The new Companies Act 2014 is a significant step for Gibraltar's burgeoning businesses (Shutterstock)
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Landmark new laws for Gibraltar’s businesses, 84 years in the making

Gibraltar’s company laws have been lagging behind 21st century business practices, say Ian Felice and Gemma Vasquez. But times are changing with the brand new Companies Act 2014, introduced this month

What is company law? In short, it’s the area of law concerned with businesses and how they operate. Businesses come in all shapes and sizes, and the laws that govern them cover everything from how they’re formed, to how they draw up accounts or declare insolvency. In short, company law enables businesses to get on with doing their work legally and equitably in the most up-to-date, modern fashion.

Gibraltar has been a member of the EU since 1973, and has seen rapid private sector growth in recent years. The latest budget figures reflect a continued growth in the economy of around 10.3 per cent per annum. Against such a backdrop, you will probably be surprised to learn that Gibraltar has not updated its company law since its last Companies Act of 1930 – more than 80 years ago. By comparison, in that space of time the UK has seen three significant company law reforms: in 1948, 1985 and 2006. To put it bluntly, Gibraltar was missing a beat. The financial services industry has long felt that the law should be updated in line with the requirements of modern practice.

That’s why, in 2010, the exciting task of modernising Gibraltar’s company law began. The project was industry-led; an initiative of The Association of Trust and Company Managers which was drafted by a team at Hassans law firm. Just two years later, the new Act came into force on the first of this month. It is a proof that Gibraltar is a modern jurisdiction that has stepped up to join the rest of the world. The Companies Act 2014 constitutes a major overhaul of the law governing Gibraltar companies, and brings it into line with the Gibraltar’s reputation as a modern, leading finance centre.

So what does it actually look like? The Act comprises a raft of amendments, intended to streamline and improve Gibraltar company law in line with the needs of the industry’s various bodies, including Companies House, the Gibraltar Society of Accountants, the Gibraltar Funds & Investments Association, as well as individual legal practitioners and the financial services industry more broadly. The Companies Act 2014 also incorporates certain provisions equivalent to those in the 2006 Companies Act of England and Wales (the “UK Act”), as well as EU Directives. It also codifies certain procedures which were already occurring as a matter of practice. 

Here are just a few of the most significant and interesting changes:

Execution of documents 

A significant practical change is the manner in which documents and deeds may be executed, which under the Companies Act 2014 is largely the same as the position in the UK and less onerous than previously was the case. The 1930 Companies Act is ambiguous as to whether a deed may be executed by a director in the presence of a witness. It is now specifically provided that a deed, or other document requiring execution by a company, may be executed by a director and a witness or by two authorised signatories (a definition for which is provided in the Companies Act 2014).

Financial assistance

The Companies Act 2014 adopts what were referred to as the “whitewash” provisions in the UK in relation to financial assistance. The new provisions reflect the position under the 1985 Companies Act of England and Wales, with the definition of financial assistance having been tightened. This means that the practice of creating a holding company with which to provide financial assistance to its parent company is no longer possible.

The only manner in which financial assistance is possible under the Companies Act 2014 is through the “whitewash” provisions. A private company can give financial assistance under the Companies Act 2014 if its net assets are not thereby reduced, or, to the extent that they are reduced, if the assistance is provided out of distributable profits.

Unfair prejudice

Under the Companies Act 2014, a member of a company may apply to the court where such member feels that the company’s affairs are being, have been conducted, or are proposed to be conducted in a manner that is unfairly prejudicial to the interests of members. It is important to note that this action is brought on the behalf of the member itself and not on behalf of the company. If the court finds the application to be successful, it can order the company to refrain from doing any act complained of, authorise civil proceedings, or make a compulsory share purchase order

E-filing

Perhaps the most obvious example of the modernisation of the 1930 Companies Act is the inclusion of “e-filing” and the ability for companies to publish certain information on websites. Communications from a company to its shareholders, and vice versa, may also be made electronically, with the intention that all such contact be both quicker and more straightforward. The registrar has the ability to impose requirements as to the form, authentication and manner of delivery of documents to the registrar

The new Companies Act is a significant change, and its effects are already being felt. This is an important step for Gibraltar’s businesses, marking it out as a mature and modern marketplace.

Ian Felice and Gemma Vasquez are partners at Hassans Gibraltar, an international law firm 

http://www.gibraltarlaw.com/ 

Photo: Getty
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Cyberspace: the final frontier

With a Gibraltarian team set to enter the finals of the Cyber Security Challenge UK, Guy Clapperton looks at some of the fundamental mistakes people still make in securing their personal and business networks.

A few years ago I was stand-in news editor for a computing publication which had better remain nameless. I was asked to go and check the regular person’s database of press releases for stories. It was inaccessible unless you had the password, so I just tried p-a-s-s-w-o-r-d. I was in immediately.

It wasn’t a problem as the organisation wanted me to have the information, but what if it hadn’t? What if I’d been in HR or finance instead, and had malicious intentions? Presumably that little hole has been plugged by now but it’s indicative of the sort of managerial rather than technological issue people can face if they’re not careful. The Cyber Security Challenge UK laudably highlights the talents of young people when it comes to working out means of protection and the excellent progress of the Gsec team from Gibraltar is promising. However, two things stand out as needing to be addressed: first, the extent of the problem, and second, the basic errors people like my ex-client still make.

Extent

The extent of the problem is hard to pin down when you’re in the press. Walk into a room full of CEOs and ask who’s been hacked and regardless of the truth, nobody is going to confirm it’s happened to them because nobody wants it publicised. This is reasonable enough, and when someone like Sony a few years ago or Ashley Madison more recently suffer Cyber-attacks you can be sure these are just the ones the press has heard of. There is other data, though, to suggest the issue will continue to grow. This article is being published on Tuesday 9th February, designated Safer Internet Day, and to mark it security company Kaspersky Lab has published research that suggests 12% of 16 to 19 year olds in the UK know someone who has done something illegal on the Internet; 35% would be impressed if a friend hacked into a bank’s website and replaced the homepage with a cartoon and one in ten would be impressed if a friend hacked into an airport’s traffic control systems.

There wasn’t any data on how many teenagers would say any old thing to shock a researcher. However, the first point is the most salient – over one in ten suggest they’ve seen someone do something illegal electronically. So, if you’re a business owner or just concerned about your security it’s just as well to ensure that a number of previous clangers don’t affect you.

Managerial errors

Security is far from just electronic. A handful of things can go wrong because staff haven’t been briefed:

  • You protect all electronic copies of every sensitive document and someone prints one of them out – and leaves it on the printer for an hour before picking it up. Or leaves it in a hotel lobby, on a train…all of these things have happened and hard copy print isn’t protected or encrypted.
  • You have visitors to your company and one of your employees nips to the loo. This is fine as long as their screen saver covers anything sensitive pretty quickly, and as long as the screen saver is password protected so someone wiggling the mouse or pressing a key won’t be able to get at all the details.
  • Pet names, partner names and the word “password” have never been good passwords and it remains poor practice to keep the default PIN that came with your phone’s voicemail.

Finally, back on the technology side, if you have a small network and it’s big enough to have a network administrator, don’t forget to ensure their administrator password is changed frequently and not easy to guess. There have been instances in which this hasn’t been done, and that password controls the system that can change all the other passwords and lock you out.

A lot of it is common sense. The Gsec team will be looking to defend people from more sophisticated attacks – but never overlook the obvious.

The New Statesman will be publishing a supplement on Cybersecurity in the issue dated 26 February.

Guy Clapperton is the freelance journalist who edits the New Statesman’s Gibraltar hub. You can also find him in the Guardian, Computer Business Review and Professional Outsourcing which he edits.