On 15 April 1997, the Republic of Trinidad & Tobago brought into force a new Companies Act. It replaced legislation that was 58-years-old and deficient in a modern commercial environment. This new law is one significant step in the Government's comprehensive overhaul of the legal and regulatory framework for doing business in Trinidad & Tobago, which is intended to increase its attractiveness as a center of business activity in the Caribbean and Latin America. Other measures include the introduction of new laws to remove restrictions on foreign investment, the abolition of foreign exchange controls and the complete modernization of the country's intellectual property laws. The new law provides a modern legal framework for the operations of companies in Trinidad & Tobago. It is based primarily on the Canadian model but has been adapted to meet local conditions.
Clearly this legislation will have a significant impact on the way in which business is conducted in this country. Because Trinidad & Tobago is the most industrialised nation in the Caribbean and has significant hydrocarbon resources, particularly natural gas, this change has implications not only for the domestic commercial community but also for a significant body of international investors who have commercial interests in the Caribbean region. Indeed so significant is the international business interest presence in Trinidad & Tobago that in 1996 alone it attracted over US$4 billion in direct foreign investment from the United States of America. Some of the ways in which the new legislation impacts on business practices and opportunities in Trinidad & Tobago include the following:
1) The introduction of a number of practical provisions which allow greater flexibility to pursue commercial objectives, including:
- the introduction of "one man companies";
- the abolition of the ultra vires rule;
- the simplification of the capital structure with the abolition of "par value" shares; and
- the introduction of "amalgamations" as a tool which can facilitate restructuring, mergers and tax planning;
2) The extension and re-enforcement of directors' duties and liabilities; and
3) The shifting of the balance of power between controllers of companies and minority shareholders to significantly favor the interests of minorities.
It is not surprising, therefore, that the new Companies legislation has provoked considerable interest and discussion among local and foreign investors alike. Indeed, in some ways, one of the most significant effects of the new Act has been to focus the attention of the business community on issues relating to company law and its impact on their conduct of business in Trinidad & Tobago. In this Article, I provide a broad overview of some of the issues that have been most frequently raised by businessmen in Trinidad & Tobago as a result of the new legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.