Business Page  The Deeds Registry  and the Commercial Court

Sunday, March 26th, 2006

                                  

Introduction:

Neither do men put new wine in old bottles: else the bottles break, and the wine runneth out, and the bottles perish: but they put new wine in new bottles, and both are preserved. Matthew 9:17

No one who has visited the building housing the registry (office) of the Registrar of Companies can fail to be impressed by the considerable improvement in its physical condition. The place is now air-conditioned with seating for the public and comfort and computers for the staff. Both the public and the staff deserve nothing less. But the very favorable impact of the physical improvement contrasts with the quality of service that had made this government department among the worst for bureaucratic nightmares and gross inefficiencies. Yet, seven years after the passage of the Deeds Registry Authority Act to "promote the efficient and orderly operation of the [Deeds] Registry," it is yet to be put into operation, not unlike the Prevention of Money Laundering Act referred to in last week's Business Page.

This office is the legal hub of commerce in the country with both broad and specific responsibility under the Companies Act 1991, Part VI of which is devoted entirely to its administration and the functions of the Registrar. Among the most important functions of the Registrar are the maintenance of a Register of Companies and the duty to furnish to any person a copy or certified copy of any document received by the Registrar under the act. Interestingly, the act also provides for the Registrar to furnish any person with a certificate stating that a company has or has not filed a document as required by the act.

The Commercial Court:

The centrality of the role of the registry would greatly impact on the effectiveness of the Commercial Court which is soon to become a reality, in preference to a Constitutional Court or a Tax Court which was one of the early commitments of the PPP/C government.

Business Page has never accepted or supported the primacy of a commercial court ahead of the more important constitutional issues involving citizens' rights which are left to fester and remain unresolved, or the tax matters which bear so heavily on the inequitable sharing of the revenue burden by citizens of the country. That the commercial banks have been among the most vocal advocates of the commercial court suggests that they would like to see the court as an instrument of debt enforcement and collection for creditors generally and the banks in particular.

The huge profits reported by the commercial banks indicate that the banks [and indeed hire-purchase companies and other institutional providers of credit] are obviously very successful at managing their loans. Despite complaints and grumbles, our laws favour creditor over debtor, the strong over the weak and to use scarce loan/grant funds hardly seems to be the best allocation of resources. To compound the issue, with the tax burden shifting inexorably from businesses to employed persons, it seems a fair assumption that the financial burden of the commercial court will fall on individuals and consumers.

Three out of three:

And what is the point of the commercial court when the central repository of corporate and business information fails to function? My most recent experiences at the registry provided ample evidence that the registry is no more useful now than it was before it closed for over seven months while it undertook physical rehabilitation and organisational make-over. The experiences involved seeking out 1) particulars of the shareholding of a publicly-owned bank, 2) the financial statements of a high-profile insurance company and 3) basic statutory information of a company in the forestry sector. After helpful searches by the staff, the response in respect of the above was 1) the information had never been submitted; 2) information not on file and 3) file cannot be found.

In each case, the information is statutorily required to be lodged and made available to the public who pay the taxes to finance the efficient administration of the registry. The idea behind such a registry and function is to ensure that the public has easy access to information on entities which enjoy limited liability as opposed to individuals including partnerships whose liability is unlimited. The registry is required to maintain for the benefit of the public information on companies including up-to-date lists of the shareholders, directors and company secretary; particulars of mortgages, including the assets and the identity of the person to whom the asset is mortgaged, and copies of audited financial information on the company.

There are prescribed deadlines for the submission of information to the Registrar and given the rationale for the registry's existence, the Registrar should enforce the penalties for non-compliance. Sadly, this does not happen and no one seems to care, not even professional advisers including lawyers and auditors.

More dollars than sense:

So bad is the situation with this registry that it seems to enjoy the minimal confidence of any of the other regulators, including the Bank of Guy-ana, the Securities Council, the Commissioner of In-surance and other public bodies and there appears to be little or no contact or professional relationships between them and the Registrar. Unfortunately for the public but quite understandably, those other regulators are unwilling to fill the breaches created by the failures of the Office of the Registrar even though the public and the economy are the biggest losers. It is not apparent how the establishment of a Commercial Court per se, without attendant improvements, will address this major problem.

One sometimes has to wonder whether donors have more dollars than sense, for why would they finance a commercial court when the most important ingredient remains broken with no apparent intention to fix it. The multilateral financial institutions are no different. They insist on new laws setting up various regulatory bodies but then sit back as those laws remain unimplemented or witness the bodies, without any hint of embarrassment, parade their ineffectiveness to the world. Just this week the Environmental Protection Agency (EPA) announced that a major project is being undertaken without their approval, but in the same breath announces that they will do nothing to stop the project! Poor Mr Badal must be wondering whom he has wronged.

Punishing the good:

One of the great ironies of Guyana is that those regulators that seek to carry out their mandate are stymied through the court process, while those like the EPA and the Guyana Forestry Commission get away with the most extraordinary public displays of bungling, ineptitude and confusion. And the Office of the Registrar is rewarded with physical upgrades for practically never having carried out its mandate. Part of the problem seems to lie with ministerial control and responsibility being shared by the Minister of Finance and the Attorney General. The Order bringing the Companies Act 1991 into operation was signed by the Minister of Finance but from all accounts it is the Attorney General that gives general directions and guidance to the Registrar. The confusion appears reinforced by the Deeds Registry Authority Act for which the Minister of Legal Affairs and Attorney General is given responsibility.

It is worth recalling that when the Companies Act 1991 was brought into operation in 1995, the Registrar read about it at the same time as the rest of the country. Twelve years later, there has been little training of the staff in both the fatter and finer points of that act. And having been led in 1999 into thinking that their status would be enhanced under new legislation, the staff of the registry has been frustrated in this nether world. Perhaps it is for this reason that even those who routinely visit the registry and suffer considerable frustration remain sympathetic to the staff, often willing to pay 'extras' for below-standard service.

From the bits and pieces that have been emanating from various functionaries, it seems that the Commercial Court is a done deal, although the public deserves more information than it has been getting. For example, where is the instrument creating the new court, where does appeal lie if it is to escape the bottlenecks of the existing system and what are the committed resources for this court? And is there any intention to ensure that the Deeds Registry Act of 1999 is implemented prior to the introduction of the court?

Conclusion:

It is now over fifteen years since the passage of the 1991 Companies Act. All practitioners agree that a review and amendments are clearly necessary, both arising out of some of the inherent deficiencies in the act as well as subsequent developments such as the Financial Institutions Act and the Securities Industry Act. It would seem that the Commercial Court would be far more effective if it has the benefit of such an exercise.

On the other hand, the introduction of an effective and professionally managed Deeds Registry requires political will, resources and attention all of which are in short supply. The establishment of the commercial court with no substantial improvements in the Office of the Registrar of Companies may serve the interest of those who can take care of themselves and pay lawyers to protect their interest. The public looking for service will have to wait longer.