referred to in clause 13 to each shareholder, together with a notice advising each holder of shares of the same class—

(a) that that shareholder is entitled to purchase a proportional number of the shares that the selling shareholder wishes to sell (rounded in an appropriate manner determined by the directors); and

(b) that, if that shareholder wishes to purchase those shares, he or she must give written notice to that effect to the company within 10 working days of the date of the notice.

Written notice is offer by selling shareholder

15. The notice referred to in clause 14 is deemed to be an offer by the selling shareholder to the recipient to sell the number of shares referred to in the notice at the price specified by the selling shareholder in the notice given under clause 13, on the terms set out in these rules.

Notice agreeing to purchase shares given within specified time

16. Subject to clause 19, if a notice is given by a shareholder within the specified time agreeing to purchase the shares offered to that shareholder in a notice given under clause 14—

(a) there is deemed to be a contract between that shareholder and the selling shareholder for the sale and purchase of the relevant number of shares; and

(b) the company must immediately advise the selling shareholder of the acceptance, and send him or her a copy of—

(i) the notice given under clause 14 by the company; and

(ii) the notice of acceptance given by the shareholder in question.

Notice agreeing to purchase shares not given within specified time

17. (1) If any shareholder does not give notice agreeing to purchase the shares offered to that shareholder within the specified time, the shares that were offered to that shareholder must be offered to those shareholders who did accept the shares offered to them, on a fair and equitable basis determined by the directors.

(2) Clauses 15 and 16 apply to any notice given to a shareholder, and to any notice of acceptance given by a shareholder, under this clause.

No shareholder wishes to purchase selling shareholder's shares

18. If no shareholder wishes to purchase the selling shareholder's shares at the specified price, the selling shareholder may, at any time in the 12 months following the giving of notice by the selling shareholder, sell some or all of those shares to any other person at a price not less than the specified price.

Selling shareholder not obliged to sell some shares

19. (1) The selling shareholder is not obliged to sell all of the shares that he or she wishes to dispose of.

(2) In the event that the selling shareholder has not been notified under clause 16 of acceptances by other shareholders in respect of all the shares referred to in the notice given under clause 13 within 40 working days of the date on which that notice was given to the company, the selling shareholder may, at his or her option, give written notice to the company terminating the offer to sell the shares to the other shareholders.

(3) If such a notice is given, clause 18 applies as if no shareholder had wished to purchase the selling shareholder's shares.

Directors may require evidence of terms

20. The directors may require reasonable evidence of the terms (including price) on which the shares were sold to accompany any share transfer in respect of those shares.

Division 4—Transfer of shares

Transfer of shares

21. (1) If shares are to be transferred, a form of transfer signed by the holder or by his or her agent or attorney must be delivered to the company.

(2) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

(3) Subject to clause 12 and subclause (4), the company must immediately on receipt of a properly executed share transfer enter the name of the transferee in the share register as holder of the shares transferred.

(4) If any amount payable to the company by the shareholder is due but unpaid, the directors may resolve to refuse to register a transfer of a share within 30 working days of receipt of the transfer.

(5) If the directors resolve to refuse to register a transfer for this reason, they must give notice of the refusal to the shareholder within 5 working days of the date of the resolution.

Share certificates

22. (1) A shareholder may apply to the company for a share certificate relating to some or all of the shareholder's shares in the company.

(2) On receipt of an application for a share certificate under subclause (1), the company must, within 20 working days after receiving the application—

(a) if the application relates to some but not all of the shares, separate the shares shown in the register as owned by the applicant into separate parcels (1 parcel being the shares to which the share certificate relates, and the other parcel being any remaining shares); and

(b) in all cases send to the shareholder a certificate stating—

(i) the name of the company; and

(ii) the class of shares held by the shareholder; and

(iii) the number of shares held by the shareholder to which the certificate relates.

(a) the share certificate relating to the share; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form determined by the directors.

Division 5—Meetings of Shareholders

Meeting of shareholders

23. (1) Clauses 24 to 32 set out the procedures to be followed at, and in relation to, meetings of shareholders.

(2) A meeting of shareholders may determine its own procedure to the extent that it is not governed by these rules.

Notice of meeting

24. (1) Written notice of the time and place of a meeting of shareholders must be given to every shareholder entitled to receive notice of the meeting and to every director and any auditor of the company not less than 10 working days before the meeting.

(2) The notice must set out—

(a) the nature of the business to be transacted at the meeting in enough detail to enable a shareholder to form a reasoned judgment in relation to it; and

(b) the text of any special resolution to be submitted to the meeting.

(6) An irregularity in a notice of a meeting is waived if all the shareholders entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity, or if all such shareholders agree to the waiver.

(7) An accidental omission to give notice of a meeting to, or the failure to receive notice of a meeting by, a shareholder does not invalidate the proceedings at that meeting.

(8) If a meeting of shareholders is adjourned for less than 30 working days, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting that is adjourned.

Methods of holding meetings

25. A meeting of shareholders may be held either—

(a) by a number of shareholders, who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all shareholders participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

26. (1) Subject to subclause (3), no business may be transacted at a meeting of shareholders if a quorum is not present.

(2) A quorum for a meeting of shareholders is present if shareholders or their proxies are present who are between them able to exercise a majority of the votes to be cast on the business to be transacted by the meeting.

(3) If a quorum is not present within 30 minutes after the time appointed for the meeting, the meeting is adjourned to the same day in the following week at the same time and place, or to such other date, time and place as the directors may appoint.

(4) If, at the adjourned meeting, a quorum is not present within 30 minutes after the time appointed for the meeting, the shareholders present or their proxies are a quorum.

Chairperson

27. (1) If the directors have elected a chairperson of the directors, and the chairperson of the directors is present at a meeting of shareholders, he or she must chair the meeting.

(2) If no chairperson of the directors has been elected or if, at any meeting of shareholders, the chairperson of the directors is not present within 15 minutes of the time appointed for the commencement of the meeting, the shareholders present may choose 1 of their number to be the chairperson of the meeting.

Voting

28. (1) In the case of a meeting of shareholders held under clause 25(a), unless a poll is demanded, voting at the meeting must take place by whichever of the following methods is determined by the chairperson of the meeting—

(a) voting by voice; or

(b) voting by show of hands.

(2) In the case of a meeting of shareholders held under clause 25(b), unless a poll is demanded, voting at the meeting must take place by shareholders signifying individually their assent or dissent by voice.

(3) A declaration by the chairperson of the meeting that a resolution is carried by the requisite majority is conclusive evidence of that fact unless a poll is demanded in accordance with subclause (4).

(4) At a meeting of shareholders a poll may be demanded by—

(a) not fewer than 5 shareholders having the right to vote on the question at the meeting; or

(b) a shareholder or shareholders representing not less than 10% of the total voting rights of all shareholders having the right to vote on the question at the meeting.

(5) A poll may be demanded either before or after a vote is taken on a resolution.

(6) If a poll is taken, votes must be counted according to the votes attached to the shares of each shareholder present and voting.

(7) The chairperson of a shareholders' meeting is not entitled to a casting vote.

Votes of joint shareholders

29. If 2 or more persons are registered as the holder of a share, the vote of the person named first in the share register and voting on a matter must be accepted to the exclusion of the votes of the other joint holders.

Proxies

30. (1) A shareholder may exercise the right to vote either by being present in person or by proxy.

(2) A proxy for a shareholder is entitled to attend and participate in a meeting of shareholders as if the proxy were the shareholder.

(3) A proxy must be appointed by notice in writing signed by the shareholder.

(4) The notice must state whether the appointment is for a particular meeting, or for a specified term.

(5) No proxy is effective in relation to a meeting unless a copy of the notice of appointment is given to the company at least 24 hours before the start of the meeting.

Corporations may act by representatives

31. (1) A corporation that is a shareholder may appoint a representative to attend a meeting of shareholders on its behalf by notice in writing signed by a director or secretary of the corporation.

(2) The notice must state whether the appointment is for a particular meeting, or for a specified term.

Minutes

32. (1) The directors must ensure that minutes are kept of all proceedings at meetings of shareholders.

(2) Minutes that have been signed correct by the chairperson of the meeting are prima facie evidence of the proceedings at the meeting.

Division 6—Miscellaneous

Annual meetings and special meetings of shareholders

33. (1) Subject to subclause (3) and clause 34(3), the directors must call an annual meeting of the company to be held—

(a) once in each calendar year; and

(b) not later than 5 months after the balance date of the company (or, if the time for completing the financial statements of the company has been extended under clause 70(1)(a), not later than 20 working days after the financial statements are required to be completed); and

(c) not later than 15 months after the previous annual meeting.

(2) The meeting must be held on the date on which it is called to be held.

(3) The company need not hold its first annual meeting in the calendar year of its incorporation, but must hold that meeting within 18 months of its incorporation.

(4) A special meeting of shareholders entitled to vote on an issue—

(a) may be called at any time by a director; and

(b) must be called by the directors on the written request of shareholders holding shares carrying together not less than 5% of the votes that may be cast on that issue.

Written resolutions of shareholders

34. (1) A resolution in writing signed by shareholders, who together hold not less than 75% of the votes entitled to be cast on that resolution at a meeting of shareholders, is as valid as if it had been passed at a meeting of those shareholders.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form each signed or assented to by 1 or more shareholders.

(3) The company need not hold an annual meeting if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with subclause (1).

(4) Within 5 working days of a resolution being passed under subclause (1), the company must send a copy of the resolution to every shareholder who did not sign it.

(5) A resolution may be signed under subclause (1) without any prior notice being given to shareholders.

Voting in interest groups

35. If the company proposes to take action that affects the rights attached to shares within the meaning of section 53 of the Act, the action may not be taken unless it is approved by a special resolution of each interest group, as defined in section 53(3) of the Act.

Shareholders entitled to receive distribution

36. (1) The shareholders who are entitled to receive distributions are—

(a) if the directors fix a date for this purpose, those shareholders whose names are registered in the share register on that date;

(b) if the directors do not fix a date for this purpose, those shareholders whose names are registered in the share register on the day on which the distribution is approved.

(2) A date fixed under subclause (1) must not precede by more than 20 working days the date on which the proposed action will be taken.

Shareholders entitled to exercise pre-emptive rights

37. The shareholders who are entitled to pre-emptive rights to acquire shares in accordance with clause 12 are those shareholders whose names are registered in the share register on the day on which notice is given to the company by the selling shareholder under clause 13.

Shareholders entitled to attend and vote at meetings

38. (1) The shareholders who are entitled to receive notice of a meeting of shareholders are—

(a) if the directors fix a date for this purpose, those shareholders whose names are registered in the share register on that date; or

(b) if the directors do not fix a date for this purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

(2) A date fixed under subclause (1)(a) must not precede by more than 30 working days the date on which the meeting is to be held.

(3) Before a meeting of shareholders, the company may prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order, and showing the number of shares held by each shareholder—

(a) if a date has been fixed under subclause (1)(a), as at that date; or

(b) if no such date has been fixed, as at the close of business on the day immediately preceding the day on which the notice is given.

(4) A person named in a list prepared under subclause (3) is entitled to attend the meeting and vote in respect of the shares shown opposite his or her name in person or by proxy, except to the extent that—

(a) that person has, since the date on which the shareholders entitled to receive notice of the meeting were determined, transferred any of his or her shares to some other person; and

(b) the transferee of those shares has been registered as the holder of those shares, and has requested before the commencement of the meeting that his or her name be entered on the list prepared under subclause (3).

(5) A shareholder may, on 2 working days' notice, examine any list prepared under subclause (3) during normal business hours at the registered office of the company.

Distributions to shareholders

39. (1) The company must not pay a dividend or make any other distribution to shareholders unless there are reasonable grounds for believing that, after that distribution is made—

(a) the company will be able to pay its debts as they become due in the normal course of business; and

(b) the value of the company's assets will not be less than the value of its liabilities.

(2) Subject to subclause (1) and to the terms of issue of any shares, the company may pay a dividend to shareholders—

(a) of the same amount in respect of each share of the same class, if the payment of the dividend is authorised by the directors; or

(b) on any other basis, with the prior approval of all shareholders.

(3) A distribution made in breach of subclause (1) or (2) may be recovered by the company from the recipients or from the persons approving the distribution, in accordance with section 28 of the Act.

Company may acquire its own shares and provide financial assistance

40. (1) The company may agree to acquire its own shares from a shareholder—

(a) with the prior approval of all shareholders; and

(b) subject to the solvency test in clause 39(1).

(2) If the company acquires its own shares, those shares are deemed to be cancelled immediately on acquisition.

(3) The company may give financial assistance to a person for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, whether directly or indirectly, only if—

(a) after providing the assistance, the company will satisfy the solvency test in clause 39(1); and

(b) all shareholders have approved the giving of the assistance.

Annual report to shareholders

41. (1) Subject to subclause (2), the directors of the company must, within 20 working days after the date on which the company is required to complete its financial statements under section 125 of the Act—

(a) prepare an annual report on the affairs of the company during the accounting period ending on that date; and

(b) send a copy of that report to each shareholder.

(2) The directors are only required to prepare an annual report in respect of an accounting period if a shareholder has given written notice to the company before the end of that accounting period requiring such a report to be prepared.

(3) If the directors are not required to prepare an annual report in respect of an accounting period, they must send a notice to each shareholder to that effect within the period referred to in subclause (1).

(4) Every annual report for the company must—

(a) be in writing and be dated; and

(b) include financial statements for the accounting period that comply with section 125 of the Act; and

(c) if an auditor's report is required in relation to the financial statements included in the report, include that auditor's report; and

(d) state the names of the persons holding office as directors of the company as at the end of the accounting period and the names of any persons who ceased to hold office as directors of the company during the accounting period; and

(e) contain any other information that may be required by regulations made under the Act; and

(f) be signed on behalf of the directors by 2 directors of the company or, if the company has only 1 director, by that director.

Deemed approval by all shareholders for certain purposes

42. For the purposes of clauses 6, 7(2), and 40(1) and (3), a decision is deemed to have been approved by all shareholders if—

(a) notice of the proposed decision has been given to all shareholders in accordance with clause 75; and

(b) no shareholder has responded within 10 working days objecting to that decision; and

(c) shareholders entitled to cast not less than 75% of the votes in relation to a resolution to alter these rules have responded within 10 working days approving that decision.

Part 3—Directors

Appointment and removal of directors

43. (1) The shareholders may by ordinary resolution fix the number of directors of the company.

(2) A director may be appointed or removed by ordinary resolution passed at a meeting called for the purpose, or by a written resolution in accordance with clause 34(1).

(3) A director vacates office if he or she—

(a) is removed from office in accordance with subclause (2); or

(b) resigns in accordance with clause 44; or

(d) dies.

Resignation of director

44. (1) A director may resign by delivering a signed written notice of resignation to the registered office of the company.

(2) Subject to subclauses (3) and (4), a notice of resignation is effective when it is received at the registered office, or at any later time specified in the notice.

(3) If the company has only 1 director, that director may not resign—

(a) until that director has called a meeting of shareholders to receive notice of the resignation; or

(b) if the company has only 1 shareholder, until that director has given not less than 10 working days' notice of the resignation to that shareholder.

(4) A notice of resignation given by the sole director of the company does not take effect, despite its terms, until the earlier of the appointment of another director of the company or—

(a) the time and date for which the meeting of shareholders is called under subclause (3)(a); or

(b) if the company has only 1 shareholder, 10 working days after notice of the resignation has been given to that shareholder.

Notice of change in directors

45. (1) The company must ensure that notice in the prescribed form of the following is delivered to the Registrar—

(a) a change in the directors of the company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both;

(b) a change in the name or the residential address of a director of the company.

(2) In the case of the appointment of a new director, a consent by that person to act as a director, in the prescribed form, must also be delivered to the Registrar.

Powers and duties of directors

46. (1) Subject to section 49 of the Act (which relates to major transactions), the business and affairs of the company must be managed by, or under the direction or supervision of, the directors.

(2) The directors have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) The directors may delegate any of their powers to a committee of directors, or to a director or employee.

(4) The directors must monitor, by means of reasonable methods properly used, the exercise of powers by any delegate.

(5) The provisions of these rules relating to proceedings of the directors also apply to proceedings of any committee of directors, except to the extent the directors determine otherwise.

(6) The directors have the duties set out in the Act, and, in particular—

(a) each director must act in good faith and in a manner that the director believes to be in the interests of the company; and

(b) a director must not act, or agree to the company acting, in a manner that contravenes the Act or these rules.

Standard of care of directors

47. A director of the company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable person would exercise in the same circumstances taking into account, but without limitation—

(a) the nature of the company; and

(b) the nature of the decision; and

Obligations of directors in connection with insolvency

48. (1) A director of the company must call a meeting of directors within 10 working days to consider whether the directors should appoint a liquidator, in accordance with section 70 of the Act, if the director—

(a) believes that the company is unable to pay its debts as they fall due; or

(b) is aware of matters that would put any reasonable person on inquiry as to whether the company is unable to pay its debts as they fall due.

(2) At a meeting called under section 70 of the Act, the directors must consider whether to—

(a) appoint a liquidator; or

(b) continue to carry on the business of the company.

Interested directors

49. (1) A director must not exercise any power as a director in circumstances where that director is directly or indirectly materially interested in the exercise of that power, unless—

(a) the Act expressly authorises the director to exercise the relevant power despite such an interest; or

(b) the director has reasonable grounds for believing that the company will satisfy the solvency test after that power is exercised, and either—

(i) these rules expressly authorise the director to exercise the relevant power despite such an interest; or

(ii) the matter in question has been approved by shareholders under section 50 of the Act, following disclosure of the nature and extent of the director's interest to all shareholders who are not otherwise aware of those matters.

(2) A director who is directly or indirectly materially interested in any transaction or proposed transaction must, within 10 working days of becoming aware of that interest, disclose the nature and extent of that interest in writing—

(a) if there is at least 1 other director who is not directly or indirectly materially interested in the transaction or proposed transaction, to the directors of the company; or

(b) if paragraph (a) does not apply, to all shareholders other than the director.

(3) A director may give a general disclosure in writing to all other shareholders that the director is a director or employee or shareholder of another company, or is otherwise associated with another company or another person. That general disclosure is a sufficient disclosure of the director's interest in any transaction entered into with that other company or person for the purposes of subclause (2).

(4) A transaction entered into by the company in which a director is directly or indirectly materially interested is voidable at the election of the company in accordance with section 107 of the Act.

(5) A transaction entered into by the company as the result of action taken by a director in breach of section 64, 65, or 66 of the Act is voidable at the option of the company in accordance with section 108 of the Act.

Use and disclosure of company information

50. (1) A director of the company who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or make use of or act on the information, except—

(a) in the interests of the company; or

(b) as required by law; or

(c) if there are reasonable grounds for believing that the company will satisfy the solvency test after the director takes that action, and that action—

(i) is approved by all shareholders under section 50 of the Act; or

(ii) is authorised by any contract of employment entered into between that director and the company, the relevant terms of which have been approved by shareholders by ordinary resolution.

(2) No director may vote on a resolution to approve such terms in relation to himself or herself.

Indemnities and insurance for directors or employees

51. (1) Subject to section 73 of the Act, the company may provide an indemnity or purchase insurance for a director of the company or of a related company with the approval of—

(a) shareholders by ordinary resolution; or

(b) all shareholders under section 50 of the Act.

(2) No director may vote on a resolution concerning an indemnity or insurance to be provided for the director.

(3) In this clause —

"director" includes—

(a) a person who is liable under any of sections 64 to 66 of the Act by virtue of section 72 of the Act; and

(b) a former director;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and "indemnity" has a corresponding meaning.

Remuneration of directors

52. (1) Directors may receive remuneration and other benefits from the company with the approval of—

(a) shareholders by ordinary resolution; or

(b) all shareholders under section 50 of the Act.

(2) No director may vote on a resolution concerning remuneration or benefits to be received by the director.

Procedure at meetings of directors

53.
(1) Clauses 54 to 60 set out the procedures to be followed at meetings of directors.

(2) A meeting of directors may determine its own procedure to the extent that it is not governed by these rules.

Chairperson

54. (1) The directors may elect 1 of their number as chairperson of directors and may determine the period for which the chairperson is to hold office.

(2) If no chairperson is elected, or if at a meeting of the directors the chairperson is not present within 5 minutes after the time appointed for the commencement of the meeting, the directors present may choose 1 of their number to be the chairperson of the meeting.

Notice of meeting

55. (1) A director or, if requested by a director to do so, an employee of the company, may convene a meeting of directors by giving notice in accordance with this clause.

(2) Not less than 24 hours notice of a meeting of directors must be given to every director who is in Solomon Islands, or who can readily be co

(3) An irregularity in the notice of a meeting is waived if all directors entitled to receive notice of the meeting attend the meeting without protest as to the irregularity, or if all directors entitled to receive notice of the meeting agree to the waiver.

Methods of holding meetings

56. A meeting of directors may be held either—

(a) by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

57. (1) A quorum for a meeting of directors is a majority of the directors.

(2) No business may be transacted at a meeting of directors if a quorum is not present.

Voting

58. (1) Every director has 1 vote.

(2) The chairperson has a casting vote.

(3) A resolution of the directors is passed if it is agreed to by all directors present without dissent, or if a majority of the votes cast on it are in favour of it.

(4) A director present at a meeting of directors is presumed to have agreed to, and to have voted in favour of, a resolution of the directors unless he or she expressly dissents from, or votes against, the resolution at the meeting.

Minutes

59. The directors must ensure that minutes are kept of all proceedings at meetings of the directors.

Unanimous resolution

60. (1) A resolution in writing, signed or assented to by all directors, is as valid and effective as if it had been passed at a meeting of the directors duly convened and held.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form each signed or assented to by 1 or more directors.

(3) A copy of any such resolution must be entered in the minute book of the directors' proceedings.

Managing director and other executive directors

61. (1) The directors may, from time to time, appoint a director as managing director for such period and on such terms as they think fit.

(2) Subject to the terms of a managing director's appointment, the directors may at any time cancel the appointment of a director as managing director.

(3) A director who holds office as managing director ceases to hold office as managing director if he or she ceases to be a director of the company.

Delegation to managing director

62. (1) The directors may delegate to the managing director, subject to any conditions or restrictions that they consider appropriate, any of their powers that may be lawfully delegated.

(2) Any such delegation may at any time be withdrawn or varied by the directors.

(3) The delegation of a power of the directors to the managing director does not prevent the exercise of the power by the directors, unless the terms of the delegation expressly provide otherwise.

Remuneration of managing director and director

63. (1) Subject to shareholder approval in accordance with clause 52, the managing director, or a director (other than the managing director) who is employed by the company, may be paid such remuneration as he or she may agree with the directors.

(2) The remuneration may be by way of salary, commission, participation in profits, or any combination of these methods, or any other method of fixing remuneration.

Part 4—Company Records

Company records

64. (1) The company must keep all the following documents at its registered office—

(a) the rules of the company;

(b) minutes of all meetings and resolutions of shareholders within the last 7 years;

(d) the full names and residential and postal addresses of the current directors;

(e) copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports made under section 55 of the Act;

(f) copies of all financial statements required to be completed under section 125 of the Act for the last 7 completed accounting periods of the company;

(g) the accounting records required by section 124 of the Act for the current accounting period and for the last 7 completed accounting periods of the company;

(h) the share register.

(2) The references in subclause (1)(b), (c), and (e) to 7 years and the references in subclause (1)(f) and (g) to 7 completed accounting periods include such lesser periods as the Registrar may approve by notice in writing to the company, in accordance with section 113(2) of the Act.

Form of records

65. (1) The records of the company must be kept—

(a) in written form; or

(b) in a form or in a manner that allows the documents and information that comprise the records to be readily accessible so as to be usable for subsequent reference, and convertible into written form.

(2) The directors must ensure that adequate measures exist to—

(a) prevent the records being falsified; and

(b) detect any falsification of them.

Access to records

66. (1) The directors of the company are entitled to access to the company's records in accordance with section 115 of the Act.

(2) A shareholder of the company is entitled—

(a) to inspect the documents referred to in section 116 of the Act, in the manner specified in section 118 of the Act; and

(b) to require copies of, or extracts from, any document that he or she may inspect within 5 working days of making a request in writing for the copy or extract, on payment of any reasonable copying and administration fee specified by the company.

(3) The fee may be determined by any director, subject to any directions from the directors.

Documents to be sent to Registrar

67. In addition to any annual return required under section 119 of the Act, the company must send all the following documents to the Registrar under the Act—

(a) notice of the adoption of new rules by the company, or the alteration of the rules of the company, under section 14 of the Act;

(b) notice of a change in the registered office or postal address of the company under section 18 of the Act;

(d) notice of the acquisition by the company of its own shares, under section 30 of the Act;

(e) notice of the redemption of a share, under section 34 of the Act;

(f) notice of a change in the directors of the company, or of a change in the name or residential address or postal address of a director, under section 85 of the Act;

(g) notice of the making of an order under section 99 of the Act altering or adding to the rules of a company;

(h) notice of any place other than the registered office of the company where records are kept;

(i) documents requested by the Registrar under section 176 of the Act.

Documents to be sent to shareholders

68. In addition to any annual report required under section 55 of the Act, the company must send all the following documents to shareholders under the Act—

(a) notice of any repurchase of shares to which section 30(4) of the Act applies;

(b) notice of a written resolution approved under section 51 of the Act;

(d) any written statement by an auditor under section 131 of the Act;

(e) any report by an auditor under section 133 of the Act.

Part 5—Accounts and Audit

Accounting records to be kept

69. (1) The directors of the company must cause accounting records to be kept that—

(a) correctly record and explain the transactions of the company; and

(b) will at any time enable the financial position of the company to be determined with reasonable accuracy; and

(c) will enable the directors to ensure that the financial statements of the company comply with section 125 of the Act; and

(d) will enable the financial statements of the company to be readily and properly audited.

(2) Without limiting clause 68, the accounting records must contain—

(a) entries of money received and spent each day and the matters to which it relates; and

(b) a record of the assets and liabilities of the company; and

(i) a record of goods bought and sold, and relevant invoices;

(ii) a record of stock held at the end of the financial year together with records of any stocktaking during the year; and

(d) if the company's business involves providing services, a record of services provided and relevant invoices.

(3) If the company sells goods or provides services for cash in the ordinary course of carrying on a retail business—

(a) invoices need not be kept in respect of each retail transaction for the purposes of subclause (2); and

(b) a record of the total money received each day in respect of the sale of goods or provision of services, as the case may be, is sufficient to comply with subclause (2) in respect of those transactions.

(4) The accounting records must be kept—

(a) in a form permitted under clause 65; and

(b) at the registered office of the company.

Financial statements to be prepared

70. (1) The directors must ensure that —

(a) within 4 months after the balance date of the company, or with the approval of shareholders by special resolution, within an extended period not exceeding 7 months after the balance date of the company, financial statements that comply with subclause (2) are completed in relation to the company and that balance date; and

(b) within 20 working days of the date on which the financial statements must be completed under paragraph (a), those financial statements are sent to all shareholders. This requirement may be satisfied by sending the financial statements to shareholders in an annual report, in accordance with section 55 of the Act.

(2) The financial statements of the company must—

(a) give a true and fair view of the matters to which they relate; and

(b) comply with any applicable regulations made under the Act; and

(c) be dated and signed on behalf of the directors by 2 directors of the company, or, if the company has only 1 director, by that director.

(3) The following periods must not exceed 15 months—

(a) the period between the date of incorporation of the company and its first balance date;

(b) the period between any 2 balance dates of the company.

(4) In this clause, "financial statements", in relation to the company and a balance date, means—

(a) a statement of financial position for the entity as at the balance date; and

(b) in the case of—

(i) a company trading for profit, a statement of financial performance for the company in relation to the accounting period ending at the balance date; and

(ii) a company not trading for profit, an income and expenditure statement for the company in relation to the accounting period ending at the balance date; and

(c) if required by regulations made under the Act, a statement of cash flows for the company in relation to the accounting period ending on the balance date; and

(d) such other financial statements in relation to the company or any group of companies of which it is the holding company as may be required by regulations made under the Act; and

(e) any notes or documents giving information relating to the statement of financial position and other statements.

Appointment of auditor

71. (1) If required to do so under subclause (2), the company must appoint an auditor who is qualified to hold that office under section 130 of the Act to—

(a) audit the financial statements of the company in respect of an accounting period; and

(b) hold office until those financial statements have been audited in accordance with the Act or until he or she ceases to hold office under subclause (3).

(2) The company must appoint an auditor within 30 working days if—

(a) a shareholder or shareholders holding shares that together carry the right to receive more than 20% of distributions made by the company give written notice to the company before the end of an accounting period requiring the financial statements of the company for that period to be audited; or

(b) a vacancy in the office of auditor arises before the financial statements in respect of a period for which an audit is required have been audited.

(3) An auditor ceases to hold office if he or she—

(a) resigns by delivering a written notice of resignation to the registered office of the company not less than 20 working days before the date on which the notice is expressed to be effective; or

(b) is replaced as auditor by an ordinary resolution appointing another person as auditor in his or her place, following notice to the auditor in accordance with section 128 of the Act; or

(d) dies; or

(e) a person in respect of whom an order of custody is in force under section 18 or 41 of the Mental Treatment Act (Cap 103); or

(f) ceases to hold office under subclause (5); or

(g) is removed by all shareholders in accordance with subclause (6).

(4) An auditor may be appointed—

(a) by ordinary resolution; or

(b) if the office of auditor is vacant, by the directors. If an auditor is appointed by the directors, the directors must, within 10 working days, give notice of the appointment to all shareholders.

(5) If the company is required to appoint an auditor in respect of an accounting period but is not required to do so in respect of a subsequent accounting period—

(a) the audit of the financial statements of the company for the accounting period in respect of which an audit is required must be completed in accordance with this section; and

(b) the directors may give notice to all shareholders within 4 months of the commencement of a subsequent accounting period that the company is no longer required to appoint an auditor, and that the auditor will cease to hold office unless a notice is given by shareholders under subclause (2)(a) by a date specified in the notice, which must be not less than 30 working days from the date on which the notice is given; and

(c) if a notice has been given under paragraph (b), and no notice under subclause (2)(a) is received by the company by the date specified in that notice, the auditor ceases to hold office on the later of—

(i) the date specified in the notice; or

(ii) the date on which the audit of the financial statements of the company for the previous accounting period is completed.

(6) Despite the other provisions of this clause, all shareholders may agree, in writing—

(a) to dispense with an audit for any accounting period; and

(b) to remove the auditor of the company.

(7) The fees payable to the auditor must be agreed between the auditor and the directors.

Auditor's attendance at shareholders' meeting

72. The directors must ensure that an auditor of the company—

(a) is permitted to attend a meeting of shareholders of the company; and

(b) receives the notices and communications that a shareholder is entitled to receive relating to meetings and resolutions of shareholders; and

(c) may be heard at a meeting of shareholders that he or she attends on any part of the business of the meeting that concerns him or her as auditor.

Part 6—Liquidation and Removal from Register

Resolution to appoint liquidator

73. (1) The shareholders may resolve to liquidate the company by special resolution.

(2) The directors may resolve to liquidate the company at a meeting called under section 70 of the Act, if they consider that the company is unable to meet its debts as they become due in the normal course of business.

Distribution of surplus assets

74. (1) The surplus assets of the company available for distribution to shareholders after all creditors of the company have been paid must be distributed in proportion to the number of shares held by each shareholder, subject to the terms of issue of any shares.

(2) The liquidator may, with the approval of a special resolution, distribute the surplus assets of the company among the shareholders in kind. For this purpose, the liquidator may set such value as he or she considers fair on any property to be divided, and may determine how the division will be carried out as between the shareholders or different classes of shareholders.

Part 7—Miscellaneous

Service of documents on shareholders

75. (1) A notice, statement, report, accounts, or other document to be sent to a shareholder who is a natural person may be—

(a) delivered to that person; or

(b) posted to that person's postal address; or

(2) A notice, statement, report, accounts, or other document to be sent to a shareholder that is a company or an overseas company may be sent by any of the methods of serving documents referred to in section 201 or 203 of the Act, as the case may be.

Interpretation

76. (1) In these rules, "Act" means the Companies Act 2009.

(2) Unless the context otherwise requires, any term or expression that is defined in the Act or any regulations made under the Act and used, but not defined, in these rules has the same meaning as in the Act or the regulations.

——————————

SCHEDULE 3
(Section 15(2))

MODEL RULES FOR SINGLE SHAREHOLDER COMPANY

Part 1—General Provisions

Name of company

1. (1) The name of the company at the time of registration under the Act appears on the application for registration or for re-registration, as the case may be.

(2) The name of the company may be changed in accordance with section 11 of the Act only with the prior approval of the shareholder.

Private company with 1 shareholder

2. (1) The company is a private company.

(2) The company must not offer any of its shares or other securities to the public.

(3) The company has 1 shareholder.

(4) These rules are designed for a company with 1 shareholder, and if the company proposes to increase the number of shareholders, it must first adopt new rules.

(5) The company must not have more than 1 shareholder.

(6) If a share transfer is presented to the company for entry on the share register that would result in a breach of this restriction, the directors must decline to register the transfer.

Rules

3. (1) The company may adopt new rules in place of these rules by special resolution, in accordance with section 14(2) of the Act.

(2) Subject to the Act—

(a) these rules have effect and may be enforced as if they constituted a contract—

(i) between the company and the shareholder; and

(ii) between the company and each director; and

(b) the shareholder and the directors of the company have the rights, powers, duties, and obligations set out in these rules.

Part 2—Shares and Shareholders

Shares

4. (1) At the time of registration under the Act, the company has the number of shares specified in the application for registration or re-registration, as the case may be.

(2) If the company was first registered under Part 2 of the Act, the company must immediately after its registration issue to the person named in the application for registration as the shareholder the number of shares specified in the application as being the number of shares to be issued to that person.

(3) With the prior approval of the shareholder, the company may—

(a) issue shares to the shareholder; and

(b) issue more than 1 class of shares.

(4) If the company issues shares, it must give the prescribed notice to the Registrar under section 25(2) of the Act within 10 working days of the issue of any shares.

(5) If the rights attached to the shares differ from those set out in section 22 of the Act, the notice must be accompanied by a document setting out the terms of issue of the shares.

(6) The shares of the company are, subject to clause 8(4) and their terms of issue, transferable by entry in the share register in accordance with clause 8(1) to (3).

Company to keep share register

5. (1) The company must maintain a share register that records the shares issued by the company and states—

(a) the names, alphabetically arranged, and the latest known address of each person who is, or has within the last 7 years been, a shareholder; and

(b) the number of shares of each class held by the shareholder within the last 7 years; and

(i) issue of shares to; or

(ii) repurchase or redemption of shares from; or

(iii) transfer of shares by or to—

the shareholder within the last 7 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(2) No notice of a trust, whether express, implied, or constructive, may be entered on the share register.

(3) The company may appoint an agent to maintain the share register.

Form and location of share register

6. The share register must be kept—

(a) in a form that complies with clause 32; and

(b) at the company's registered office.

Status of registered shareholder

7. (1) The company must treat the registered holder of a share as the only person entitled to—

(a) exercise the right to vote attaching to the share; and

(b) receive notices; and

(c) receive a distribution in respect of the share; and

(d) exercise the other rights and powers attaching to the share.

(2) If the shareholder dies, that shareholder's legal representative is the only person recognised by the company as having any title to, or interest in, the share.

(3) Any person who becomes entitled to a share as a consequence of the death, bankruptcy or insolvency or incapacity of the shareholder may be registered as the holder of the shareholder's shares on making a request in writing to the company to be so registered, accompanied by proof satisfactory to the directors of that entitlement.

Transfer of shares

8. (1) If shares are to be transferred, a form of transfer signed by the holder or by his or her agent or attorney must be delivered to the company.

(2) The personal representative of the deceased shareholder may transfer the share.

(3) Subject to subclause (4), the company must, immediately on receipt of a properly executed share transfer, enter the name of the transferee in the share register as holder of the shares transferred.

(4) If any amount payable to the company by the shareholder is due but unpaid, the directors may resolve to refuse to register a transfer of a share within 30 working days of receipt of the transfer.

(5) If the directors resolve to refuse to register a transfer under subclause (4), they must give notice of the refusal to the shareholder within 5 working days of the date of the resolution.

Share certificates

9. (1) The shareholder may apply to the company for a share certificate relating to some or all of the shareholder's shares in the company.

(2) On receipt of an application for a share certificate, the company must, within 20 working days after receiving the application—

(a) if the application relates to some but not all of the shares, separate the shares shown in the register as owned by the shareholder into separate parcels (1 parcel being the shares to which the share certificate relates, and the other parcel being any remaining shares); and

(b) in all cases send to the shareholder a certificate stating—

(i) the name of the company; and

(ii) the class of shares held by the shareholder; and

(iii) the number of shares held by the shareholder to which the certificate relates.

(a) the share certificate relating to the share; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form determined by the directors.

Shareholder decisions and exercise of shareholder powers

10. A resolution in writing signed by the shareholder is as valid as if it had been passed at a meeting of the shareholder.

Distributions to shareholders

11. (1) The payment of a dividend or the making of any other distribution must be approved by the shareholder.

(2) The company must not make a distribution to the shareholder unless there are reasonable grounds for believing that, after that distribution is made—

(a) the company will be able to pay its debts as they become due in the normal course of business; and

(b) the value of the company's assets will not be less than the value of its liabilities.

(3) A distribution made in breach of subclause (2) may be recovered by the company from the shareholder, in accordance with section 28 of the Act.

Company may acquire its own shares and provide financial assistance

12. (1) The company may agree to acquire its own shares from the shareholder, subject to the solvency test in clause 11(2).

(2) If the company acquires its own shares, those shares are deemed to be cancelled immediately on acquisition.

(3) The company may give financial assistance to the shareholder for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, whether directly or indirectly, only if after providing the assistance the company will satisfy the solvency test in clause 11(2).

Annual report to shareholders

13. The directors of the company are not required to prepare an annual report in respect of any accounting period, unless requested to do so by the shareholder by notice in writing.

Part 3—Directors

Appointment and removal of directors

14. (1) The shareholder may fix the number of directors of the company by notice in writing to the company.

(2) A director may be appointed or removed by the shareholder by notice in writing to the company.

(3) A director vacates office if he or she—

(a) is removed from office in accordance with subclause (2); or

(b) resigns in accordance with subclause (4); or

(d) dies.

(4) A director may resign by delivering a signed written notice of resignation to the registered office of the company and to the shareholder. Subject to subclause (5), the notice is effective when it is received at the registered office, or at any later time specified in the notice.

(5) If the company has only 1 director, that director may not resign until that director has given not less than 10 working days' written notice of the resignation to the shareholder. A notice of resignation given by the sole director of the company does not take effect, despite its terms, until the earlier of—

(a) the expiry of 10 working days after written notice of the resignation has been given to the shareholder; or

(b) the appointment of another director of the company.

(6) The company must ensure that notice in the prescribed form of all the following is delivered to the Registrar—

(a) a change in the directors of the company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both;

(b) a change in the name or the residential address of a director of the company.

(7) In the case of the appointment of a new director, a consent by that person to act as a director, in the prescribed form, must also be delivered to the Registrar.

Powers and duties of directors

15. (1) The business and affairs of the company must be managed by, or under the direction or supervision of, the directors subject to—

(a) section 49 of the Act, which relates to major transactions; and

(b) any directions given to the board in writing by the shareholder.

(2) The directors have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) The directors may delegate to a committee of directors, or to a director or employee, any of their powers. The directors must monitor, by means of reasonable methods properly used, the exercise of powers by any delegate.

(4) The provisions of these rules relating to proceedings of the directors also apply to proceedings of any committee of directors, except to the extent the directors determine otherwise.

(5) The directors have the duties set out in the Act, and, in particular—

(a) each director must act in good faith and in a manner that the director believes to be in the interests of the company; and

(b) a director must not act, or agree to the company acting, in a manner that contravenes the Act or these rules.

Standard of care of directors

16. A director of the company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable person would exercise in the same circumstances taking into account, but without limitation—

(a) the nature of the company; and

(b) the nature of the decision; and

Obligations of directors in connection with insolvency

17. (1) A director of the company must call a meeting of directors within 10 working days to consider whether the directors should appoint a liquidator, in accordance with section 70 of the Act, if the director—

(a) believes that the company is unable to pay its debts as they fall due; or

(b) is aware of matters that would put any reasonable person on inquiry as to whether the company is unable to pay its debts as they fall due.

(2) At a meeting called under section 70 of the Act, the directors must consider whether to—

(a) appoint a liquidator; or

(b) continue to carry on the business of the company.

Interested directors

(1) A director must not exercise any power as a director in circumstances where that director is directly or indirectly materially interested in the exercise of that power unless the matter in question has been approved by the shareholder.

(2) A transaction entered into by the company in which a director is directly or indirectly materially interested is voidable at the election of the company in accordance with section 107 of the Act.

(3) A transaction entered into by the company as the result of action taken by a director in breach of section 64, 65, or 66 of the Act is voidable at the option of the company in accordance with section 108 of the Act.

Use and disclosure of company information

19. A director of the company who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or make use of or act on the information, except—

(a) in the interests of the company; or

(b) as required by law; or

(d) if there are reasonable grounds for believing that the company will satisfy the solvency test after the director takes that action, and that action—

(i) is approved by the shareholder; or

(ii) is authorised by any contract of employment entered into between that director and the company, the relevant terms of which have been approved by the shareholder.

Indemnities and insurance for directors or employees

20. (1) Subject to section 73 of the Act, the company may provide an indemnity or purchase insurance for a director of the company or of a related company with the approval of the shareholder.

(2) In subclause (1)—

"director" includes—

(a) a person who is liable under any of sections 64 to 70 of the Act by virtue of section 72 of the Act; and

(b) a former director;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and "indemnity" has a corresponding meaning.

Remuneration of directors

21. Directors may receive remuneration and other benefits from the company with the approval of the shareholder.

Procedures at meetings of directors

22. (1) Clauses 23 to 29 set out the procedure to be followed at meetings of directors.

(2) A meeting of directors may determine its own procedure to the extent that it is not governed by these rules.

Chairperson

23. (1) The shareholder may appoint a director as chairperson of directors and may determine the period for which the chairperson is to hold office.

(2) If no chairperson is appointed, or if at a meeting of the directors the chairperson is not present within 5 minutes after the time appointed for the commencement of the meeting, the directors present may choose 1 of their number to be the chairperson of the meeting.

Notice of meeting

24. (1) A director or, if requested by a director to do so, an employee of the company, may convene a meeting of directors by giving notice in accordance with this clause.

(2) Not less than 24 hours notice of a meeting of directors must be given to every director who is in Solomon Islands, or who can readily be contacted outside Solomon Islands.

Methods of holding meetings

25. A meeting of directors may be held either—

(a) by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

26. (1) A quorum for a meeting of directors is a majority of the directors.

(2) No business may be transacted at a meeting of directors if a quorum is not present.

Voting

27. (1) Every director has 1 vote.

(2) The chairperson has a casting vote.

(3) A resolution of the board is passed if it is agreed to by all directors present without dissent, or if a majority of the votes cast on it are in favour of it.

Minutes

28. The directors must ensure that minutes are kept of all proceedings at meetings of the directors.

Unanimous resolution

29. (1) A resolution in writing signed or assented to by all directors is as valid and effective as if it had been passed at a meeting of the directors duly convened and held.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form each signed or assented to by 1 or more directors.

(3) A copy of any such resolution must be entered in the minute book of the directors' proceedings.

Managing director and other executive directors

30. (1) The shareholder may from time to time appoint a director as managing director for such period and on such terms as the shareholder thinks fit.

(2) The remuneration of the managing director must be approved by the shareholder.

(3) Subject to the terms of a managing director's appointment, the shareholder may at any time cancel the appointment of a director as managing director.

(4) A director who holds office as managing director ceases to hold office as managing director if he or she ceases to be a director of the company.

(5) The directors may, with the prior approval of the shareholder, delegate to the managing director, subject to any conditions or restrictions that they consider appropriate, any of their powers that may be lawfully delegated.

(6) Any such delegation may at any time be withdrawn or varied by the directors. The delegation of a power of the directors to the managing director does not prevent the exercise of the power by the directors, unless the terms of the delegation expressly provide otherwise.

(7) A director other than the managing director who is employed by the company may be paid such remuneration as may be approved by the shareholder.

Part 4—Company Records

Company records

31. (1) The company must keep all the following documents at its registered office—

(a) the rules of the company;

(b) minutes of all meetings and resolutions of the shareholder within the last 7 years;

(d) the full names and residential and postal addresses of the current directors;

(e) copies of all written communications to the shareholders during the last 7 years, including annual reports made under section 55 of the Act;

(f) copies of all financial statements required to be completed under section 125 for the last 7 completed accounting periods of the company;

(g) the accounting records required by section 124 for the current accounting period and for the last 7 completed accounting periods of the company;

(h) the share register.

(2) The references in subclause (1)(b), (c), and (e) to 7 years and the references in subclause (1)(f) and (g) to 7 completed accounting periods include any lesser periods that the Registrar may approve by notice in writing to the company, in accordance with section 113(2) of the Act.

Form of records

32. (1) The records of the company must be kept—

(a) in written form; or

(2) The directors must ensure that adequate measures exist to—

(a) prevent the records being falsified; and

(b) detect any falsification of them.

Access to records

33. (1) The directors of the company are entitled to access to the company's records in accordance with section 115 of the Act.

(2) The shareholder of the company is entitled to access to the company's records as if the shareholder were a director.

Documents to be sent to Registrar

34. In addition to the annual return required under section 119 of the Act, the company must send all the following documents to the Registrar under the Act—

(a) notice of the adoption of new rules by the company, or the alteration of the rules of the company, under section 14 of the Act;

(b) notice of a change in the registered office of the company, under section 18 of the Act;

(d) notice of the acquisition by the company of its own shares, under section 30 of the Act;

(e) notice of the redemption of a share, under section 34 of the Act;

(f) notice of a change in the directors of the company, or of a change in the name or residential address or postal address of a director, under section 85 of the Act;

(g) notice of the making of an order under section 99 of the Act altering or adding to the rules of a company;

(h) notice of any place other than the registered office of the company where records are kept;

(i) documents requested by the Registrar under the Act.

Documents to be sent to shareholder

35. In addition to any annual report required under section 55 of the Act, the company must send all the following documents to the shareholder under the Act—

(a) financial statements required to be sent under section 125 of the Act;

(b) any written statement by an auditor under section 131 of the Act;

Part 5—Accounts and Audit

Accounting records to be kept

36. (1) The directors of the company must cause accounting records to be kept that—

(a) correctly record and explain the transactions of the company; and

(b) will at any time enable the financial position of the company to be determined with reasonable accuracy; and

(c) will enable the directors to ensure that the financial statements of the company comply with section 125 of the Act; and

(d) will enable the financial statements of the company to be readily and properly audited.

(2) Without limiting subclause (1), the accounting records must contain—

(a) entries of money received and spent each day and the matters to which it relates; and

(b) a record of the assets and liabilities of the company; and

(i) a record of goods bought and sold, and relevant invoices; and

(ii) a record of stock held at the end of the financial year together with records of any stocktaking during the year; and

(b) if the company's business involves providing services, a record of services provided and relevant invoices.

(3) If the company sells goods or provides services for cash in the ordinary course of carrying on a retail business—

(a) invoices need not be kept in respect of each retail transaction for the purposes of subclause (2); and

(4) The accounting records must be kept—

(a) in a form permitted under clause 32; and

(b) at the registered office of the company.

Financial statements to be prepared

37. (1) The directors of every company must ensure that within 4 months after the balance date of the company or, if the shareholder agrees in writing, within an extended period not exceeding 7 months after the balance date of the company, financial statements that comply with subclause (2) are—

(a) completed in relation to the company and that balance date; and

(b) given to the shareholder.

(2) The financial statements of the company must—

(a) give a true and fair view of the matters to which such statements relate; and

(b) comply with any applicable regulations made under the Act; and

(c) be dated and signed on behalf of the directors by 2 directors of the company, or, if the company has only 1 director, by that director.

(3) The period between—

(a) the date of incorporation of the company and its first balance date; or

(b) any 2 balance dates of the company,

must not exceed 15 months.

(4) In this clause, "financial statements", in relation to the company and a balance date, means—

(a) a statement of financial position for the entity as at the balance date; and

(b) in the case of—

(i) a company trading for profit, a statement of financial performance for the company in relation to the accounting period ending at the balance date; and

(ii) a company not trading for profit, an income and expenditure statement for the company in relation to the accounting period ending at the balance date; and

(c) if required by regulations made under the Act, a statement of cash flows for the company in relation to the accounting period ending on the balance date; and

(d) such other financial statements in relation to the company or any group of companies of which it is the holding company as may be required by regulations made under the Act; and

(e) any notes or documents giving information relating to the statement of financial position and other statements.

Appointment of auditor

38. (1) The shareholder may, by notice in writing to the company, appoint an auditor who is qualified to hold that office under section 130 of the Act to—

(a) hold office as auditor for the period specified in the notice; and

(b) audit the financial statements of the company.

(2) The shareholder may remove an auditor by notice in writing to the company and to that auditor.

Auditor's attendance at shareholders' meeting

39. The directors of the company must ensure that an auditor of the company—

is permitted to attend a meeting of the shareholder of the company; and

receives the notices and communications that the shareholder is entitled to receive relating to meetings and resolutions of the shareholder; and

may be heard at a meeting of the shareholder that he or she attends on any part of the business of the meeting that concerns him or her as auditor.

Part 6—Liquidation and Removal from Register

Resolution to appoint liquidator

40. (1) The shareholder may resolve to liquidate the company by special resolution.

(2) The directors may resolve to liquidate the company at a meeting called under section 70 of the Act if they consider that the company is unable to meet its debts as they become due in the normal course of business.

(3) The directors must give not less than 5 working days' notice to the shareholder of any meeting called under section 70 of the Act, and must permit the shareholder to attend and speak at that meeting.

Distribution of surplus assets

41. (1) The surplus assets of the company available for distribution to the shareholder after all creditors of the company have been paid must be distributed to the shareholder.

(2) The liquidator may, with the approval of the shareholder, distribute the surplus assets of the company to the shareholder in kind.

Part 7—Miscellaneous

Service of documents on shareholder

42 (1) A notice, statement, report, accounts, or other document to be sent to the shareholder who is a natural person may be—

(a) delivered to that person; or

(b) sent by any other method approved in writing by the shareholder.

(2) A notice, statement, report, accounts, or other document to be sent to the shareholder that is a company or an overseas company may be sent by any of the methods of serving documents referred to in section 201 or 203 of the Act, as the case may be.

Interpretation

43. (1) In these rules, "Act" means the Companies Act 2009.

——————————

SCHEDULE 4
(Section 15(3)

MODEL RULES FOR PUBLIC COMPANIES

Part 1—General Provisions

Name of company

1. (1) The name of the company at the time of registration under the Act appears on the application for registration or for re-registration, as the case may be.

(2) The name of the company may be changed in accordance with section 10 of the Act with the prior approval of the directors.

Public company

2. The company is a public company.

Rules

3. (1) The company may adopt new rules in place of these rules by special resolution, in accordance with section 14(2) of the Act.

(2) Subject to the Act—

(a) these rules have effect and may be enforced as if they constituted a contract—

(i) between the company and its shareholders; and

(ii) between the company and each director; and

(b) the shareholders and directors of the company have the rights, powers, duties, and obligations set out in these rules.

PART 2—SHARES AND SHAREHOLDERS

Division 1—General provisions

Number of shares

4. At the time of registration under the Act the company has the number of shares specified in the application for registration or re-registration, as the case may be.

Rights attaching to shares

5. Subject to clause 7(4), each share carries all the following rights—

(a) the right to 1 vote on a poll at a meeting of the company on any resolution, including any resolution to—

(i) appoint or remove a director or auditor;

(ii) adopt new rules;

(iii) alter the company's rules;

(iv) approve a major transaction;

(v) approve registration of a public company as a private company;

(vi) put the company into liquidation;

(vii) approve the transfer of registration of the company to another country; and

(b) the right to an equal share in dividends paid by the company; and

Initial issue of shares

6. If the company was first registered under Part 2 of the Act, the company must immediately after its registration issue to any person named in the application for registration as a shareholder the number of shares specified in the application as being the number of shares to be issued to that person or those persons.

Process for issuing shares

7. (1) The directors may issue shares—

(a) pursuant to an offer made to all shareholders proportionally, that, if accepted by all shareholders, would not affect relative voting or distribution rights, on such terms as the directors think fit (including issuing shares without consideration, or instead of dividends). The shareholders must have a reasonable opportunity to consider and respond to the offer; or

(b) to shareholders or any other persons for a consideration determined by the directors. The directors must use reasonable endeavours to obtain the best price reasonably obtainable for those shares.

(2) The directors may issue more than 1 class of shares. In particular, shares may be issued that—

(a) are redeemable; or

(b) confer preferential rights to distributions of capital or income; or

(c) confer special, limited, or conditional voting rights; or

(d) do not confer voting rights.

(3) If the company issues shares, it must give the prescribed notice to the Registrar under section 25(2) of the Act within 10 working days of the issue of any shares.

(4) If the rights attached to the shares differ from those set out in clause 5, the notice must be accompanied by a document setting out the terms of issue of the shares.

Transferability of shares

8. The shares of the company are, subject to clause 7(4) and their terms of issue, transferable by entry in the share register in accordance with subclauses 12(1) to (3).

Division 2—Share Register

Company to keep share register

9 (1) The company must maintain a share register that records the shares issued by the company and states—

(a) the names, alphabetically arranged, and the last known address of each person who is, or has within the last 7 years been, a shareholder; and

(b) the number of shares of each class held by each shareholder within the last 7 years; and

(i) issue of shares to; or

(ii) repurchase or redemption of shares from; or

(iii) transfer of shares by or to—

each shareholder within the last 7 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(2) No notice of a trust, whether express, implied, or constructive, may be entered on the share register.

(3) The company may appoint an agent to maintain the share register.

Form and location of share register

10. The share register must be kept—

(a) in a form that complies with clause 76; and

(b) at the company's registered office.

Status of registered shareholders

11. (1) The company must treat the registered holder of a share as the only person entitled to—

(a) exercise the right to vote attaching to the share; and

(b) receive notices; and

(c) receive a distribution in respect of the share; and

(d) exercise the other rights and powers attaching to the share.

(2) If a joint holder of a share dies, the remaining holders must be treated by the company as the holders of that share.

(3) If the sole holder of a share dies, that shareholder's legal representative is the only person recognised by the company as having any title to or interest in the share.

(4) Any person who becomes entitled to a share as a consequence of the death, bankruptcy or insolvency or incapacity of a shareholder may be registered as the holder of that shareholder's shares on making a request in writing to the company to be so registered, accompanied by proof satisfactory to the directors of that entitlement.

Division 3—Transfer of Shares and Share Certificates

Transfer of shares

12. (1) If shares are to be transferred, a form of transfer signed by the holder or by his or her agent or attorney must be delivered to the company.

(2) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

(4) The directors may resolve to refuse to register a transfer of a share within 30 working days of receipt of the transfer, if any amount payable to the company by the shareholder is due but unpaid.

(5) If the directors resolve to refuse to register a transfer for this reason, they must give notice of the refusal to the shareholder within 5 working days of the date of the resolution.

Share certificates

13. (1) A shareholder may apply to the company for a share certificate relating to some or all of the shareholder's shares in the company.

(2) On receipt of an application for a share certificate under subclause (1), the company must, within 20 working days after receiving the application—

(b) in all cases send to the shareholder a certificate stating—

(i) the name of the company; and

(ii) the class of shares held by the shareholder; and

(iii) the number of shares held by the shareholder to which the certificate relates.

(b) the share certificate relating to the share; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form determined by the directors.

Division 4—Meetings of Shareholders

Meetings of shareholders

14. (1) Clauses 15 to 27 set out the procedure to be followed at, and in relation to, meetings of shareholders.

(2) A meeting of shareholders may determine its own procedure to the extent that it is not governed by these rules.

Notice of meetings

15. (1) Written notice of the time and place of a meeting of shareholders must be given to every shareholder entitled to receive notice of the meeting and to every director and any auditor of the company not less than 15 working days before the meeting.

(2) The notice must set out—

(a) the nature of the business to be transacted at the meeting in sufficient detail to enable a shareholder to form a reasoned judgment in relation to it; and

(b) the text of any special resolution to be submitted to the meeting.

(3) An irregularity in a notice of a meeting is waived if all the shareholders entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity, or if all such shareholders agree to the waiver.

(4) An accidental omission to give notice of a meeting to, or the failure to receive notice of a meeting by, a shareholder does not invalidate the proceedings at that meeting.

(5) If a meeting of shareholders is adjourned for less than 30 working days, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting that is adjourned.

Methods of holding meetings

16. A meeting of shareholders may be held either—

(a) by a number of shareholders, who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all shareholders participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

17. (1) Subject to subclause (3), no business may be transacted at a meeting of shareholders if a quorum is not present.

(2) A quorum for a meeting of shareholders is present if 5 or more shareholders or their proxies are present who are between them able to exercise a majority of the votes to be cast on the business to be transacted by the meeting.

(4) If, at the adjourned meeting, a quorum is not present within 30 minutes after the time appointed for the meeting, the shareholders present or their proxies are a quorum.

Chairperson

18. (1) If the directors have elected a chairperson of the directors, and the chairperson of the directors is present at a meeting of shareholders, he or she must chair the meeting.

Voting

19. (1) In the case of a meeting of shareholders held under clause 16(a), unless a poll is demanded, voting at the meeting will take place by whichever of the following methods is determined by the chairperson of the meeting—

(a) voting by voice;

(b) voting by show of hands.

(2) In the case of a meeting of shareholders held under clause 16(b), unless a poll is demanded, voting at the meeting will take place by shareholders signifying individually their assent or dissent by voice.

(3) A declaration by the chairperson of the meeting that a resolution is carried by the requisite majority is conclusive evidence of that fact unless a poll is demanded in accordance with subclause (4).

(4) At a meeting of shareholders a poll may be demanded by—

(a) not fewer than 5 shareholders having the right to vote on the question at the meeting; or

(b) a shareholder or shareholders representing not less than 10% of the total voting rights of all shareholders having the right to vote on the question at the meeting.

(5) A poll may be demanded either before or after a vote is taken on a resolution.

(6) If a poll is taken, votes must be counted according to the votes attached to the shares of each shareholder present and voting.

(7) The chairperson of a shareholders' meeting is not entitled to a casting vote.

Votes of joint shareholders

20. If 2 or more persons are registered as the holder of a share, the vote of the person named first in the share register and voting on a matter must be accepted to the exclusion of the votes of the other joint holders.

Proxies

21. (1) A shareholder may exercise the right to vote either by being present in person or by proxy.

(8) A proxy for a shareholder is entitled to attend and participate in a meeting of shareholders as if the proxy were the shareholder.

(9) A proxy must be appointed by notice in writing signed by the shareholder. The notice must state whether the appointment is for a particular meeting, or for a specified term.

(10) No proxy is effective in relation to a meeting unless a copy of the notice of appointment is given to the company at least 24 hours before the start of the meeting.

Corporations may act by representatives

22. (1) A corporation that is a shareholder may appoint a representative to attend a meeting of shareholders on its behalf by notice in writing signed by a director or secretary of the corporation.

(2) The notice must state whether the appointment is for a particular meeting, or for a specified term.

Postal votes

23. (1) A shareholder may exercise the right to vote at a meeting by casting a postal vote in accordance with this clause.

(2) The notice of a meeting at which shareholders are entitled to cast a postal vote must state the name of the person authorised by the directors to receive and count postal votes at that meeting.

(3) A shareholder may cast a postal vote on all or any of the matters to be voted on at the meeting by sending a notice of the manner in which his or her shares are to be voted to a person authorised to receive and count postal votes at that meeting. The notice must reach that person not less than 48 hours before the start of the meeting.

(4) A shareholder who has submitted a postal vote on any resolution—

(a) may attend and speak at the meeting; and

(b) must not vote on that resolution in person at the meeting.

Duty of person authorised to receive and count postal votes

24. (1) If no person has been authorised to receive and count postal votes at a meeting, or if no person is named as being so authorised in the notice of the meeting, every director is deemed to be so authorised.

(2) It is the duty of a person authorised to receive and count postal votes at a meeting—

(a) to collect together all postal votes received by him or her or by the company; and

(b) in relation to each resolution to be voted on at the meeting, to count—

(i) the number of shareholders voting in favour of the resolution and the number of votes cast by each shareholder in favour of the resolution; and

(ii) the number of shareholders voting against the resolution, and the number of votes cast by each shareholder against the resolution; and

(c) to sign a certificate that he or she has carried out the duties set out in paragraphs (a) and (b) and that sets out the results of the counts required by paragraph (b); and

(d) to ensure that the certificate required by paragraph (c) is presented to the chairperson of the meeting.

Duty of chairperson concerning postal votes

25. (1) If a vote is taken at a meeting on a resolution on which postal votes have been cast, the chairperson of the meeting must—

(a) on a vote by show of hands, count each shareholder who has submitted a postal vote for or against the resolution; and

(b) on a poll, count the votes cast by each shareholder who has submitted a postal vote for or against the resolution.

(2) The chairperson of a meeting must call for a poll on a resolution on which he or she holds sufficient postal votes, that he or she believes, that if a poll is taken, the result may differ from that obtained on a show of hands.

(3) The chairperson of a meeting must ensure that a certificate of postal votes held by him or her is annexed to the minutes of the meeting.

Minutes

26. (1) The directors must ensure that minutes are kept of all proceedings at meetings of shareholders.

(2) Minutes that have been signed correct by the chairperson of the meeting are prima facie evidence of the proceedings at the meeting.

Division 5—Miscellaneous

Annual meetings and special meetings of shareholders

27. (1) Subject to subclause (3) and clause 28(3), the directors must call an annual meeting of the company to be held—

(a) once in each calendar year; and

(b) not later than 5 months after the balance date of the company; and

(2) The meeting must be held on the date on which it is called to be held.

(3) The company need not hold its first annual meeting in the calendar year of its incorporation, but must hold that meeting within 18 months of its incorporation.

(4) A special meeting of shareholders entitled to vote on an issue—

(a) may be called at any time by a director; and

(b) must be called by the directors on the written request of shareholders holding shares carrying together not less than 10% of the votes that may be cast on that issue.

Written resolutions of shareholders

28. (1) A resolution in writing signed by shareholders, who together hold not less than 75% of the votes entitled to be cast on that resolution at a meeting of shareholders, is as valid as if it had been passed at a meeting of those shareholders.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form, each signed or assented to by 1 or more shareholders.

(3) The company need not hold an annual meeting if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with subclause (1).

(4) Within 5 working days of a resolution being passed under subclause (1), the company must send a copy of the resolution to every shareholder who did not sign it.

(5) A resolution may be signed under subclause (1) without any prior notice being given to shareholders.

Voting in interest groups

29. If the company proposes to take action that affects the rights attached to shares within the meaning of section 53 of the Act, the action may not be taken unless it is approved by a special resolution of each interest group, as defined in section 53(3) of the Act.

Shareholders entitled to receive dividends

30. (1) The shareholders who are entitled to receive dividends are—

(c) if the directors fix a date for this purpose, those shareholders whose names are registered in the share register on that date;

(d) if the directors do not fix a date for this purpose, those shareholders whose names are registered in the share register on the day on which the dividend is approved.

(2) A date fixed under subclause (1)(a) must not precede by more than 20 working days the date on which the proposed action will be taken.

Notice of meeting and voting

31. (1) The shareholders who are entitled to receive notice of a meeting of shareholders are—

(a) if the directors fix a date for this purpose, those shareholders whose names are registered in the share register on that date;

(b) if the directors do not fix a date for this purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

(2) A date fixed under subclause (1)(a) must not precede by more than 30 working days the date on which the meeting is to be held.

(3) Before a meeting of shareholders, the company may prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order, and showing the number of shares held by each shareholder—

(a) if a date has been fixed under subclause (1)(a), as at that date; or

(b) if no such date has been fixed, as at the close of business on the day immediately preceding the day on which the notice is given.

(4) A person named in a list prepared under subclause (3) is entitled to attend the meeting and vote in respect of the shares shown opposite his or her name in person or by proxy, except to the extent that—

(a) that person has, since the date on which the shareholders entitled to receive notice of the meeting were determined, transferred any of his or her shares to some other person; and

(b) the transferee of those shares has been registered as the holder of those shares, and has requested, before the commencement of the meeting, that his or her name be entered on the list prepared under subclause (3).

(5) A shareholder may on 2 working days' notice examine any list prepared under subclause (3) during normal business hours at the registered office of the company.

Distributions to shareholders

32. (1) The company must not pay a dividend or make any other distribution to shareholders unless there are reasonable grounds for believing that, after that distribution is made—

(a) the company will be able to pay its debts as they become due in the normal course of business; and

(b) the value of the company's assets will not be less than the value of its liabilities.

(2) Subject to subclause (1) and to the terms of issue of any shares, the company may pay a dividend to shareholders—

(a) of the same amount in respect of each share of the same class, if the payment of the dividend is authorised by the directors; or

(b) on any other basis, with the prior approval of all shareholders.

(3) A distribution made in breach of subclause (1) or (2) may be recovered by the company from the recipients or from the persons approving the distribution, in accordance with section 28 of the Act.

(4) No dividend or other distribution bears interest against the company unless the applicable terms of issue of a share expressly provide otherwise.

(5) All dividends and other distributions unclaimed for 1 year after the due date for payment may be invested or otherwise made use of by the directors for the benefit of the company until claimed.

(6) The company is entitled to mingle the unclaimed distribution with other money of the company and is not required to hold it or to regard it as being impressed with any trust but, subject to compliance with the solvency test, must pay the distribution to the person producing evidence of entitlement to receive it.

Company may acquire its own shares and provide financial assistance

33. (1) Subject to the solvency test, the company may agree to acquire its own shares from a shareholder—

(a) pursuant to an offer to acquire shares made to all holders of shares of the same class that would, if accepted by all persons to whom the offer is made, leave unaffected relative voting and distribution rights; or

(b) on any other basis, with the prior approval of shareholders by special resolution.

(2) If the company acquires its own shares, those shares are deemed to be cancelled immediately on acquisition.

(3) The company may give financial assistance to a person for the purpose of, or in connection with, the purchase of a share issued or to be issued by the company, whether directly or indirectly, only if—

(a) the company gives the assistance in the normal course of its business and on usual terms and conditions; or

(b) the giving of the assistance is authorised by the directors or by all shareholders under section 50 of the Act, and there are reasonable grounds for believing that, after providing the assistance, the company will satisfy the solvency test.

Annual report to shareholders

34. (1) The directors of the company must, within 5 months after the balance date of the company—

(a) prepare an annual report on the affairs of the company during the accounting period ending on that date; and

(b) send a copy of that report to each shareholder.

(2) Every annual report for the company must—

(a) be in writing and be dated; and

(b) include financial statements for the accounting period that comply with section 125 of the Act; and

(e) contain such other information as may be required by regulations made under the Act; and

(f) be signed on behalf of the directors by 2 directors of the company or, if the company has only 1 director, by that director.

Division 6—Compulsory Acquisitions

Compulsory acquisition of minority holdings below 10%

35. (1) A shareholder who holds 90% of the voting shares of the company ("majority shareholder") may give a notice to the other holders of voting shares ("minority shareholders") in accordance with this clause, requiring the minority shareholders to sell their voting shares to the majority shareholder.

(2) The majority shareholder must also give the notice to the company, and give public notice of the fact that such a notice has been given.

(3) A notice may be given under subclause (1) by a majority shareholder at any time within 6 months after that majority shareholder first becomes interested in not less than 90% of the voting shares of the company.

Price for voting share

36. (1) The majority shareholder must pay a price for each voting share that is—

(a) equal to the highest price paid for a voting share by that majority shareholder in an arms length sale and purchase of such shares during the 6-month period ending on the date on which the majority shareholder first became interested in not less than 90% of the voting shares; or

(b) if the majority shareholder so elects, a price to be fixed by an independent arbitrator.

(2) The majority shareholder must ask the directors of the company to nominate an independent arbitrator for this purpose.

(3) If the directors fail to do so within 10 working days of receiving such a request, the majority shareholder may nominate the arbitrator.

Notice under clause 35: general requirements

37. (1) A notice given under clause 35 must specify—

(a) the name of the majority shareholder; and

(b) the date on which the majority shareholder first became interested in not less than 90% of the voting shares of the company; and

(c) if the price to be paid for each voting share has been determined under clause 36(1)(a), that price, which must be certified by the majority shareholder as meeting the requirements of clause 36(1)(a); and

(d) if the price to be paid for each voting share is to be fixed by an arbitrator under clause 36(1)(b), the name of the arbitrator and the date on which and place at which the arbitration is to be held; and

(e) the rights of minority shareholders under clause 39.

(2) The date referred to in subclause (1)(d) must not be less than 60 working days from the date on which the notice is given to minority shareholders.

Requirements for price for voting share determined under clause 36(1)(a)

38. If the price to be paid for each voting share has been determined under clause 36(1)(a), a notice given under clause 35 must also—

(a) specify a date not less than 20 working days from the date of the notice on which the price will be paid, and the shares will be acquired by the majority shareholder ("transfer date"); and

(b) advise the shareholder that no payment will be received by the shareholder until any share certificate that has been issued in respect of the voting shares has been delivered to the company; and

(c) require the shareholder to specify the manner in which payment for the voting shares is to be made to that shareholder; and

(d) advise shareholders that payment may be made by cheque to be collected from the company at a specified address, or posted to a postal address specified by the shareholder, and may provide for other payment options.

Requirements for price for voting share determined under clause 36(1)(b)

39. (1) If the price to be paid for each voting share is to be determined under clause 36(1)(b) and, if any minority shareholder considers that the arbitrator is not suitably qualified to value the shares, or is not independent, the minority shareholder may give notice to the company within 10 working days requiring the company to apply to the Court for appointment of another person as arbitrator.

(2) If a notice under subclause (1) is received, the company must immediately apply to the Court for the appointment of an arbitrator.

(3) If a notice is given under subclause (1), or if for any other reason the arbitration does not proceed on the date and at the place specified in the notice, not less than 40 working days' notice of the altered date and place must be given to each minority shareholder.

(4) Each minority shareholder is entitled to attend the arbitration and to be heard, in person or by a representative (who may, but need not, be a legal practitioner or a chartered accountant).

(5) The arbitrator must expeditiously determine a fair and reasonable price per share for the shares to be acquired.

(6) The price must not include any discount or premium to reflect the size of the parcels of shares to be acquired, or the circumstances of the acquisition.

(7) The costs of the arbitration must be paid by the majority shareholder.

Notice of determination of price by arbitrator

40. Within 10 working days of the determination by the arbitrator, the company must give a notice to each minority shareholder that—

(a) advises the shareholder of the price that has been determined by the arbitrator; and

(b) specifies a date not less than 10 working days and not more than 20 working days from the date of the notice on which the price will be paid, and the shares will be acquired by the majority shareholder ("transfer date"); and

(c) advises the shareholder that no payment will be received by the shareholder until any share certificate that has been issued in respect of the voting shares has been delivered to the company; and

(d) requires the shareholder to specify the manner in which payment for the voting shares is to be made to that shareholder; and

(e) advises the shareholders that payment may be made by cheque to be collected from the company at a specified address, or posted to a postal address specified by the shareholder, and may provide for other payment options.

Requirements on transfer date

41. (1) On the transfer date—

(a) the majority shareholder must pay the full amount of the price for all voting shares held by minority shareholders to the company, to be held on trust by the company for the benefit of those shareholders. The payment must be made in cleared funds; and

(b) all voting shares held by minority shareholders are deemed to be transferred to the majority shareholder on payment to the company in accordance with paragraph (a), and the company must register the majority shareholder as the holder of those shares despite any outstanding share certificates in respect of those shares.

(2) Subject to subclause (5), within 3 working days of the transfer date the company must pay each minority shareholder the price for that shareholder's voting shares, in the manner specified by that shareholder.

(3) If the shareholder has specified that a cheque will be collected from the company by that shareholder, the cheque must be held ready for collection from that date.

(4) If the company fails to make a payment, or to make it available for collection, the company must pay interest to the shareholder from the due date to the date on which the payment is made, or is made available for collection, at the rate of 15% per annum, accruing daily and compounding monthly.

(5) If a share certificate has been issued in respect of voting shares held by a minority shareholder, no payment may be made to that minority shareholder until the minority shareholder delivers to the company—

(a) the share certificate; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form determined by the directors.

Division 7—Exit Rights

Application of exit rights

42. (1) Subject to subclause (2), this clause and clauses 43 to 48 apply to a shareholder ("acquirer") who—

(a) acquires shares in the company or otherwise becomes interested in shares in the company ("acquisition"); and

(b) before the acquisition, was interested in less than 50% of the voting shares of the company; and

(2) A person may be exempted from the application of this clause and clauses 43 to 48, either with or without conditions, by a special resolution of holders of voting shares other than—

(a) voting shares in which that person is interested; and

(b) voting shares in which any other person is interested, where that other person is interested in not less than 50% of the company's voting shares.

Acquire to give notice to company

43. An acquirer must, within 10 working days of first becoming a shareholder to whom this clause applies, give notice to the company—

(a) advising the company that the acquirer is a shareholder to whom this clause applies; and

(b) identifying the names of the holders of all voting shares in which the acquirer is interested, and the number of shares held by each of them in which the acquirer is interested; and

(c) offering to purchase all voting shares in which the acquirer is not interested ("remaining shares") on the terms set out in clause 44.

Consideration for remaining shares

44. A notice given under clause 43 must be signed by the acquirer or, if the acquirer is a corporation, by a director of that corporation, and must—

(a) specify the highest price paid for any voting share in the company by the acquirer, or by any person holding shares in which the acquirer is interested, from the date 6 months before the date on which the acquirer first became a person to whom this clause applies up to the date of the notice; and

(b) if any shares in which the acquirer is interested were acquired during this period for a non-cash consideration, describe that consideration and state an assessment of the cash value to which that consideration corresponds; and

(c) specify the consideration offered by the acquirer for each remaining share, which may, but need not, be a cash consideration ("consideration"); and

(d) specify the date on which the acquirer will provide the consideration for any remaining shares in respect of which the offer is accepted, which must be not less than 20 working days nor more than 40 working days from the date on which the notice is given to the company ("transfer date"); and

(e) specify the rights of the holders of remaining shares under clause 47.

Independent report

45. A notice given under clause 43 must be accompanied by a report from an independent, appropriately qualified person previously approved by the company, confirming that the consideration offered is a fair and reasonable consideration for a share, without any discount or premium to reflect the size of the parcels of shares to be acquired or the circumstances of the acquisition.

Notice to holders of remaining shares

46. (1) Within 10 working days of receiving a notice under clause 43, the company must forward the notice to all holders of remaining shares.

(2) The notice under subclause (1) may, but need not, be accompanied by—

(a) additional information provided by the directors in relation to the offer;

(b) a recommendation by the directors as to whether or not the offer should be accepted.

(3) The company must also immediately give public notice of the notice given to shareholders.

Rights of holders of remaining shares

47. (1) A shareholder to whom a notice is given under clause 46—

(a) is not required to accept the offer;

(b) may accept the offer by notice in writing to the company within 20 working days of the date on which the notice was given to the shareholder.

(2) If a shareholder gives notice accepting an offer in accordance with subclause (1)(b), there is deemed to be a contract between the acquirer and the shareholder for the purchase by the acquirer of the remaining shares held by that shareholder—

(a) on the transfer date; and

(b) for the consideration.

When voting rights not to be exercised

48. (1) If a shareholder to whom this clause applies fails to give the notice required under clause 43 within the time specified in that clause, no voting rights may be exercised in respect of any shares in which that acquirer is interested until that notice has been given.

(2) If a person who is not a shareholder becomes interested in 40% or more of the voting shares of the company, no voting rights may be exercised in respect of any voting shares in which that person is interested unless that person—

(a) is exempted by a special resolution under clause 42(2); or

(b) undertakes to the company to make an offer as if that person were an acquirer, and complies with that undertaking.

Part 3—Directors

When voting rights not to be exercised

49. (1) The minimum number of directors is 2.

(2) The maximum number of directors is 10.

(3) The shareholders may, by ordinary resolution, vary the minimum or maximum number of directors of the company.

Appointment and removal of directors

50. A director may be appointed or removed by ordinary resolution passed at a meeting called for the purpose, or by a written resolution in accordance with clause 28(1).

Term of office

51. (1) The resolution appointing a director may specify the period for which the director is to hold office.

(2) On the expiry of any period specified in this manner, the director ceases to hold office unless reappointed.

When director vacates office

52. A director vacates office if he or she—

(a) is removed from office in accordance with clause 50; or

(b) ceases to hold office in accordance with clause 51; or

(c) resigns in accordance with clause 53; or

(d) becomes disqualified from being a director under section 82 of the Act; or

(e) dies; or

(f) is absent from 3 consecutive meetings of the directors without leave being granted by a resolution of the directors, and the directors resolve that that director has vacated office.

Resignation of director

53. (1) A director may resign by delivering a signed written notice of resignation to the registered office of the company.

(2) Subject to subclauses (3) and (4), the notice is effective when it is received at the registered office, or at any later time specified in the notice.

(3) If the company has only 1 director, that director may not resign—

(a) until that director has called a meeting of shareholders to receive notice of the resignation; or

(b) if the company has only 1 shareholder, until that director has given not less than 10 working days' notice of the resignation to that shareholder.

(4) A notice of resignation given by the sole director of the company does not take effect, despite its terms, until the earlier of the appointment of another director of the company or—

(a) the time and date for which the meeting of shareholders is called under subclause (3)(a); or

(b) if the company has only 1 shareholder, 10 working days after notice of the resignation has been given to that shareholder

Casual vacancies

54. The directors may appoint any person to be a director to fill a casual vacancy until the next annual meeting of the company.

Notice of changes in directors

55. (1) The company must ensure that notice in the prescribed form of the following is delivered to the Registrar—

(a) a change in the directors of the company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both;

(b) a change in the name or the residential address of a director of the company.

(2) In the case of the appointment of a new director, a consent by that person to act as a director, in the prescribed form, must also be delivered to the Registrar.

Powers and duties of directors

56. (1) Subject to section 49 of the Act (which relates to major transactions) the business and affairs of the company must be managed by, or under the direction or supervision of, the directors.

(2) The directors have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) The directors may delegate any of their powers to a committee of directors, or to a director or employee.

(4) The directors must monitor, by means of reasonable methods properly used, the exercise of powers by any delegate.

(5) The provisions of these rules relating to proceedings of the directors also apply to proceedings of any committee of directors, except to the extent the directors determine otherwise.

(6) The directors have the duties set out in the Act, and, in particular—

(a) each director must act in good faith and in a manner that the director believes to be in the interests of the company; and

(b) a director must not act, or agree to the company acting, in a manner that contravenes the Act or these rules.

Standard of care of directors

57. A director of the company, when exercising powers or performing duties as a director, must exercise the care, diligence, and skill that a reasonable person would exercise in the same circumstances, taking into account, but without limitation—

(a) the nature of the company; and

(b) the nature of the decision; and

Obligations of directors in connection with insolvency

58. (1) A director of the company must call a meeting of directors within 10 working days to consider whether the directors should appoint a liquidator, in accordance with section 70 of the Act, if the director—

(a) believes that the company is unable to pay its debts as they fall due; or

(b) is aware of matters that would put any reasonable person on inquiry as to whether the company is unable to pay its debts as they fall due.

(2) At a meeting called under section 70 of the Act the directors must consider whether to appoint a liquidator, or to continue to carry on the business of the company.

Interested directors

59. (1) A director must not exercise any power as a director in circumstances where that director is directly or indirectly materially interested in the exercise of that power unless—

(a) the Act expressly authorises the director to exercise the relevant power despite such an interest; or

(b) the director has reasonable grounds for believing that the company will satisfy the solvency test after that power is exercised, and either—

(i) these rules expressly authorise the director to exercise the relevant power despite such an interest, and the interest has been disclosed in accordance with clause 63(4); or

(ii) the matter in question has been approved by shareholders under section 51 of the Act, following disclosure of the nature and extent of the director's interest to all shareholders who are not otherwise aware of those matters.

(2) A transaction entered into by the company in which a director is directly or indirectly materially interested is voidable at the election of the company in accordance with section 107 of the Act.

(3) A transaction entered into by the company as the result of action taken by a director in breach of section 64, 65, or 66 of the Act is voidable at the option of the company in accordance with section 108 of the Act.

Use and disclosure of company

60. A director of the company who has information in his or her capacity as a director or employee of the company, being information that would not otherwise be available to him or her, must not disclose that information to any person, or make use of or act on the information, except—

(a) in the interests of the company; or

(b) as required by law; or

(c) if there are reasonable grounds for believing that the company will satisfy the solvency test after the director takes that action, and that action—

(i) is approved by all shareholders under section 50 of the Act; or

(ii) is authorised by any contract of employment entered into between that director and the company, the relevant terms of which have been disclosed in the interests register referred to in clause 63.

Indemnities and insurance for directors or employees

61. (1) Subject to section 73 of the Act, the company may provide an indemnity or purchase insurance for a director of the company or of a related company with the approval of—

(a) the directors; but no director may vote on a resolution concerning an indemnity or insurance to be provided for him or her; or

(b) shareholders by ordinary resolution; but no director may vote on a resolution concerning an indemnity or insurance to be provided for him or her; or

(2) In subclause (1)—

"director" includes—

(a) a person who is liable under any of sections 64 to 70 of the Act by virtue of section 73 of the Act; and

(b) a former director;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and "indemnity" has a corresponding meaning.

Remuneration of directors

62. Directors may receive remuneration and other benefits from the company with the approval of—

(a) the directors; but no director may vote on a resolution concerning remuneration or other benefits to be provided for him or her; or

(b) shareholders by ordinary resolution; but no director may vote on a resolution concerning remuneration or benefits to be received by him or her; or

Disclosure of interests by directors

63. (1) The company must—

(a) maintain an interests register; and

(b) permit any director or shareholder to inspect the interests register as if sections 115 and 116 of the Act applied to the interests register.

(2) The annual report of the company under section 55 of the Act in respect of any accounting period must contain all entries made in the interests register in the course of that accounting period.

(3) The directors must enter in the interests register details of any—

(a) contract of employment to which clause 60(c) applies; and

(b) indemnity or insurance provided for a director under clause 61; and

(d) disclosure by a director under subclauses (4) or (5).

(4) A director who is in any way directly or indirectly materially interested in a transaction or proposed transaction with the company must, within 10 working days of becoming aware of that interest—

(a) disclose that interest in writing to the directors; and

(b) ensure that details of that disclosure are entered in the interests register.

(5) A director may disclose to the other directors, and enter in the interests register, a general disclosure that the director is a director or employee or shareholder of another company, or is otherwise associated with another company or another person.

(6) Disclosure under subclause (5) is disclosure of the director's interest in any transaction entered into with that other company or person for the purposes of subclause (4).

Procedure at meetings of directors

64. (1) Clauses 65 to 74 set out the procedure to be followed at meetings of directors.

(2) A meeting of directors may determine its own procedure, to the extent that it is not governed by these rules.

Chairperson

65. (1) The directors may elect 1 of their number as chairperson of directors and may determine the period for which the chairperson is to hold office.

Notice of meeting

66. (1) A director or, if requested by a director to do so, an employee of the company, may convene a meeting of directors by giving notice in accordance with this clause.

(2) Not less than 24 hours' notice of a meeting of directors must be given to every director who is in Solomon Islands, or who may readily be contacted outside Solomon Islands.

(3) An irregularity in the notice of a meeting is waived if all directors entitled to receive notice of the meeting attend the meeting without protest as to the irregularity, or if all directors entitled to receive notice of the meeting agree to the waiver.

Methods of holding meeting

67. A meeting of directors may be held either—

(a) by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

68. (1) A quorum for a meeting of directors is a majority of the directors.

(2) No business may be transacted at a meeting of directors if a quorum is not present.

Voting

69. (1) Every director has 1 vote.

(2) The chairperson has a casting vote.

(3) A resolution of the directors is passed if it is agreed to by all directors present without dissent, or if a majority of the votes cast on it are in favour of it.

(4) A director present at a meeting of directors is presumed to have agreed to, and to have voted in favour of, a resolution of the directors unless he or she expressly dissents from or votes against the resolution at the meeting.

Minutes

70. The directors must ensure that minutes are kept of all proceedings at meetings of the directors.

Unanimous resolution

71. (1) A resolution in writing signed or assented to by all directors is as valid and effective as if it had been passed at a meeting of the directors duly convened and held.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form, each signed or assented to by 1 or more directors.

(3) A copy of any such resolution must be entered in the minute book of the directors' proceedings.

Managing director and other executive

72. (1) The directors may, from time to time, appoint a director as managing director for such period and on such terms as they think fit.

(2) Subject to the terms of a managing director's appointment, the directors may, at any time, cancel the appointment of a director as managing director.

(3) A director who holds office as managing director ceases to hold office as managing director if he or she ceases to be a director of the company.

Delegation to managing director

73. (1) The directors may delegate to the managing director, subject to any conditions or restrictions that they consider appropriate, any of their powers that may be lawfully delegated.

(2) Any such delegation may at any time be withdrawn or varied by the directors.

(3) The delegation of a power of the directors to the managing director does not prevent the exercise of the power by the directors, unless the terms of the delegation expressly provide otherwise.

Remuneration of managing director and executive directors

74. (1) The managing director may be paid such remuneration as he or she may agree with the directors.

(2) A director (other than the managing director) who is employed by the company may be paid such remuneration as may be agreed between that director and the other directors.

The remuneration referred to in subclauses (1) and (2) may be by way of salary, commission, participation in profits or any combination of these methods, or any other method of fixing remuneration.

Part 4—Company Records

Company records

75. (1) The company must keep all the following documents at its registered office—

(a) the rules of the company;

(b) minutes of all meetings and resolutions of shareholders within the last 7 years;

(d) the full names and residential and postal addresses of the current directors;

(e) copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports made under section 55 of the Act;

(f) copies of all financial statements required to be completed under section 125 of the Act for the last 7 completed accounting periods of the company;

(g) the accounting records required by section 124 of the Act for the current accounting period and for the last 7 completed accounting periods of the company;

(h) the share register.

(2) The references in subclause (1)(b), (c), and (e) to 7 years and the references in subclause (1)(f) and (g) to 7 completed accounting periods include any lesser periods that the Registrar may approve by notice in writing to the company, in accordance with section 113(2) of the Act.

(3) The interests register required to be kept under clause 63 must be—

(a) kept at the same place as the written communications to shareholders referred to in clause 75(1)(e); and

(b) kept in a form that complies with clause 76; and

Form of records

76. (1) The records of the company must be kept—

(a) in written form; or

(2) The directors must ensure that adequate measures exist to—

(a) prevent the records being falsified; and

(b) detect any falsification of them.

Access to records

77. (1) The directors of the company are entitled to access to the company's records in accordance with section 115 of the Act.

(2) A shareholder of the company is entitled—

(a) to inspect the documents referred to in section 116 of the Act, in the manner specified in section 118 of the Act; and

(b) to require copies of or extracts from any document that he or she may inspect within 5 working days of making a request in writing for the copy or extract, on payment of any reasonable copying and administration fee specified by the company.

(2) The fee may be determined by any director, subject to any directions from the directors.

Documents to be sent to Registrar

78. In addition to the annual return required under section 119 of the Act, the company must send all the following documents to the Registrar under the Act—

(a) notice of the adoption of new rules by the company, or the alteration of the rules of the company, under section 14;

(b) notice of a change in the registered office of the company, under section 17 of the Act;

(d) notice of the acquisition by the company of its own shares, under section 30 of the Act;

(e) notice of the redemption of a share, under section 34 of the Act;

(f) notice of a change in the directors of the company, or of a change in the name or residential address or postal address of a director, under section 85 of the Act;

(g) notice of the making of an order under section 100 of the Act altering or adding to the rules of a company;

(h) notice of any place other than the registered office of the company where records are kept;

(i) documents requested by the Registrar under the Act.

Documents to be sent to shareholders

79. In addition to the annual report required under section 55 of the Act, the company must send all the following documents to shareholders under the Act—

(a) notice of any repurchase of shares to which section 30(4) of the Act applies;

(b) notice of a written resolution approved under section 51 of the Act;

(d) any written statement by an auditor under section 131 of the Act

(e) the report by the auditor under section 133 of the Act.

Part 5—Accounts and Audit

Accounting records to be kept

80. (1) The directors of the company must cause accounting records to be kept that—

(a) correctly record and explain the transactions of the company; and

(b) will at any time enable the financial position of the company to be determined with reasonable accuracy; and

(c) will enable the directors to ensure that the financial statements of the company comply with section 125 of the Act; and

(d) will enable the financial statements of the company to be readily and properly audited.

(2) Without limiting subclause (1), the accounting records must contain—

(a) entries of money received and spent each day and the matters to which it relates; and

(b) a record of the assets and liabilities of the company; and

(i) a record of goods bought and sold, and relevant invoices; and

(ii) a record of stock held at the end of the financial year together with records of any stocktaking during the year; and

(d) if the company's business involves providing services, a record of services provided and relevant invoices.

(3) If the company sells goods or provides services for cash in the ordinary course of carrying on a retail business—

(a) invoices need not be kept in respect of each retail transaction for the purposes of subclause (2); and

(4) The accounting records must be kept—

(a) in a form permitted under clause 76; and

(b) at the registered office of the company.

Financial statements to be prepared

81. (1) The directors must ensure that—

(a) within 4 months after the balance date of the company, financial statements that comply with subclause (2) are completed in relation to the company and that balance date; and

(2) The financial statements of the company must—

(a) give a true and fair view of the matters to which they relate; and

(b) comply with any applicable regulations made under the Act; and

(c) be dated and signed on behalf of the directors by 2 directors of the company, or, if the company has only 1 director, by that director.

(3) The period between—

(a) the date of incorporation of the company and its first balance date; or

(b) any 2 balance dates of the company,

must not exceed 15 months.

(4) In this clause, "financial statements", in relation to the company and a balance date, means—

(a) a statement of financial position for the entity as at the balance date; and

(b) in the case of—

(i) a company trading for profit, a statement of financial performance for the company in relation to the accounting period ending at the balance date; and

(ii) a company not trading for profit, an income and expenditure statement for the company in relation to the accounting period ending at the balance date; and

(c) if required by regulations made under the Act, a statement of cash flows for the company in relation to the accounting period ending on the balance date; and

(d) such other financial statements in relation to the company or any group of companies of which it is the holding company as may be required by regulations made under the Act; and

(e) any notes or documents giving information relating to the statement of financial position and other statements.

Appointment of auditor

82. (1) The company must appoint an auditor who is qualified to hold that office under section 130 of the Act to—

(a) audit the financial statements of the company in respect of an accounting period; and

(b) hold office until those financial statements have been audited in accordance with the Act or until he or she ceases to hold office.

(2) The company must appoint an auditor within 30 working days in the event of a vacancy in the office of auditor.

(3) An auditor ceases to hold office if he or she—

(a) resigns by delivering a written notice of resignation to the registered office of the company not less than 20 working days before the date on which the notice is expressed to be effective; or

(b) is replaced as auditor by an ordinary resolution appointing another person as auditor in his or her place, following notice to the auditor in accordance with section 128 of the Act; or

(d) a person in respect of whom an order of custody is in force under section 18 or 41 of the Mental Treatment Act (Cap 103); or

(e) dies.

(4) An auditor may be appointed—

(a) by ordinary resolution; or

(b) if the office of auditor is vacant, by the directors. If an auditor is appointed by the directors, the directors must, within 10 working days, give notice of the appointment to all shareholders.

(5) The fees payable to the auditor must be agreed between the auditor and the directors.

Auditor's attendance at shareholders' meeting

83. The directors must ensure that an auditor of the company—

(a) is permitted to attend a meeting of shareholders of the company; and

(b) receives the notices and communications that a shareholder is entitled to receive relating to meetings or resolutions of shareholders; and

(c) may be heard at a meeting of shareholders that he or she attends on any part of the business of the meeting that concerns him or her as auditor.

Part 6—Liquidation And Removal From Register

Resolution to appoint liquidator

84. (1) The shareholders may resolve to liquidate the company by special resolution.

Distribution of surplus assets

85. (1) The surplus assets of the company available for distribution to shareholders after all creditors of the company have been paid must be distributed in proportion to the number of shares held by each shareholder, subject to the terms of issue of any shares.

(2) The liquidator may, with the approval of a special resolution, distribute the surplus assets of the company among the shareholders in kind.

(3) For the purposes of subclause (2), the liquidator may—

(a) set such value as he or she considers fair on any property to be divided; and

(b) determine how the division will be carried out as between the shareholders or different classes of shareholders.

Part 7—Miscellaneous

Service of documents on shareholders

86. (1) A notice, statement, report, accounts, or other document to be sent to a shareholder who is a natural person may be—

(a) delivered to that person; or

(b) posted to that person's postal address; or

(2) A notice, statement, report, accounts, or other document to be sent to a shareholder that is a company or an overseas company may be sent by any of the methods of serving documents referred to in section 201 or section 203 of the Act, as the case may be.

Interpretation

87. (1) In these rules, "Act" means the Companies Act 2009.

(3) For the purposes of these rules—

(a) "voting share" means a share that confers on its holder the right to vote on a resolution to amend the rules;

(b) the percentage of voting shares held by any person is treated as equal to the percentage of votes that that person is entitled to cast on such a resolution.

(4) For the purposes of these rules, a person is "interested in a voting share" if that person—

(a) is a beneficial owner of the share; or

(b) has the power to exercise any right to vote attached to the share; or

(d) has the power to acquire or dispose of the share; or

(e) has the power to control the acquisition or disposition of the share by another person; or

(f) under, or by virtue of, any trust, agreement, arrangement or understanding relating to the share (whether or not that person is a party to it, and whether or not it is legally enforceable) may, at any time, have the power to—

(i) exercise any right to vote attached to the share; or

(ii) control the exercise of any right to vote attached to the share; or

(iii) acquire or dispose of, the share; or

(iv) control the acquisition or disposition of the share by another person.

(5) A person who has, or may have, a power referred to in subclause (4)(b) to (f) is interested in a share, regardless of whether the power is—

(a) express or implied;

(b) direct or indirect;

(c) legally enforceable or not;

(d) related to a particular share or not;

(e) subject to restraint or restriction or is capable of being made subject to restraint or restriction;

(f) exercisable presently or in the future;

(g) exercisable only on the fulfilment of a condition;

(h) exercisable alone or jointly with another person or persons.

——————————

SCHEDULE 5
(Section 15(4))

MODEL RULES FOR COMMUNITY COMPANY

Part 1—General Provisions

Name of Company

1. (1) The name of the company at the time of registration under the Act appears on the application for registration.

(2) The name of the company may be changed in accordance with section 11 of the Act only with the prior approval of all shareholders.

Community company

2. (1) The company is a community company.

(2) The company must not offer any of its shares or other securities to the public.

(3) The company must not have more than 50 shareholders.

(4) If a share transfer is presented to the company for entry on the share register that would result in a breach of this restriction, the directors must decline to register the transfer.

Rules

3. (1) The company may adopt new rules in place of these rules by special resolution, in accordance with section 14(2) of the Act.

(2) Subject to the Act—

(a) these rules have effect and may be enforced as if they constituted a contract—

(i) between the company and its shareholders; and

(ii) between the company and each director; and

(b) the shareholders and directors of the company have the rights, powers, duties, and obligations set out in these rules.

Part 2—Restrictions

Asset Lock and restrictions on distributions, dividends and loans

4. (1) All assets of the company may be transferred—

(a) for full consideration; and

(b) with the approval of 75% of all registered shareholders.

(2) If the company makes a transfer of assets under clause 4(1) it must first outline to all members of the community details of the transaction.

(3) The company must not make any distributions; or pay dividends to shareholders; or make loans to directors or shareholders.

Part 3—Shares and Shareholders

Division 1—General Provisions

Number of shares

5. (1) At the time of registration under the Act, the company has the number of shares specified in the application for registration or re-registration, as the case may be.

Rights attaching to shares

6. Subject to clause 8(2), each share carries the right to 1 vote on a poll at a meeting of the company on any resolution, including any resolution to—

(i) appoint or remove a director or auditor;

(ii) adopt new rules;

(iii) alter the company's rules;

(iv) approve a major transaction;

(v) put the company into liquidation.

Issue of shares

7. The directors may issue shares—

(a) in accordance with clause 8; or

(b) to shareholders or any other persons on any other basis, with the prior approval of all shareholders.

Process for issuing shares

8. (1) The directors may issue shares in accordance with the following process—

(2) With the prior approval of all shareholders, the company may issue more than 1 class of shares. In particular, shares may be issued that—

(a) are redeemable; or

(b) confer special, limited, or conditional voting rights; or

(c) do not confer voting rights.

(3) If the company issues shares, it must give the prescribed notice to the Registrar under section 25(2) of the Act within 10 working days of the issue of any shares.

(4) If the rights attached to the shares differ from those set out in clause 6, the notice must be accompanied by a document setting out the terms of issue of the shares.

Transferability of shares

9. The shares of the company are, subject to clauses 13 and 22 and their terms of issue, transferable by entry in the share register in accordance with clause 22.

Division 2—Share Register

Company to keep share register

10. (1) The company must maintain a share register that records the shares issued by the company and states—

(a) the names, alphabetically arranged, and the last known address of each person who is, or has within the last 7 years been, a shareholder; and

(b) the number of shares of each class held by each shareholder within the last 7 years; and

(i) issue of shares to; or

(ii) repurchase or redemption of shares from; or

(iii) transfer of shares by or to—

each shareholder within the last 7 years, and in relation to the transfer, the name of the person to or from whom the shares were transferred.

(2) No notice of a trust, whether express, implied, or constructive, may be entered on the share register.

(3) The company may appoint an agent to maintain the share register.

Form and location of shares

11. The share register must be kept—

(a) in a form that complies with clause 65; and

(b) at the company's registered office, or at any other place in Solomon Islands notice of which has been given to the Registrar under section 113 of the Act.

Status of registered shareholder

12. (1) The company must treat the registered holder of a share as the only person entitled to—

(a) exercise the right to vote attaching to the share; and

(b) receive notices; and

(2) If a joint holder of a share dies, the remaining holders must be treated by the company as the holders of that share.

(3) If the sole holder of a share dies, that shareholder's legal representative is the only person recognised by the company as having any title to, or interest in, the share.

(4) Any person who becomes entitled to a share as a consequence of the death, bankruptcy or insolvency, or incapacity of a shareholder may be registered as the holder of that shareholder's shares on making a request in writing to the company to be so registered, accompanied by proof satisfactory to the directors of that entitlement.

Division 3—Pre-emptive Rights

Restriction on selling shares

13. (1) A shareholder is not entitled to sell or otherwise dispose of his or her shares in the company without first offering to sell them to the other holders of shares of the same class in accordance with the procedures set out in clauses 14 to 21, unless all the other shareholders agree otherwise.

(2) Any share transfer delivered to the company by a shareholder who has not complied with subclause (1) is of no effect, and the transfer must not be entered on the share register.

Selling shareholder to give written notice to company

14. A shareholder who wishes to dispose of some or all of his or her shares ("selling shareholder") must give written notice to the company of—

(a) the number of shares to be sold; and

(b) the price at which the selling shareholder is willing to sell the shares.

Company to give written notice to shareholders

15. The company must, within 10 working days, give a copy of the written notice referred to in clause 14 to each shareholder, together with a notice advising each holder of shares of the same class—

(a) that that shareholder is entitled to purchase a proportional number of the shares that the selling shareholder wishes to sell (rounded in an appropriate manner determined by the directors); and

(b) that, if that shareholder wishes to purchase those shares, he or she must give written notice to that effect to the company within 10 working days of the date of the notice.

Written notice is offer by selling shareholder

16. The notice referred to in clause 15 is deemed to be an offer by the selling shareholder to the recipient to sell the number of shares referred to in the notice at the price specified by the selling shareholder in the notice given under clause 14, on the terms set out in these rules.

Notice agreeing to purchase shares given within specified time

17. Subject to clause 20, if a notice is given by a shareholder within the specified time agreeing to purchase the shares offered to that shareholder in a notice given under clause 15—

(a) there is deemed to be a contract between that shareholder and the selling shareholder for the sale and purchase of the relevant number of shares; and

(b) the company must immediately advise the selling shareholder of the acceptance, and send him or her a copy of—

(i) the notice given under clause 15 by the company; and

(ii) the notice of acceptance given by the shareholder in question.

Notice agreeing to purchase shares not given within specified time

18. (1) If any shareholder does not give notice agreeing to purchase the shares offered to that shareholder within the specified time, the shares that were offered to that shareholder must be offered to those shareholders who did accept the shares offered to them, on a fair and equitable basis determined by the directors.

(2) Clauses 16 and 17 apply to any notice given to a shareholder, and to any notice of acceptance given by a shareholder, under this clause.

No shareholder wishes to purchase selling shareholder's shares

19. If no shareholder wishes to purchase the selling shareholder's shares at the specified price, the selling shareholder may, at any time in the 12 months following the giving of notice by the selling shareholder, sell some or all of those shares to any other person at a price not less than the specified price.

Selling shareholder not obliged to sell some shares

20. (1) The selling shareholder is not obliged to sell all of the shares that he or she wishes to dispose of.

(2) In the event that the selling shareholder has not been notified under clause 17 of acceptances by other shareholders in respect of all the shares referred to in the notice given under clause 14 within 40 working days of the date on which that notice was given to the company, the selling shareholder may, at his or her option, give written notice to the company terminating the offer to sell the shares to the other shareholders.

(3) If such a notice is given, clause 19 applies as if no shareholder had wished to purchase the selling shareholder's shares.

Directors may require evidence of terms

21. The directors may require reasonable evidence of the terms (including price) on which the shares were sold to accompany any share transfer in respect of those shares.

Division 4—Transfer of Shares

Transfer of shares

22. (1) If shares are to be transferred, a form of transfer signed by the holder or by his or her agent or attorney must be delivered to the company.

(2) The personal representative of a deceased shareholder may transfer a share even though the personal representative is not a shareholder at the time of transfer.

(3) Subject to clause 13, the company must immediately on receipt of a properly executed share transfer enter the name of the transferee in the share register as holder of the shares transferred.

Share certificates

23. (1) A shareholder may apply to the company for a share certificate relating to some or all of the shareholder's shares in the company.

(2) On receipt of an application for a share certificate under subclause (1), the company must, within 20 working days after receiving the application—

(b) in all cases send to the shareholder a certificate stating—

(i) the name of the company; and

(ii) the class of shares held by the shareholder; and

(iii) the number of shares held by the shareholder to which the certificate relates.

(a) the share certificate relating to the share; or

(b) evidence as to its loss or destruction and, if required, an indemnity in a form determined by the directors.

Division 5—Meetings of Shareholders

Meetings of shareholders

24. (1) Clauses 25 to 33 set out the procedure to be followed at, and in relation to, meetings of shareholders.

(2) A meeting of shareholders may determine its own procedure to the extent that it is not governed by these rules.

Notice of meetings

25. (1) Written notice of the time and place of a meeting of shareholders must be given to every shareholder entitled to receive notice of the meeting and to every director and any auditor of the company not less than 10 working days before the meeting.

(2) The notice must set out—

(a) the nature of the business to be transacted at the meeting in enough detail to enable a shareholder to form a reasoned judgment in relation to it; and

(b) the text of any special resolution to be submitted to the meeting.

(4) An accidental omission to give notice of a meeting to, or the failure to receive notice of a meeting by, a shareholder does not invalidate the proceedings at that meeting.

(5) If a meeting of shareholders is adjourned for less than 30 working days, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting that is adjourned.

Methods of holding meetings

26. A meeting of shareholders may be held either—

(a) by a number of shareholders, who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all shareholders participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

27. (1) Subject to subclause (3), no business may be transacted at a meeting of shareholders if a quorum is not present.

(3) If, at the adjourned meeting, a quorum is not present within 30 minutes after the time appointed for the meeting, the shareholders present or their proxies are a quorum.

Chairperson

28. (1) If the directors have elected a chairperson of the directors, and the chairperson of the directors is present at a meeting of shareholders, he or she must chair the meeting.

Voting

29. (1) In the case of a meeting of shareholders held under clause 26(a), unless a poll is demanded, voting at the meeting must take place by whichever of the following methods is determined by the chairperson of the meeting—

(a) voting by voice; or

(b) voting by show of hands.

(2) In the case of a meeting of shareholders held under clause 26(b), unless a poll is demanded, voting at the meeting must take place by shareholders signifying individually their assent or dissent by voice.

(3) A declaration by the chairperson of the meeting that a resolution is carried by the requisite majority is conclusive evidence of that fact unless a poll is demanded in accordance with subclause (4).

(4) At a meeting of shareholders a poll may be demanded by—

(a) not fewer than 5 shareholders having the right to vote on the question at the meeting; or

(b) a shareholder or shareholders representing not less than 10% of the total voting rights of all shareholders having the right to vote on the question at the meeting.

(5) A poll may be demanded either before or after a vote is taken on a resolution.

(6) If a poll is taken, votes must be counted according to the votes attached to the shares of each shareholder present and voting.

(7) The chairperson of a shareholders' meeting is not entitled to a casting vote.

Votes of joint shareholders

30. If 2 or more persons are registered as the holder of a share, the vote of the person named first in the share register and voting on a matter must be accepted to the exclusion of the votes of the other joint holders.

Proxies

31. (1) A shareholder may exercise the right to vote either by being present in person or by proxy.

(2) A proxy for a shareholder is entitled to attend and participate in a meeting of shareholders as if the proxy were the shareholder.

(3) A proxy must be appointed by notice in writing signed by the shareholder.

(4) The notice must state whether the appointment is for a particular meeting, or for a specified term.

(5) No proxy is effective in relation to a meeting unless a copy of the notice of appointment is given to the company at least 24 hours before the start of the meeting.

Community entity may act by representatives

32. (1) A community entity that is a shareholder may appoint a representative to attend a meeting of shareholders on its behalf by notice in writing signed by a director or secretary of the community entity.

(2) The notice must state whether the appointment is for a particular meeting, or for a specified term.

Minutes

33. (1) The directors must ensure that minutes are kept of all proceedings at meetings of shareholders.

(2) Minutes that have been signed correct by the chairperson of the meeting are prima facie evidence of the proceedings at the meeting.

Division 6—Miscellaneous

Annual meetings and special meetings of shareholders

34. (1) Subject to subclause (3) and clause 35(3), the directors must call an annual meeting of the company to be held—

(a) once in each calendar year; and

(2) The meeting must be held on the date on which it is called to be held.

(3) The company need not hold its first annual meeting in the calendar year of its incorporation, but must hold that meeting within 18 months of its incorporation.

(4) A special meeting of shareholders entitled to vote on an issue—

(a) may be called at any time by a director; and

(b) must be called by the directors on the written request of shareholders holding shares carrying together not less than 5% of the votes that may be cast on that issue.

Written resolutions of shareholders

35. (1) A resolution in writing signed by shareholders, who together hold not less than 75% of the votes entitled to be cast on that resolution at a meeting of shareholders, is as valid as if it had been passed at a meeting of those shareholders.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form each signed or assented to by 1 or more shareholders.

(3) The company need not hold an annual meeting if everything required to be done at that meeting (by resolution or otherwise) is done by resolution in accordance with subclause (1).

(4) Within 5 working days of a resolution being passed under subclause (1), the company must send a copy of the resolution to every shareholder who did not sign it.

(5) A resolution may be signed under subclause (1) without any prior notice being given to shareholders.

Voting in interest groups

36. If the company proposes to take action that affects the rights attached to shares within the meaning of section 53 of the Act, the action may not be taken unless it is approved by a special resolution of each interest group, as defined in section 53(3) of the Act.

Shareholders entitled to exercise pre-emptive rights

37. The shareholders who are entitled to pre-emptive rights to acquire shares in accordance with clause 13 are those shareholders whose names are registered in the share register on the day on which notice is given to the company by the selling shareholder under clause 14.

Shareholders entitled to attend and vote at meetings

38. (1) The shareholders who are entitled to receive notice of a meeting of shareholders are—

(a) if the directors fix a date for this purpose, those shareholders whose names are registered in the share register on that date;

(b) if the directors do not fix a date for this purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

(2) A date fixed under subclause (1)(a) must not precede by more than 30 working days the date on which the meeting is to be held.

(3) Before a meeting of shareholders, the company may prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order, and showing the number of shares held by each shareholder—

(a) if a date has been fixed under subclause (1)(a), as at that date; or

(b) if no such date has been fixed, as at the close of business on the day immediately preceding the day on which the notice is given.

(4) A person named in a list prepared under subclause (3) is entitled to attend the meeting and vote in respect of the shares shown opposite his or her name in person or by proxy, except to the extent that—

(a) that person has, since the date on which the shareholders entitled to receive notice of the meeting were determined, transferred any of his or her shares to some other person; and

(b) the transferee of those shares has been registered as the holder of those shares, and has requested before the commencement of the meeting that his or her name be entered on the list prepared under subclause (3).

(5) A shareholder may, on 2 working days' notice, examine any list prepared under subclause (3) during normal business hours at the registered office of the company.

Distribution to shareholders

39. (1) The company must not pay a dividend or make any other distribution to shareholders.

(2) A distribution made in breach of subclause (1) may be recovered by the company from the recipients or from the persons approving the distribution, in accordance with section 28 of the Act.

Company may acquire its own shares and provide financial assistance

40. (1) The company may agree to acquire its own shares from a shareholder—

(a) with the prior approval of all shareholders; and

(b) subject to the solvency test.

(2) If the company acquires its own shares, those shares are deemed to be cancelled immediately on acquisition.

Annual report to shareholders

41. (1) The directors of the company must, within 20 working days after the date on which the company is required to complete its financial statements under section 125 of the Act—

(a) prepare an annual report on the affairs of the company during the accounting period ending on that date; and

(b) send a copy of that report to each shareholder.

(2) Every annual report for the company must—

(a) be in writing and be dated; and

(b) include financial statements for the accounting period that comply with section 125 of the Act; and

(c) if an auditor's report is required in relation to the financial statements included in the report, include that auditor's report; and

(e) contain any other information that may be required by regulations made under the Act including how the company has furthered the community interest including a report on its consultations with community stakeholders; and

(f) be signed on behalf of the directors by 2 directors of the company or, if the company has only 1 director, by that director.

Deemed approval by all shareholders for certain purposes

42. For the purposes of clauses 7, and 8(2), a decision is deemed to have been approved by all shareholders if—

(a) notice of the proposed decision has been given to all shareholders in accordance with clause 75; and

(b) no shareholder has responded within 10 working days objecting to that decision; and

(c) shareholders entitled to cast not less than 75% of the votes in relation to a resolution to alter these rules have responded within 10 working days approving that decision.

Part 3—Directors

Appointment and removal of directors

43. (1) The shareholders may by ordinary resolution fix the number of directors of the company.

(2) A director may be appointed or removed by ordinary resolution passed at a meeting called for the purpose, or by a written resolution in accordance with clause 35(1).

(3) A director vacates office if he or she—

(a) is removed from office in accordance with subclause (2); or

(b) resigns in accordance with clause 44; or

(d) dies.

Resignation of director

44. (1) A director may resign by delivering a signed written notice of resignation to the registered office of the company.

(2) Subject to subclauses (3) and (4), a notice of resignation is effective when it is received at the registered office, or at any later time specified in the notice.

(3) If the company has only 1 director, that director may not resign—

(a) until that director has called a meeting of shareholders to receive notice of the resignation; or

(b) if the company has only 1 shareholder, until that director has given not less than 10 working days' notice of the resignation to that shareholder.

(4) A notice of resignation given by the sole director of the company does not take effect, despite its terms, until the earlier of the appointment of another director of the company or—

(a) the time and date for which the meeting of shareholders is called under subclause (3)(a); or

(b) if the company has only 1 shareholder, 10 working days after notice of the resignation has been given to that shareholder.

Notice of change in directors

45. (1) The company must ensure that notice in the prescribed form of the following is delivered to the Registrar—

(a) a change in the directors of the company, whether as the result of a director ceasing to hold office or the appointment of a new director, or both;

(b) a change in the name or the residential address of a director of the company.

(2) In the case of the appointment of a new director, a consent by that person to act as a director, in the prescribed form, must also be delivered to the Registrar.

Powers and duties of directors

(2) The directors have all the powers necessary for managing, and for directing and supervising the management of, the business and affairs of the company.

(3) The directors may delegate any of their powers to a committee of directors, or to a director or employee.

(4) The directors must monitor, by means of reasonable methods properly used, the exercise of powers by any delegate.

(5) The provisions of these rules relating to proceedings of the directors also apply to proceedings of any committee of directors, except to the extent the directors determine otherwise.

(6) The directors have the duties set out in the Act, and, in particular—

(a) each director must act in good faith and in a manner that the director believes to be in the interests of the company; and

(b) a director must not act, or agree to the company acting, in a manner that contravenes the Act or these rules.

Standard of care of directors

(a) the nature of the company; and

(b) the nature of the decision; and

Obligations of directors in connection with insolvency

(a) believes that the company is unable to pay its debts as they fall due; or

(b) is aware of matters that would put any reasonable person on inquiry as to whether the company is unable to pay its debts as they fall due.

(2) At a meeting called under section 70 of the Act, the directors must consider whether to—

(a) appoint a liquidator; or

(b) continue to carry on the business of the company.

Interested directors

49. (1) A director must not exercise any power as a director in circumstances where that director is directly or indirectly materially interested in the exercise of that power, unless—

(a) the Act expressly authorises the director to exercise the relevant power despite such an interest; or

(b) the director has reasonable grounds for believing that the company will satisfy the solvency test after that power is exercised, and either—

(i) these rules expressly authorise the director to exercise the relevant power despite such an interest; or

(ii) the matter in question has been approved by shareholders under section 50 of the Act, following disclosure of the nature and extent of the director's interest to all shareholders who are not otherwise aware of those matters.

(2) A director who is directly or indirectly materially interested in any transaction or proposed transaction must, within 10 working days of becoming aware of that interest, disclose the nature and extent of that interest in writing—

(a) if there is at least 1 other director who is not directly or indirectly materially interested in the transaction or proposed transaction, to the directors of the company; or

(b) if paragraph (a) does not apply, to all shareholders other than the director.

(3) A director may give a general disclosure in writing to all other shareholders that the director is a director or employee or shareholder of another company, or is otherwise associated with another company or another person. That general disclosure is a sufficient disclosure of the director's interest in any transaction entered into with that other company or person for the purposes of subclause (2).

(4) A transaction entered into by the company in which a director is directly or indirectly materially interested is voidable at the election of the company in accordance with section 107 of the Act.

(5) A transaction entered into by the company as the result of action taken by a director in breach of section 64, 65, or 66 of the Act is voidable at the option of the company in accordance with section 108 of the Act.

Use and disclosure of company information

(a) in the interests of the company; or

(b) as required by law; or

(c) if there are reasonable grounds for believing that the company will satisfy the solvency test after the director takes that action, and that action—

(i) is approved by all shareholders under section 50 of the Act; or

(ii) is authorised by any contract of employment entered into between that director and the company, the relevant terms of which have been approved by shareholders by ordinary resolution.

(2) No director may vote on a resolution to approve such terms in relation to himself or herself.

Indemnities and insurance for directors or employees

51. (1) Subject to section 73 of the Act, the company may provide an indemnity or purchase insurance for a director of the company or of a related company with the approval of—

(a) shareholders by ordinary resolution.; or

(b) all shareholders under section 50 of the Act.

(2) No director may vote on a resolution concerning an indemnity or insurance to be provided for the director.

(3) In this clause—

"director" includes—

(a) a person who is liable under any of sections 64 to 66 of the Act by virtue of section 72 of the Act; and

(b) a former director;

"indemnify" includes relieve or excuse from liability, whether before or after the liability arises; and "indemnity" has a corresponding meaning.

Remuneration of directors

52. (1) Directors may receive remuneration and other benefits (excluding loans) from the company with the approval of—

(a) shareholders by special resolution; or

(b) all shareholders under section 50 of the Act.

(2) No director may vote on a resolution concerning remuneration or benefits to be received by the director.

Procedure at meetings of directors

53. (1) Clauses 54 to 60 set out the procedure to be followed at meetings of directors.

(2) A meeting of directors may determine its own procedure to the extent that it is not governed by these rules.

Chairperson

54. (1) The directors may elect 1 of their number as chairperson of directors and may determine the period for which the chairperson is to hold office.

(2) If no chairperson is elected, or if at a meeting of the directors the chairperson is not present within 5 minutes after the time appointed for the commencement of the meeting, the directors present may choose 1 of their number to be the chairperson of the meeting.

Notice of meeting

55. (1) A director or, if requested by a director to do so, an employee of the company, may convene a meeting of directors by giving notice in accordance with this clause.

(2) Not less than 24 hours notice of a meeting of directors must be given to every director who is in Solomon Islands, or who can readily be contacted outside Solomon Islands.

Methods of holding meetings

56. A meeting of directors may be held either—

(a) by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or

(b) by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum, may simultaneously hear each other throughout the meeting.

Quorum

57. (1) A quorum for a meeting of directors is a majority of the directors.

(2) No business may be transacted at a meeting of directors if a quorum is not present.

Voting

58. (1) Every director has 1 vote.

(2) The chairperson has a casting vote.

(3) A resolution of the directors is passed if it is agreed to by all directors present without dissent, or if a majority of the votes cast on it are in favour of it.

Minutes

59. The directors must ensure that minutes are kept of all proceedings at meetings of the directors.

Unanimous resolution

60. (1) A resolution in writing, signed or assented to by all directors, is as valid and effective as if it had been passed at a meeting of the directors duly convened and held.

(2) Any such resolution may consist of several documents (including fax or other similar means of communication) in like form each signed or assented to by 1 or more directors.

(3) A copy of any such resolution must be entered in the minute book of the directors' proceedings.

Managing director and other executive directors

61. (1) The directors may, from time to time, appoint a director as managing director for such period and on such terms as they think fit.

(2) Subject to the terms of a managing director's appointment, the directors may at any time cancel the appointment of a director as managing director.

(3) A director who holds office as managing director ceases to hold office as managing director if he or she ceases to be a director of the company.

Delegation to managing director

62. (1) The directors may delegate to the managing director, subject to any conditions or restrictions that they consider appropriate, any of their powers that may be lawfully delegated.

(2) Any such delegation may at any time be withdrawn or varied by the directors.

(3) The delegation of a power of the directors to the managing director does not prevent the exercise of the power by the directors, unless the terms of the delegation expressly provide otherwise.

Remuneration of managing director and director

(2) The remuneration may be by way of salary, commission, participation in profits, or any combination of these methods, or any other method of fixing remuneration.

Part 4—Company Records

Company records

64. (1) The company must keep all the following documents at its registered office—

(a) the rules of the company;

(b) minutes of all meetings and resolutions of shareholders within the last 7 years;

(d) the full names and residential and postal addresses of the current directors;

(e) copies of all written communications to all shareholders or all holders of the same class of shares during the last 7 years, including annual reports made under section 55 of the Act;

(f) copies of all financial statements required to be completed under section 125 of the Act for the last 7 completed accounting periods of the company;

(g) the accounting records required by section 124 of the Act for the current accounting period and for the last 7 completed accounting periods of the company;

(h) the share register.

(2) The references in subclause (1)(b), (c), and (e) to 7 years and the references in subclause (1)(f) and (g) to 7 completed accounting periods include such lesser

(3) periods as the Registrar may approve by notice in writing to the company, in accordance with section 113(2) of the Act.

Form of records

65. (1) The records of the company must be kept—

(a) in written form; or

(2) The directors must ensure that adequate measures exist to—

(a) prevent the records being falsified; and

(b) detect any falsification of them.

Access to records

(1) The directors of the company are entitled to access to the company's records in accordance with section 115 of the Act.

(2) A shareholder of the company is entitled—

(a) to inspect the documents referred to in section 116 of the Act, in the manner specified in section 118 of the Act; and

(3) The fee may be determined by any director, subject to any directions from the directors.

Documents to be sent to Registrar

In addition to any annual return required under sections 119 of the Act, the company must send all the following documents to the Registrar under the Act—