Businesses need to keep abreast of new laws or changes to existing laws that affect them. That’s precisely what happened with the Belize Companies Act 2022, which repeals and replaces the International Companies Act, Cap. 270 and the Companies Act, Cap. 250.
Passed in August by the Financial Services Commission (FSC), the new Act contains several changes that will affect different business community sectors. The goal was to modernize the provisions and address issues that respond to an increasingly complex global business environment.
For investors of offshore businesses based in Belize, it’s essential to know about these new changes and how they impact investments. Here are the fundamental changes to understand.
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Who Will Be Affected by the Changes?
There won’t be many changes for some offshore companies based in Belize. Others will be affected in several ways. The expectation is that the effects will be positive.
One area where things will be different is the matter of issuing shares. Both companies limited by guarantee that were authorized to issue shares, and those that were not authorized to do the same, will have new rules to follow. The same will hold true for unlimited companies previously authorized to issue shares and unlimited companies that could not issue shares under the previous laws.
Private trust companies must also make changes to comply with the new Act’s provisions. The same is true for foreign companies across the board. Segregated portfolio companies must also rethink their current operations to be fully compliant.
Why Enact New Legislation?
Simply put, the older laws were no longer practical. Even with amendments, they did not adequately cover today’s business climate. The thought was that continuing to operate with the older governmental regulations was hindering the ability to attract and keep the interest of those looking for places to base their offshore operations.
There was also some sentiment that having everything encompassed by a single Act would make it easier for everyone involved to understand what Belizean law requires. That would be true for business owners and those charged with ensuring those legal provisions were honored.
Is There a Need to Re-Register?
All companies formed under the provisions of the two previous laws will have a window of time to re-register. This applies to any Belizean company that was established under those laws.
The same is true for any overseas company that chose to set up under the provisions found in the Companies Act, Cap. 250. Under the provisions in the new Act, they will be converted to the status of Foreign Company.
Keeping Copies of Financial Records
A provision in the new Act changes what documents and records offshore companies are required to maintain within the country. While some choose to keep financial records within the nation, others store financial documents outside Belize. With the new Act, it will be necessary to keep copies of certain documents within the country.
Business owners must maintain a document confirming the location of original documents outside Belize. The other is to have copies of all transactions that accurately assess the company’s financial condition.
Making Basic Business Processes Simpler
Much of the work of this new Act focuses on making it easier for business owners to take care of basic processes related to establishing and continuing compliance with government requirements. That includes the use of modern technology to manage those tasks. Simply put, the older laws did not address the use of technology in this area.
See this as streamlining actions that were more time-consuming in the past. Now, the ability to complete requirements digitally, submit returns and reports quickly, and even receive digital confirmations and receipts will make it all the easier to stay on top of communication with the government.
Addressing Virtual Meetings and Digital Registration
While registration in Belize has tended to be less complex than in some other nations, the new Act aims to simplify the process. Preliminary meetings that had to take place in person before can now happen by video conferencing. Recording the video conference is not required but can be conducted with the agreement of both parties. That will go a long way toward saving time and reducing travel expenses.
To aid in the registration process. Belize is preparing what will be known as the Online Business Registry System (OBRS). The system will be available before the end of December 2022. This will allow existing companies to use the interface to re-register well before the deadline of June 2023. The launch will also make it easy for owners of new offshore businesses to register with relative ease. All registrants will receive a nine-digit company number and electronic certificate after completing the registration process.
Some company structures had statutory limits on the number of shareholders a company could secure. The new Act changes that, allowing business owners to expand the number of shareholders. This is seen as one way to allow the company to grow while maintaining a reasonable amount of regulatory authority.
There will still be guidelines related to the issuance of shares, how investors have a voice and vote in company matters, and other essentials. What has changed is that companies will now have greater latitude in these areas than was allowed under the previous legislation.
While minority shareholders have enjoyed some protections under previous laws, they will now enjoy greater protection. That includes granting statutory rights in some instances that were not possible. Some provisions provide more mechanisms that ensure minority shareholders are treated fairly.
This will also help attract new business and retain current business activity. By adding these protections, company owners will find it easier to take on shareholders who begin with smaller shares but may be in a position to secure others later.
Making the Liquidation of a Registered Company Easier
The reality is that not all companies are successful. Before the new Act, the process of liquidating company assets as part of a shutdown was somewhat cumbersome. The process will be more straightforward and require less time to complete.
That does not mean there is no government oversight or any provisions that require compliance. What it means is that the process for liquidating the company will be less complex, allowing company owners to settle debt and move on with greater ease.
Biz Latin Hub can help you understand Companies Act
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Contact us to find out more about how we can support you doing business.
