Re-registration requirements for Papua New Guinea registered entities

What you need to know

• An amendment to the Companies Act 1997 (Papua New Guinea) is now in force, requiring all corporate entities registered in PNG, both local and foreign, to re-register in order to maintain their corporate status
• Late lodgement of annual returns is now likely to lead to automatic deregistration 6 months after the filing month (in comparison to the 12 month period applicable in other countries such as Australia)
• Local companies are subject to a "Know Your Shareholder" requirement about beneficial ownership of shares. (This requirement is more onerous than the equivalent law in Australia).

What you need to do

• Action on re-registration is required by November 2023 at the latest
• Financial statements, audit and annual return can be undertaken in the normal timeframe, and the return can be submitted as part of the re-registration process
• The online records will be frozen until the re-registration process is completed (so some companies may prefer to take action on re-registration ahead of their annual return filing month, but that is not compulsory)
• All companies must obtain information about beneficial ownership of all shares in the company- so in effect there is a "Know Your Shareholder" requirement for public companies, which is said to be an anti-money laundering measure
• A flow-on requirement regarding ownership of shares is that a more detailed form of share transfer can be used

CHANGES TO ANNUAL RETURN FILING/RE-REGISTRATION REQUIREMENTS

Although there has been a delay, the Companies (Amendment) Act 2022 (Amendment) commenced in December 2022 and so:

(a) All PNG registered entities, both local and foreign. must re-register within 12 months in order to maintain their corporate status;

(b) annual returns can presently be filed free of charge as part of the re-registration process;

(c) as noted in the summary, there is a general requirement for all PNG companies to obtain and maintain sufficient information to identify the beneficial ownership of their shares. The Registrar of Companies will be entitled to ask for information about non-beneficial ownership, presumably in the context of administrative or regulatory enquiries;

(d) the late lodgement of an annual return is likely to lead to automatic deregistration from 6 months after the filing month (in comparison to the 12 month period applicable in other countries such as Australia); and

(e) the time for effecting a filing where there is a change of 50% or more of shares held is changed to be 10 days after registration of the transfer. In practice, is desirable to do the filing for all transfers.

FOREIGN INVESTOR REPORTING

The re-registration process is also being applied to the records maintained by the Investment Promotion Authority under the Investment Promotion Act 1992 in respect of foreign-controlled entities that hold certification under that law. Although we have queried the basis for this but assume that you instruct us to deal with this at the same time as the matters referred to above.

It will remain the case that if you hold certification to carry on business as a foreign enterprise, it is a condition of certification that you provide a report at intervals of six months after certification of:

• activities;
• locations:  registered office and principal office;
• capital expenditure;
• employment; and
• shareholder.

These reports will be lodged separately in the IPA portal.

Authors: Richard Flynn, Partner; and Jerome Kadamongariga, Associate.