We obtained a copy of the new draft law pertaining to a new reform of the code of commercial companies. This reform, if it will eventually take place, will not be the first. Five times already, the code included new provisions in 2000, 2001, 2005, two years later in 2007 and finally last in January when the commercial concept of holding was introduced. The new draft reform itself targets two main objectives. The first is to “achieve a balance between the imperatives of efficiency and effectiveness in the management of corporations in general and the management of public limited companies . The second objective and the most important in our view, as the Tunis Stock Exchange is boosted by the listing of a growing number of public limited companies, is “the protection of shareholders’ fundamental rights including the right to information and the right to take legal action by entitling them to sue for damages.
Managers of companies facing hardships, also subject to justice?
Many important reforms are being outlined by this draft bill underway which might spark the outcry of managers particularly those who keep being out of reach of the justice and will not certainly be in favour of this strong breath of transparency that the bill is trying to introduce .
One of these reforms deals with the rights and duties of heads of companies facing hardships. The 1995 bill puts such companies under legal protection even against the tax office , the social security fund, creditors and the press. It is used in many cases to evade law, paying and to launch other businesses.
The code of commercial companies’ article 121 governs such cases. Currently, the article states that “in case of initiation receivership or bankruptcy procedure, any person who, in fact, exerted the management powers in a company can be made liable for all or part of the social and liabilities subject to the prohibitions and disqualifications prescribed by law under the same conditions as the manager. ”
The new Article 121 under way could provide that “if a judicial reorganization or bankruptcy, shows a lack of equity, the court may, at the request of the administrator or trustee in bankruptcy or one creditor, involve jointly and severally or not, part of all liability of the manager or managers or any other officer within the limits of the amounts determined by the court. The court may also decide to ban the direct manager from directing any business or exercising any commercial activity for a period determined by the court. ” Finally, justice will be done and it will not be possible for some managers to be involved with impunity in mismanagement, to evade the tax and social security, to launch other businesses , knowing that such cases are real including recent ones!
Small shareholders entitled to file complaint!
The bill will also beef up the rights of shareholders, to have access to all documents of the company and no longer being (as it is currently the case in more than a Tunisian listed company listed a mere “third wheel of the cart”, utilised for the purposes of votes counting . The bill acknowledges, in its preamble, “the gaps in existing legislation that prevent shareholders from exercising and exerting adequately and properly their right to information and legal actions .
If the bill passes, if not challenged by bosses who will do everything to defend their right to non-transparency, non-questioning and slip through the net of justice, it should entitle shareholders to new rights including those to access to all documents relating to accounting or not. The bill will make it mandatory to specify in the deed of the formation of the company, where such documents are filed so that shareholders may consult them freely during work time. The draft bill includes also financial penalties for board members who won’t release these documents. This right of shareholders to have access to documents, should also apply to the auditor reports .
The right to complain individually too!
If the draft law which is revolutionary as far as shareholders’ rights are concerned will not be fiercely challenged bosses , it should entitle these small shareholders, to forward written questions to managers. If this were the case, Sotrapil, Stip and even Batam case would have been avoided. The draft bill (and we are pessimistic about its chances of success), is designed to entitle shareholders to the right ,in the event of litigation brought before justice, to call for a confrontation meeting with the managers to ask questions about their management. Article 121 relating to the liability of directors, currently under way, will also be extended to corporations. For the latter, only trustee are allowed to complain. Now and if the draft law passes (our pessimism is growing!), It will also be allowed to creditors to file a complaint. For public limited companies, it might even be possible to provide evidence of mismanagement, leaving it to the leader to prove otherwise.
Currently, the law acknowledges the right to complain, even before the company is in insolvency. The law, however, restricts that right to those who detain not less than 15% of the capital. If the draft law passes, the rate will drop to only 5% and 10% for public limited companies. The draft bill will also give right for complaints to be filed on an individual basis as well.
