Close corporation amendment bill tabled

Martin Endjala

The Minister of Industrialization and Trade Lucia Iipumbu yesterday tabled an Amendment Bill to the Close Corporation Amendment Act No. 26 of 1998 in parliament after Namibia underwent her second peer-review evaluation by the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force (FATF).

The outcomes of the peer review necessitate a piecemeal amendment of the Act to avoid Namibia from being greylisted.

She said that while the government is prioritizing the findings from the peer review, the government is also cognizant of the fact that the review of the law should be undertaken with the understanding of the role of close corporations in the 21st century and their role in the economy as a whole.

“One key role of the government is to ensure that the regulatory framework within which enterprises operate promotes growth, employment, innovation, stability, good governance, confidence and international competitiveness,” said Iipumbu.

Should Namibia not be able to demonstrate sufficient progress at the end of the 12-month period, the country may be escalated by the FATF for greylisting, which the Minister stressed Namibia should avoid at all costs as it will lead to the Gross Domestic Product negatively being impacted up to seven percent.

It will also lead to a lack of new Foreign Direct Investments until removal from FATF greylisting six months after and Possible termination of, or extreme and costly enhanced due diligence measures on correspondent banking relationships with the Bank of Namibia and commercial banks operative in Namibia.

Meanwhile, Cabinet approved the National Action Plan on 13 December 2022 aimed at addressing all the deficiencies highlighted in Namibia’s Mutual Evaluation Report.

The plan included the amendment of various laws and the introduction or fast-tracking of new Bills.

“It is common cause that the majority of our population prefers registering Close Corporations as opposed to Companies since Close Corporations are less rigid than Companies. It therefore follows that there is a need to ensure that entrepreneurs who opt to register Close Corporations should not only receive adequate legal cushioning but such cushioning should be current,”Iipumbu added.

According to her, the Ministry, through its implementing agency, the Business Intellectual Property Authority(BIPA) has embarked upon the process of reviewing both the Close Corporations and the Companies Act.

She added that the process is progressing well with various stakeholder consultations having been conducted in several regions. It is projected that the said consultations will conclude in mid-July 2023.

Furthermore, MIT in collaboration with BIPA ensured the drafting of the Close Corporations Amendment Bill to ensure, amongst others, to insert new definitions, to require close corporations to keep and maintain registers of beneficial owners as well as provide for incidental matters.

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