Companies - Close Companies (Ss 248-276)

Link to law: http://www.elaws.gov.bw/desplaylrpage1.php?id=1307

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[Ch4201s126]

248. Formation of close company

(1) Anyone or more persons, but not exceeding five, who qualify for membership of a close company in terms of this Act, may form a close company by making application under subsection (3)(a).

(2) Any private company having not more than five shareholders, in this Part called "members", who qualify under section 249 for membership of a close company, may apply to the Registrar for the private company to be converted into a close company by making application under section 278.

(3) The application under subsection (1) for registration as a close company shall be made by application for registration under section 21 signed by all of the applicants.

(4) The application shall state in addition to the matters referred to in section 21-

(a) the size, expressed as a percentage of each member’s interest in the company;

(b) particulars of the contribution of each member in accordance with section 250 including-

(i) any amounts of money, and

(ii) a description and statement of the fair value of any property (whether corporeal or incorporeal) or any service referred to in section 250(1).

(c) the name and address of the person or firm which has consented in writing to be appointed as accounting officer of the close company pursuant to section 273.

(5) The application shall provide for the designation "CC" to be added to the name of the close company.

(6) The Registrar on being satisfied that the company is entitled to be registered as a close company shall enter the company on the register of close companies and the company shall thereupon be a close company under this Act.

(7) In this Part, unless the context otherwise requires-

"property" includes corporeal or incorporeal property;

249. Qualification for membership of and nature of business of a close company

(1) Subject to subsection (2) only individuals may be members of a close company and no corporate body or trustee in that capacity shall directly or indirectly (whether through the instrumentality of a nominee or otherwise) hold a member’s interest in a close company.

(2) In the case of a member who becomes insolvent, deceased or mentally disordered or is otherwise incapable or incompetent to manage his affairs that member’s interest may be held by the trustee, administrator, executor or curator or other legal personal representative of the member.

(3) A close company may not be established for or carry on the business of banking, or insurance but may otherwise be formed for and carry on any lawful business.

(4) The provisions of this Act, with the exception of the Ninth Schedule, shall apply mutatis mutandis to a close company, and references to shareholders shall be read as referring to members and references to directors or to the board read as referring to members collectively.

250. Contributions by members

(1) Every person who is to become a member of a close company upon its registration, shall make to the company an initial contribution of money, property, or services rendered in connection with and for the purposes of the formation and incorporation of the company, and particulars of such contribution shall be stated in the application for incorporation referred to in section 248(4).

(2) The amount or value of the members’ contributions, or of the contribution of any one or more members, may from time to time by agreement among all the members-

(a) be increased by additional contributions of money or property to the close company by existing members or, in terms of section 255 (1)(b), by a person becoming a member of a registered corporation; or

(b) be reduced, provided that a reduction by way of a repayment to any member shall comply with the provisions of section 258 and 259.

(3) Particulars of any increase or reduction of a member’s contribution in terms of subsection (2) shall be notified to the Registrar under section 261.

(4) Money or property referred to in subsection (1) or (2)(a) shall, in order to vest ownership thereof in the close company, be paid, delivered or transferred, as the case may be, to the company within a period of 90 days-

(a) after the date of registration of the company, in the case of an initial contribution referred to in subsection (1); or

(b) after the date of the registration of any notice of additional contribution referred to in section 261.

(5) An undertaking by a member to make an initial or an additional contribution to a corporation shall be enforceable by the close company in legal proceedings.

251. Postal address and registered office

(1) Every close company shall have in Botswana a postal address and an office to which, subject to subsection (2), all communications and notices to the company may be addressed.

(2) Any-

(a) notice, order, communication or other document which is in terms of this Act required or permitted to be served upon any company or member thereof, shall be deemed to have been served if it has been delivered at the registered office, or has been sent by certified or registered post to the registered office or postal address, of the company; and

(b) process which is required to be served upon any corporation or member thereof shall, subject to applicable provisions in respect of such service in any law, be served by so delivering or sending it.

252. Deregistration

(1) If the Registrar has reasonable cause to believe that a close company is not carrying on business or is not in operation, he shall serve on the company at its postal address a letter by certified post in which the company is notified thereof and informed that if the Registrar is not within 60 days from the date of his letter informed in writing that the company is carrying on business or is in operation, the company will, unless good cause is shown to the contrary, be deregistered.

(2) After the expiration of the period of 60 days mentioned in a letter referred to in subsection (1), or upon receipt from the company of a written statement signed by or on behalf of every member to the effect that the company has ceased to carry on business and has no assets or liabilities, the Registrar may, unless good cause to the contrary has been shown by the company, deregister that company.

(3) Where a company has been deregistered, the Registrar shall give notice to that effect in the Gazette, and the date of the publication of such notice shall be deemed to be the date of deregistration.

(4) The deregistration of a close company shall not affect any liability of a member of the close company to the company or to any other person, and such liability may be enforced as if the company were not deregistered.

(5) If a company is deregistered while having outstanding liabilities, the persons who are members of such company at the time of de-registration shall be jointly and severally liable for such liabilities.

(6) The Registrar may on application by any interested person, if he is satisfied that a company was at the time of its deregistration carrying on business or was in operation, or that it is otherwise just that the registration of the company be restored, restore the said registration.

(7) The Registrar shall give notice of the restoration of the registration of a company in the Gazette, and as from the date of such notice the company shall continue to exist and be deemed to have continued in existence as from the date of re-registration as if it were not deregistered.

253. Nature of member’s interest

(1) The interest of any member in a close company shall be a single interest expressed as a percentage and shall be moveable property which shall be transferable in the manner provided by this Act.

(2) Two or more persons shall not be joint holders of the same member’s interest in a close company.

254. Representation of members

(1) A minor who is a member of a close company, other than a minor over the age of 18 years whose guardian has lodged with the company a written consent to the minor’s participation in the company, shall be represented in the close company by his guardian.

(2) A married woman, whether subject to the marital power of her husband or not, shall require no representation or assistance to act as a member of a close company.

(3) A member subject to any other legal disability shall be represented in the close company by his duly appointed or authorised legal representative referred to in subsection (2) of section 249.

255. Acquisition of member’s interest by new member

(1) A person becoming a member of a close company shall acquire his member’s interest required for membership-

(a) from one or more of the existing members or his or their deceased or insolvent estates; and

(b) pursuant to a contribution made by such person to the close company, in which case the percentage of his member’s interest is determined by agreement between him and the existing members, and the percentages of the interests of the existing members in the close company shall be reduced in accordance with the provisions of section 258.

(2) The contribution referred to in subsection (1)(b) may consist of an amount of money, or of any property of a value agreed upon by the person concerned and the existing members.

256. Disposal of interest of insolvent member

(1) Notwithstanding any provision to the contrary in the constitution or other agreement between members, a trustee of the insolvent estate of a member of a close company may, in the discharge of his duties, sell that member’s interest-

(a) to the close company if there are one or more members other than the insolvent member;

(b) to the members of the close company other than the insolvent member, in proportion to their member’s interests or as they may otherwise agree upon; or

(c) subject to the provisions of subsection (2), to any other person who qualifies for membership of a close company in terms of section 249.

(2) If the close company concerned has one or more members other than the insolvent, the following provisions shall apply to a sale in terms of subsection (1)(c) of the insolvent member’s interest-

(a) the trustee shall deliver to the close company a written statement giving particulars of the name and address of the proposed purchaser, the purchase price and the time and manner of payment thereof;

(b) for a period of 28 days after the receipt by the close company of the written statement the close company or the members, in such proportions as they may agree upon, shall have the right, exercisable by written notice to the trustee, to be substituted as purchasers of the whole, and not a part only, of the insolvent member’s interest at the price and on the terms set out in the trustee’s written statement; and

(c) if the insolvent member’s interest is not purchased in terms of paragraph (b), the sale referred to in the trustee’s written statement shall become effective and be implemented.

(3) The provisions of this section shall apply mutatis mutandis to any attachment and sale in execution of a member’s interest in a close company.

257. Disposal of interest of deceased member

Subject to any other arrangement in the constitution an executor of the estate of a member of a close company who is deceased shall, in the performance of his duties-

(a) cause the deceased member’s interest in the close company to be transferred to a person who qualifies for membership of a close company in terms of section 249 and is entitled thereto as legatee or heir or under a redistribution agreement, if the remaining member or members of the close company (if any) consent to the transfer of the member’s interest to such person; or

(b) if any consent referred to in paragraph (a) is not given within 28 days after it was requested by the executor, sell the deceased member’s interest-

(i) to the close company, if there is any other member or members than the deceased member,

(ii) to any other remaining member or members of the close company in proportion to the interests of those members in the close company or as they may otherwise agree upon, or

(iii) to any other person who qualifies for membership of a close company in terms of section 249, in which case the provisions of subsection (2) of section 256 shall mutatis mutandis apply in respect of any such sale.

258. Maintenance of aggregate of members’ interest

The aggregate of the members’ interests in a close company expressed as a percentage shall at all times be one hundred per cent, and for that purpose-

(a) any transfer of the whole, or a portion, of a member’s interest shall be effected by the cancellation or the reduction, as the case may be, of the interest of the member concerned and the allocation in the name of the transferee, if not already a member, of a member’s interest of the percentage concerned, or the addition to the interest of an existing member of the percentage concerned;

(b) when a person becomes a member of a close company pursuant to a contribution made by him to the company, the percentage of his member’s interest shall be agreed upon by him or her and the existing members, and the percentages of the interests of the existing members shall be reduced proportionally or as they may otherwise agree; and

(c) any member’s interest acquired by the close company shall be added to the respective interests of the other members in proportion to their existing interests or as they may otherwise agree.

259. Payment by close company for members’ interest acquired

(1) Payment by a close company in respect of its acquisition of a member’s interest in the company shall be made only-

(a) with the previously obtained written consent of every member of the company, other than the member whose interest is acquired, for the specific payment;

(b) if, after such payment is made, the company’s assets, fairly valued, exceed all its liabilities;

(c) if the company is able to pay its debts as they become due in the ordinary course of its business; and

(d) if such payment will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

(2) For the purposes of subsection (1) "payment" shall include the delivery or transfer of any property.

260. Financial assistance by close company in respect of acquisition of members’ interest

A close company may give financial assistance (whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise) for the purpose of, or in connection with, any acquisition of a member’s interest in that company by any person, only-

(a) with the previously obtained written consent of every member of the company for the specific assistance;

(b) if, after such assistance is given, the company’s assets, fairly valued, exceed all its liabilities;

(c) if the company is able to pay its debts as they become due in the ordinary course of its business; and

(d) if such assistance will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

261. Registration of changes

(1) Whenever any change has been made or has occurred in any of the following particulars the members of a close company shall within 30 days give notice in writing containing particulars of the change to the Registrar-

(a) the constitution;

(b) the registered office;

(c) the names and addresses of each member;

(d) the name and address of any person who becomes a member and of the size expressed as a percentage of that person’s interest as a member;

(e) the name of any person ceasing to be a member;

(f) the name and address of the accounting officer;

(g) the name of the close company;

(h) the financial year;

(i) the making of any additional contribution to the close company by a member or the reduction in any contribution; and

(j) the change in the percentage of a member’s interest in the close company.

(2) If the members of a close company fail to comply with any of the requirements of subsection (1) each member shall be guilty of an offence and liable to the penalty set out in section 492(1).

262. Management

(1) A close company shall -

(a) have no directors or a board and Part X, other than section 160, shall not apply to a close company; and

(b) convert to a private company under section 279 should it desire to have directors.

(2) The management of a close company shall be vested in its members which, unless otherwise provided in its constitution, shall be in proportion to the percentage of their respective interests in the close company, as adjusted from time to time to properly reflect any additional contributions or reduction of interest by the members.

(3) The members of a close company may delegate the management of the company to a manager or managers who shall be appointed by unanimous agreement of the members on the terms and conditions provided for in that agreement or in accordance with such procedure and on such terms and conditions as is provided in the constitution.

(4) Subject to subsection (5), every member of a close company shall, in relation to a person who is dealing with the company and is not a member, be an agent of the company.

(5) A close company shall be bound by any act of a member or manager of the close company, whether or not such act is performed for the carrying out of the business of the company, unless the member or manager so acting has in fact no authority to act for the company in the particular matter and the person with whom the member or manager dealt, has or ought reasonably to have, knowledge of the fact that the member or manager has no such authority.

263. Meetings

A close company may make the decisions and take any steps which are required by this Act to be made by ordinary or special resolution in any of the following ways-

(a) by an ordinary or special resolution at a meeting of members called and conducted in the way required by the Act or the constitution of the company;

(b) by a resolution in lieu of meeting; or

(c) in relation to any matters which can be entered into or done by way of unanimous agreement under section 247 then by way of such unanimous agreement.

264. Fiduciary position of members

(1) Each member of a close company stands in a fiduciary relationship towards the company and his fellow members.

(2) Without prejudice to the generality of subsection (1) of this section -

(a) every member of a close company is bound to render to every other member full information on all things affecting the company;

(b) every member of a close company shall account to the company for any benefit derived by him without the consent of the other members from any transaction concerning the company or from any use by him of the company’s property, name or business connection; and

(c) if a member of a close company, without the consent of the other members, directly or indirectly carries on any business of the same nature as, and competing with, that of the company, he shall account for and pay over to the company all profits made by him in that business.

(2) A close company need not keep an Interests Register.

265. Payments by close company to members

(1) Any payment by a close company to any member by reason only of his membership, may be made only-

(a) if, after such payment is made, the company’s assets, fairly valued, exceed all its liabilities;

(b) if the company is able to pay its debts as they become due in the ordinary course of its business; and

(c) if such payment will in the particular circumstances not in fact render the company unable to pay its debts as they become due in the ordinary course of its business.

(2) A member shall be liable to a close company for any payment received contrary to any provision of subsection (1).

(3) For the purposes of this section-

(a) without prejudice to the generality of the expression "payment by a close company to any member by reason only of his membership", that expression-

(i) shall include a distribution, or a repayment of any contribution, or part thereof, to a member, but

(ii) shall exclude any payment to a member in his capacity as a creditor of the relevant close company and, in particular, a payment as remuneration for services rendered as an employee or officer of the company, a repayment of a loan or of interest thereon or a payment of rental; and

(b) "payment" shall include the delivery or transfer of any property.

266. Prohibition of loans and furnishing of security to members and others by close company

(1) A close company shall not, directly or indirectly, make a loan -

(a) to any of its members;

(b) to any other company in which one or more of its members together hold more than a 50 per cent interest; or

(c) to any other company (except a close company) controlled by one or more members of the close company,

and shall not provide any security to any person in connection with any obligation of any such member, or other close company, or other company.

(2) The provisions of subsection (1) shall not apply in respect of the making of any particular loan or the provision of any particular security with the express previously obtained consent in writing of all the members of a close company.

(3) Any member of a close company who authorises or permits or is a party to the making of any loan or the provision of any security contrary to any provision of this section-

(a) shall be liable to indemnify the close company and any other person who had no actual knowledge of the contravention against any loss directly resulting from the invalidity of such loan or security; and

(b) shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(2).

(4) A company shall be treated for the purposes of subsection (1)(c) as being controlled by one or more members of a close company if the same factors are present as would result in a company being controlled by another company under section 7.

(5) In this section the term-

(a) "loan" includes-

(i) a loan of any property, and

(ii) any credit extended by a close company where the debt concerned is not payable or is not being paid in accordance with normal business practice in respect of the payment of debts of the same kind; and

(b) "security" includes a guarantee.

267. Liability of members for negligence

(1) A member of a close company shall be liable to the company for loss caused by his failure in the carrying out of the business of the company to act with the degree of care and skill that may reasonably be expected from a person of his knowledge and experience.

(2) Liability referred to in subsection (1) shall not be incurred if the relevant conduct was preceded or followed by the written approval of all the members where such members had or have knowledge of all the material facts.

268. Rules applying to internal relations in the absence of contrary agreement

The following rules shall apply to the relations between members of a close company insofar as this Act or the constitution in respect of the close company does not provide otherwise-

(a) every member shall be entitled to participate in the carrying on of the business of the company;

(b) subject to the provision of section 262 and of paragraph (d), members shall have the right to participate in the management of the business of the company and in regard to the power to represent the company in the carrying on of its business:

Provided that the consent in writing of a member holding a member’s interest of at least 75 per cent, or of members holding together at least that percentage of the member’s interests, in the company, shall be required for -

(i) a change in the principal business carried on by the company,

(ii) a disposal of the whole, or substantially the whole, undertaking of the company,

(iii) a disposal of all, or the greater portion of, the assets of the company, and

(iv) any acquisition or disposal of immovable property by the company;

(c) differences between members as to matters connected with a close company’s business shall be decided by majority vote at a meeting of members of the company;

(d) at any meeting of members of a close company each member shall have the number of votes that corresponds with the percentage of his interest in the close company;

(e) all the members are entitled to share in the capital and profits of the close company in proportion to their respective interests in the company;

(f) a close company shall indemnify every member in respect of expenditure incurred or to be incurred by him-

(i) in the ordinary and proper conduct of the business of the company, and

(ii) in regard to anything done or to be done for the preservation of the business or property of the company; and

(g) distributions by a close company to its members by reason only of their membership in terms of section 265 shall be of such amounts and be effected at such times as the members may from time to time agree upon, and such payments shall be made to members in proportion to their respective interests in the company.

269. Disqualification of persons regarding management of close company

(1) Notwithstanding any other provision of this Act or the constitution of a close company, the following persons shall be disqualified from taking part in the management of a close company-

(a) any person under legal disability, except-

(i) ......

(ii) a minor who has attained at least the age of 18 years and whose guardian has lodged with the company a written consent to the minor’s participation in the management of the business of the company;

(b) save under authority of a court-

(i) an un-rehabilitated insolvent,

(ii) any person removed from an office of trust on account of misconduct, and

(iii) any person who has at any time been convicted of theft, fraud, forgery or uttering a forged document, perjury, or any offence involving dishonesty or in connection with the formation or management of a company, and has been sentenced in relation to such conviction to imprisonment for at least six months without the option of a fine; and

(c) any person who is subject to any order of a court under this Act or the repealed Act disqualifying him from being a director of a company.

(2) Any person disqualified under the provisions of subsection (1)(b) or (c) who directly or indirectly takes part in or is concerned with the management of any close company, shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(2).

270. Accounting records

(1) A close company shall keep in the English language such accounting records as are necessary fairly to present the state of affairs and business of the company, and to explain the transactions and financial position of the business of the company, including-

(a) records showing its assets and liabilities, members’ contributions, undrawn profits, revaluations of fixed assets and amounts of loans to and from members;

(b) a register of fixed assets showing in respect thereof the respective dates of any acquisition and the cost thereof, depreciation (if any), and where any assets have been revalued, the date of the revaluation and the revalued amount thereof, the respective dates of any disposals and the consideration received in respect thereof:

Provided that in the case of a close company which has been converted from a private company, the existing fixed asset register of the company shall be deemed to be such a register in respect of the close company, and such particulars therein shall be deemed to apply in respect of it;

(c) records containing entries from day to day of all cash received and paid out, in sufficient detail to enable the nature of the transactions and, except in the case of cash sales, the names of the parties to the transactions to be identified;

(d) records of all goods purchased and sold on credit, and services received and rendered on credit, in sufficient detail to enable the nature of those goods or services and the parties to the transactions to be identified;

(e) statements of the annual stocktaking, and records to enable the value of stock at the end of the financial year to be determined; and

(f) vouchers supporting entries in the accounting records.

(2) The accounting records relating to-

(a) contributions by members;

(b) loans to and from members; and

(c) payments to members, shall contain sufficient detail of individual transactions to enable the nature and purpose thereof to be clearly identified.

(3) The accounting records referred to in subsection (1) shall be kept in such a manner as to provide adequate precautions against falsification and to facilitate the discovery of any falsification.

(4) The accounting records shall be kept at the place or places of business or at the registered office of the close company and shall, wherever kept, be open at all reasonable times for inspection by any member.

(5) Any close company which fails to comply with any provision of any of the preceding subsections of this section, and every member thereof who is a party to such failure or who fails to take all reasonable steps to secure compliance by the company with any such provision, shall be guilty of an offence and liable to the penalty set out in section 492(2).

(6) In any proceedings against any member of a close company in respect of an offence consisting of a failure to take reasonable steps to secure compliance by a close company with any provision referred to in subsection (5), it shall be a defence if it is proved that-

(a) the accused had reasonable grounds for believing and did believe that a competent and reliable person was charged with the duty of seeing that any such provision was complied with;

(b) such person was in a position to discharge that duty; and

(c) that the accused had no reason to believe that such person had in any way failed to discharge that duty.

271. Financial year of close company

(1) A close company shall-

(a) determine a date on which, in each year, its financial year will end; and

(b) cause the financial year of the company to be its annual accounting period.

(2) The date referred to in subsection (1)(a) may, subject to the provisions of section 261, be changed by the company to any other date:

Provided that the close company may not change the date referred to in subsection (1)(a) more than once in any financial year.

(3) Subject to any increase or reduction of the duration of a financial year by reason of the provisions of subsection (4), the duration of each financial year of a close company shall be 12 months ending on the date or other date referred to in subsection (1)(a) or (2).

(4) Notwithstanding the provisions of subsection (3)-

(a) the first financial year of a close company shall commence on the date of its registration and shall end on the date referred to in subsection (1)(a) occurring not less than three nor more than 15 months after the date of registration:

Provided that the first financial year of any close company which has converted from an existing private company in terms of section 248 shall end on the date on which the financial year of the private company would have ended had it not been so converted; and

(b) in the case of a close company which has in terms of subsection (2) changed the date referred to in subsection (1)(a), the financial year shall commence at the end of the previous financial year and shall end on the date as changed occurring not less than three nor more than 18 months after the end of that previous financial year.

272. Annual financial statements

(1) The members of a close company shall within five months after the end of every financial year of the company cause annual financial statements in respect of that financial year to be made out in the English language.

(2) The annual financial statements of a close company-

(a) shall consist of-

(i) a balance sheet and any notes thereon, and

(ii) an income statement or any similar financial statement where such form is appropriate, and any notes thereon;

(b) shall be in conformity with generally accepted accounting principles, appropriate to the business of the company, fairly present the state of affairs of the company as at the end of the financial year concerned, and the results of its operations for that year;

(c) shall disclose separately the aggregate amounts, as at the end of the financial year, of contributions by members, undrawn profits, revaluations of fixed assets and amounts of loans to or from members, and the movements in these amounts during the year;

(d) shall be in agreement with the accounting records, which shall be summarised in such a form that-

(i) compliance with the provisions of this subsection is made possible, and

(ii) an accounting officer is enabled to report to the company in terms of section 276 (1) without it being necessary to refer to any subsidiary accounting records and vouchers supporting the entries in the accounting records:

Provided that nothing contained in this paragraph shall be construed as preventing an accounting officer, if he deems it necessary, from inspecting such subsidiary accounting records and vouchers; and

(e) shall contain the report of the accounting officer referred to in section 276.

(3) The annual financial statements shall be approved and signed by or on behalf of a member holding a member’s interest of at least 51 per cent, or members together holding members’ interests of at least 51 per cent, in the company.

(4) A close company which in respect of its last preceding financial year satisfies the criteria referred to in the definition of "exempt private company" in section 2(4) shall comply with the obligations of an exempt private company in relation to its financial statements and the provisions relating to auditors in all respects as if it were a non-exempt private company and sections 2(4) and 190 to 211 shall apply to such a close company.

(5) Any member of a close company who fails to take all reasonable steps to comply or to secure compliance with any provision of this section, shall be guilty of an offence and liable on conviction to the penalty set out in section 492(2).

(6) In any proceedings against any member of a close company under subsection (5) the defence referred to in section 270(6) shall be available to him.

273. Appointment of accounting officers

(1) Subject to subsection (7) every close company shall appoint an accounting officer in accordance with the provisions of this Part.

(2) The appointment of the first accounting officer of a close company shall take effect on the date of registration of the close company.

(3) If a vacancy occurs in the office of an accounting officer, whether as a result of a removal, resignation or otherwise, the close company shall within 28 days appoint another accounting officer and comply with the provisions of this Part.

(4) A close company shall inform its accounting officer in writing of his removal from office.

(5) An accounting officer shall on resignation or removal from office forthwith inform every member of the close company thereof in writing, and shall send a copy of the letter to the last known address of the registered office of the close company and shall in addition forthwith by certified post inform the Registrar-

(a) that he has resigned or been removed from office;

(b) of the date of his resignation or removal from office;

(c) of the date up to which he performed his duties; and

(d) whether, at the time of the resignation or removal from office of the accounting officer, that officer was aware of any matters in the financial affairs of the close company which are in contravention of the provisions of this Act, and where that accounting officer was aware of any such matter shall submit the full particulars thereof in writing to the Registrar.

(6) If an accounting officer who has been removed from office is of the opinion that he was removed for improper reasons, he shall forthwith by certified post inform the Registrar thereof, and shall send a copy of the letter to every member.

(7) Where a close company is receiving accounting advice and assistance, which includes an equivalent service to that required of an accounting officer under section 276, through a programme for small business administered or approved by the Ministry responsible for trade and industry the Registrar shall be given notice by the Director or officer from the Ministry responsible for providing the programme of the fact that such assistance is being given and until further notice is given by such Director or officer to the Registrar that this advice and assistance has been withdrawn the close company need not appoint an accounting officer under this section:

Provided that the provisions of this section shall not apply from after the expiry of the third financial year of a close company following its incorporation.

274. Qualifications of accounting officers

(1) Subject to section 273(7), no person shall be appointed as or hold the office of an accounting officer of a close company, unless that person is a member of the Botswana Institute of Accountants and is ordinarily resident in Botswana.

(2) A member or employee of a close company, or a firm whose partner or employee is a member or employee of a close company, shall not qualify for appointment as an accounting officer of such company unless all the members consent in writing to such appointment.

(3) A firm or corporation may be appointed as an accounting officer of a close company, provided that-

(a) at least one member of the firm or director of the corporation is ordinarily resident in Botswana; and

(b) the members of the firm or directors of the corporation who accept responsibility for the work of the firm or corporation as accounting officer are qualified to act as accounting officer under subsection (1).

275. Right of access and remuneration of accounting officers

(1) An accounting officer of a close company shall at all times have a right of access to the accounting records and all the books and documents of the close company, and to require from members such information and explanations as he considers necessary for the performance of his duties as an accounting officer.

(2) The remuneration of an accounting officer shall be determined by agreement with the close company.

276. Duties of accounting officers

(1) The accounting officer of a close company shall, not later than three months after completion of the annual financial statements-

(a) subject to the provisions of section 272, determine whether the annual financial statements are in agreement with the accounting records of the close company;

(b) review the appropriateness of the accounting policies represented to the accounting officer as having been applied in the preparation of the annual financial statements; and

(c) report in respect of paragraphs (a) and (b) to the members.

(2) An accounting officer of a close company may be engaged by the company to keep the company’s books and financial records and prepare its financial statements.

(3) If during the performances of his duties an accounting officer becomes aware of any contravention of a provision of this Act, he shall describe the nature of such contravention in his report.

(4) Where an accounting officer is a member or employee of the close company, or is a firm of which a partner or employee is a member or employee of the close company, or if the accounting officer has himself assisted in or had responsibility for keeping the company’s books and financial records or preparing its financial statements, his report shall state that fact.

(5) If an accounting officer of a close company-

(a) at any time knows, or has reason to believe, that the close company is not carrying on business or is not in operation and has no intention of resuming operations in the foreseeable future; or

(b) during the performance of his duties finds-

(i) that any change, during a relevant financial year, in respect of any particulars mentioned in the constitution (or in the absence of a constitution are required by this Act) has not been registered,

(ii) that the annual financial statements indicate that as at the end of the financial year concerned the close company’s liabilities exceed its assets, or

(iii) that the annual financial statements incorrectly indicate that as at the end of the financial year concerned the assets of the close company exceed its liabilities, or has reason to believe that such an incorrect indication is given,

he shall forthwith report in writing accordingly to the Registrar.

(6) If an accounting officer of a close company has in accordance with subparagraph (ii) or (iii) of paragraph (b) of subsection (5) reported to the Registrar that-

(a) the annual financial statements of the close company concerned indicate that as at the end of the financial year concerned the company’s liabilities exceed its assets;

(b) the annual financial statements incorrectly indicate that as at the end of the financial year concerned the assets of the company exceed its liabilities;

(c) he has reason to believe that such an incorrect indication is given, and he finds that any subsequent financial statements of the company concerned indicate that the situation-

(i) has changed, or

(ii) has been rectified and that the assets concerned then exceed the liabilities or that they no longer incorrectly indicate that the assets exceed the liabilities; or

(d) he no longer has reason to believe that such an incorrect indication is given, as the case may be, he may report to the Registrar accordingly.