The Minister of Industrialization and Trade (MIT) Hon Lucia Iipumbu recently introduced the Close Corporation Amendment Bill in parliament to modify the Close Corporation Act No. 26 of 1988 as an alternative to avoid Namibia from being graylisted.
It comes after Namibia recently undertook its second peer-review evaluation by the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) and the Financial Action Task Force (FATF), with the results identifying the need for a piecemeal amendment to the Act.
According to Iipumbu, the Ministry has recently begun the process of reviewing both the Close Corporations Act and the Companies Act via its implementing body, the Business Intellectual Property Authority.
They worked together to ensure that the new version of the Bill includes new definitions, requires close corporations to maintain beneficial owner registers, and provides for incidental matters.
“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,” the MIT minister affirmed in the National Assembly during her tabling of the Bill.
She explained that one of the government’s key roles is to ensure that the regulatory framework within which enterprises operate promotes growth, employment, innovation, stability, good governance, confidence, and international competitiveness, adding that if Namibia is unable to demonstrate sufficient progress at the end of the 12 months, the FATF may escalate the country for greylisting.
She further emphasized that Namibia must avoid this at all costs because it could result in a 7% drop in GDP, limited new foreign direct investment until the country is removed from the FATF greylist six months later, and possible termination of, or extreme and costly enhanced due diligence measures on correspondent banking relationships with the Bank of Namibia and commercial banks operating in Namibia.
Moreover, Iipumbu reaffirmed that while the government prioritizes these findings, it is also cognizant that the legislation should be thoroughly scrutinized, with an understanding of the role of close corporations in the 21st century and their role in the economy.
According to the minister, on 13 December last year, Cabinet approved the National Action Plan to remedy all of the flaws mentioned in Namibia’s mutual evaluation report, which involves amending various laws and introducing, including fast-tracking, new Bills.
“This process is progressing well following the completion of consultations with various stakeholders in various regions, and we project that the said consultations will conclude in mid-July 2023,” she added.
“The effective date for the commencement of the Close Corporation Amendment Bill will be upon publication in the Government Gazette,” she said.
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