Home›Law Series›Company Law
Company Law
One hundred and eighty-five questions and answers on the Companies Act 1997 - forming a company, shares and shareholders, directors and their duties, records and reporting, charges, amalgamations, receivership, liquidation, removal from the register, overseas companies and offences - plus the Insolvency Act (Chapter 253) on personal insolvency and the Investment Promotion Act 1992 on foreign investment.
A company is a legal person separate from the people who own it and the people who run it. In Papua New Guinea companies are governed by the Companies Act 1997, which sets out how a company is formed, what its constitution may do, how shares are issued and transferred, what shareholders may decide, what duties directors owe and to whom, what records and accounts must be kept, and what happens when a company is sold, restructured, put into receivership, wound up or struck off. This series works through the Act section by section in plain language.
Jump to a subject
89 questions and answers, grouped by subject.
- What a company is — 6 questions
- Forming a company — 8 questions
- The company constitution — 2 questions
- Shares and distributions — 11 questions
- Shareholders and their rights — 5 questions
- Directors and their duties — 10 questions
- Enforcing rights against the company — 1 question
- Running the company day to day — 6 questions
- Accounts, reporting and audit — 6 questions
- Charges, amalgamations and compromises — 4 questions
- Receiverships — 3 questions
- Liquidations — 5 questions
- Striking off, restoration and overseas companies — 5 questions
- The Registrar, offences and disqualification — 2 questions
- Personal insolvency under the Insolvency Act — 2 questions
- Foreign investment and the Investment Promotion Authority — 13 questions
What a company is
Separate legal personality, capacity and powers, the solvency test, holding companies and subsidiaries, and how the Act is put together.
What Is a Company?
Sections 11 and 16 of the PNG Companies Act 1997: separate legal personality, the four essential requirements of a company, and what separateness means in practice.
Read the answer → No. 2What Does the Companies Act Cover?
An overview of the PNG Companies Act 1997: its twenty-four Parts, the key definitions, how it interacts with other legislation, and where to find what.
Read the answer → No. 3What Can a Company Do? Capacity and Powers
Sections 17 and 18 of the PNG Companies Act 1997: full capacity and powers, restrictions in a constitution, and why acts outside the company’s powers are still valid.
Read the answer → No. 5What Is the Solvency Test?
Section 4 of the PNG Companies Act 1997: the two-limb solvency test, what directors must have regard to, contingent liabilities, and every transaction that depends on it.
Read the answer → No. 6What Is a Holding Company and a Subsidiary?
Sections 5, 6 and 7 of the PNG Companies Act 1997: the four control tests, what “control of the board” means, shares that are disregarded, and why the definition matters.
Read the answer → No. 8Who Is the Registrar of Companies?
Part XXI of the PNG Companies Act 1997: the Registrar and Deputy Registrars, the register, registration of documents, inspection and investigation powers, and appeals.
Read the answer →Forming a company
Essential requirements, the application, the certificate of incorporation, company names, and pre-incorporation contracts.
How Do I Register a Company?
Sections 12 to 15 of the PNG Companies Act 1997: who may apply, what the application must contain, the signed consents required by section 13A, and the effect of the certificate.
Read the answer → No. 10How Do I Choose and Reserve a Company Name?
Sections 21 and 23 of the PNG Companies Act 1997: the reservation requirement, how to apply, what the Registrar must tell you, and how a company name relates to business names and trade marks.
Read the answer → No. 12How Do I Change a Company Name?
Section 24 of the PNG Companies Act 1997: the special resolution requirement, the new certificate of incorporation, and why a change of name changes nothing about the company itself.
Read the answer → No. 13Can the Registrar Make Me Change My Company Name?
Section 25 of the PNG Companies Act 1997: directions to change a company name, the minimum notice period, the Registrar’s power to select a name, and how to respond.
Read the answer → No. 15What Are Pre-Incorporation Contracts?
Sections 157 and 158 of the PNG Companies Act 1997: the definition, ratification, the implied warranties given by the promoter, and the measure of damages.
Read the answer → No. 17How Does a Company Enter Into a Contract?
Sections 155 and 156 of the PNG Companies Act 1997: the three methods of contracting, the common seal, official seals for use overseas, and company attorneys.
Read the answer → No. 18What Must I Do After My Company Is Incorporated?
A practical checklist of the first obligations of a new PNG company under the Companies Act 1997 — shares, registers, records, accounts, the annual return and external requirements.
Read the answer → No. 19What Happened to Companies Registered Before the 1997 Act?
Part XXIV of the PNG Companies Act 1997: election to register, deemed registration, compensation for prejudiced members, and the continuity of existing documents, registers and appointments.
Read the answer →The company constitution
Whether you need one, what it may contain, how it binds, and how it is adopted, altered and revoked.
Does a Company Need a Constitution?
Sections 27 to 29 of the PNG Companies Act 1997: the optional constitution, what the Act supplies by default, and how to decide whether your company needs one.
Read the answer → No. 21What Can Go in a Company Constitution?
Sections 30 and 31 of the PNG Companies Act 1997: the form a constitution takes, what it may contain, the section 17(2) restriction, and what cannot be included.
Read the answer →Directors and their duties
Who is a director, the powers of the board, major transactions, the four core duties, self-interested transactions, appointment, removal, remuneration and indemnity.
What Is a Major Transaction?
Section 110 of the PNG Companies Act 1997: the three limbs of the definition, valuing contingent liabilities, the floating charge exception, and the receiver exception.
Read the answer → No. 57Can the Board Delegate Its Powers?
Section 111 of the PNG Companies Act 1997 and Schedule 3: the power to delegate, the non-delegable powers, and the two conditions for escaping responsibility.
Read the answer → No. 58What Duties Do Directors Owe?
Sections 112, 113 and 114 of the PNG Companies Act 1997: the duty of good faith and best interests, the group and joint venture exceptions, employees’ interests, and the duty to comply.
Read the answer → No. 59What Standard of Care Does a Director Owe?
Section 115 of the PNG Companies Act 1997: the objective care and diligence standard, the four-limb business judgment rule, rationality, and criminal negligence.
Read the answer → No. 61What Must a Director Disclose About an Interest?
Sections 117 and 118 of the PNG Companies Act 1997: when a director is “interested”, the security exception, the disclosure obligation, general notices and the ordinary-course exemption.
Read the answer → No. 62What Happens if a Director Was Interested in a Transaction?
Sections 119 and 120 of the PNG Companies Act 1997: avoidance of interested transactions, the fair value defence, the onus of proof, and protection of third parties.
Read the answer → No. 63Can a Director Use Company Information?
Section 123 of the PNG Companies Act 1997: the restriction on disclosing or using company information, the nominee director exception, and board-authorised use.
Read the answer → No. 67How Are Directors Appointed?
Sections 131, 132 and 133 of the PNG Companies Act 1997: appointment of first and subsequent directors, the Court’s power to appoint, and the rule against bundled appointment resolutions.
Read the answer → No. 68How Is a Director Removed?
Sections 134 and 135 of the PNG Companies Act 1997: removal by ordinary resolution, the notice requirement, the five ways an office is vacated, resignation, and continuing liability.
Read the answer → No. 69How Do I Notify a Change of Directors?
Sections 136 and 137 of the PNG Companies Act 1997: validity of a director’s acts despite a defective appointment, the notice of change, the time limits, and the signed consent to be kept.
Read the answer →Enforcing rights against the company
Injunctions, derivative actions, personal and representative actions, the prejudiced shareholder remedy, and ratification.
Running the company day to day
Contracting, the registered office, company records, the address for service, the secretary, the annual return, and inspection of records.
What Records Must a Company Keep?
Sections 164, 165 and 166 of the PNG Companies Act 1997: the company records, keeping them elsewhere, the form they must take, anti-falsification measures, and inspection by directors.
Read the answer → No. 83What Is an Address for Service?
Sections 167 and 168 of the PNG Companies Act 1997: the address for service, how it must be described, changing it, and how it differs from the registered office.
Read the answer → No. 84Does a Company Need a Secretary?
Sections 169 and 170 of the PNG Companies Act 1997: the optional secretary, residence, who may act in the secretary’s absence, appointment and removal, and the notice obligations.
Read the answer → No. 85What Is the Annual Return?
Section 215 of the PNG Companies Act 1997: the annual return, the allocated month, the exemptions, the audited accounts, and the offences for failing to file.
Read the answer → No. 87What Information Can a Shareholder Demand?
Section 219 of the PNG Companies Act 1997: a shareholder’s request for information, the four possible responses, the grounds of refusal, charges, and the Court’s power to compel.
Read the answer → No. 89How Are Documents Served on a Company?
Sections 431 to 436 of the PNG Companies Act 1997: service on companies and overseas companies, service on shareholders and creditors, deemed receipt, and proving service.
Read the answer →Accounts, reporting and audit
Financial statements, group accounts, accounting records, the annual report, auditors and the Accounting Standards Board.
What Accounting Records Must a Company Keep?
Sections 188 and 189 of the PNG Companies Act 1997: the four objectives, the specific entries required, the form, the ten-year retention, and where the records may be kept.
Read the answer → No. 93Does My Company Need an Auditor?
Sections 190 to 198 of the PNG Companies Act 1997: appointment of auditors, fees, partnerships, qualifications and disqualifications, automatic reappointment, replacement and resignation.
Read the answer → No. 94What Does an Auditor Do?
Sections 199 to 203 of the PNG Companies Act 1997: the auditor’s report on reporting and exempt companies, the duty to report non-compliance to the Registrar, access to information, and attendance at meetings.
Read the answer → No. 95What Must Go in a Company’s Annual Report?
Sections 209 to 214 of the PNG Companies Act 1997: the annual report obligation, the waiver, sending it to shareholders, its contents, and the effect of a failure to send.
Read the answer → No. 96What Is the Accounting Standards Board?
Sections 204 to 208 of the PNG Companies Act 1997: the Accounting Standards Board, its membership, functions, approval and revocation of standards, and certificates.
Read the answer → No. 97What Happens if the Accounts Are Not Prepared or Audited?
Sections 183 to 187 of the PNG Companies Act 1997 and the surrounding consequences: the offences, filing failures, section 348A liability, and what a director should do to fix a lapse.
Read the answer →Charges, amalgamations and compromises
Registering charges and their priority, amalgamations, compromises with creditors, and court-approved arrangements.
What Is a Charge, and Why Must It Be Registered?
Sections 221 and 222 of the PNG Companies Act 1997: the registrable charges, the two-month deadline, the consequence of non-registration, debenture series and the anti-avoidance rule.
Read the answer → No. 101How Is a Charge Released From the Register?
Section 227 of the PNG Companies Act 1997: memoranda of satisfaction and release, who may lodge one, the evidence required, and how to correct the register if a release is refused.
Read the answer → No. 103What Is an Amalgamation?
Sections 232, 233 and 234 of the PNG Companies Act 1997: what an amalgamation is, what the proposal must contain, the board resolutions and certificates, and the approval process.
Read the answer → No. 104What Is a Short Form Amalgamation?
Section 235 of the PNG Companies Act 1997: the two short form routes, the required content of the board resolutions, notice to secured creditors, and the certificate.
Read the answer →Receiverships
Appointing a receiver, the receiver's powers and duties, reports, preferential claims, liability and court supervision.
What Is a Receivership?
Sections 254 to 258, 263 and 266 of the PNG Companies Act 1997: what a receiver is, how one is appointed, the agency relationship, and the validity of a receiver’s acts.
Read the answer → No. 113What Powers Does a Receiver Have?
Sections 262, 264, 265 and 267 of the PNG Companies Act 1997: obtaining documents and information, the statutory powers of a receiver, calls on shares, and Court-authorised sales.
Read the answer → No. 118Who Gets Paid First in a Receivership?
Sections 279 and 280 of the PNG Companies Act 1997: the priority of preferential claims in a receivership under a floating charge, and a receiver’s position once the company goes into liquidation.
Read the answer →Liquidations
Putting a company into liquidation, the liquidator's duties and powers, inability to pay debts, statutory demands, voidable transactions, insolvent trading and creditors' claims.
What Is a Liquidation?
Sections 290 to 292, 298 and 299 of the PNG Companies Act 1997: how a liquidation commences, the three appointment routes, the effect of commencement, and when a liquidation is complete.
Read the answer → No. 120Who Can Apply to Put a Company Into Liquidation?
Sections 291(2)(c), 296, 297 and 300 to 302 of the PNG Companies Act 1997: applying to the Court for the appointment of a liquidator, interim liquidators, stays, termination, and creditors who have started execution.
Read the answer → No. 121Must a Liquidator Call a Meeting of Creditors?
Sections 293 to 295A, 362 and 363 of the PNG Companies Act 1997: the first meeting of creditors, dispensing with it, related-creditor voting, and liquidation committees.
Read the answer → No. 122What Does a Liquidator Do?
Sections 303 to 310A of the PNG Companies Act 1997 and Schedule 8: the liquidator’s principal duty, reporting obligations, duty to report offences, and statutory powers.
Read the answer → No. 128When Is a Company Unable to Pay Its Debts?
Sections 335 and 336 of the PNG Companies Act 1997: the presumptions of inability to pay debts, the one-month rule for statutory demand evidence, contingent liabilities, and applications by contingent creditors.
Read the answer →Striking off, restoration and overseas companies
Removal from the register, what happens to the property, restoration, and the rules for overseas companies carrying on business here.
When Can a Company Be Struck Off the Register?
Sections 365 and 366 of the PNG Companies Act 1997: what removal from the register is, and the seven grounds on which the Registrar may remove a company.
Read the answer → No. 137How Is a Company Removed From the Register?
Sections 367 to 372 of the PNG Companies Act 1997: the notice procedures for removal from the register, objections, the Court’s power, and the Registrar as representative of a defunct company.
Read the answer → No. 139Can a Struck-Off Company Be Restored?
Sections 378 to 381 of the PNG Companies Act 1997: restoration by the Registrar, restoration by the Court, the effect of restoration, and the revesting of property including land.
Read the answer → No. 140Does a Foreign Company Need to Register in PNG?
Sections 382 to 387 of the PNG Companies Act 1997: what counts as carrying on business, the duty to register, name reservation, registration for name protection, and the application requirements.
Read the answer → No. 141What Must an Overseas Company Do in PNG?
Sections 388 to 393 of the PNG Companies Act 1997 and Schedule 12: name disclosure, notifying changes, financial reporting, annual returns, ceasing to carry on business, and liquidation of PNG assets.
Read the answer →The Registrar, offences and disqualification
The Registrar's powers, inspections and appeals, penalties, false statements, fraudulent trading, disqualification from managing companies, and phoenix companies.
What Happens if Someone Makes a False Statement?
Section 420 of the PNG Companies Act 1997: false statements in documents and in reports about a company’s affairs, who they may be made to, and the deemed authorisation by voting.
Read the answer → No. 147Who Is Banned From Managing a Company?
Sections 425 to 429 of the PNG Companies Act 1997: automatic prohibition, Court disqualification orders, Registrar prohibition notices, and personal liability for acting in contravention.
Read the answer →Personal insolvency under the Insolvency Act
The Insolvency Act (Chapter 253): creditors' petitions and debtors' petitions, acts of insolvency, the Official Receiver and trustees, the property divisible among creditors, priority of debts, discharge and compositions.
How Are Dividends Paid in an Insolvency?
Sections 121 to 128 of the PNG Insolvency Act (Chapter 253): declaring and notifying dividends, provision for distant creditors and undetermined claims, late proofs, future debts, actions for dividends, forfeiture, and the final dividend.
Read the answer → No. 169What Is a Liquidation by Arrangement or a Composition?
Part XIV of the PNG Insolvency Act (Chapter 253), sections 181 to 199: liquidation by arrangement, compositions with creditors, registration, the effect on creditors, and conversion to insolvency.
Read the answer →Foreign investment and the Investment Promotion Authority
The Investment Promotion Act 1992: who needs an IPA certificate, what counts as carrying on business, how to apply, reserved activities, changes of ownership, cancellation, participation in a national enterprise, investment guarantees, appeals and offences.
What Is the Investment Promotion Act?
An overview of the PNG Investment Promotion Act 1992: its purposes, the certification requirement, the Authority, and how the Act fits with the Companies Act 1997.
Read the answer → No. 172Who Is a Foreign Enterprise?
The definitions in section 3 of the PNG Investment Promotion Act 1992: enterprise, citizen, national enterprise, foreign enterprise, foreign investor and investment.
Read the answer → No. 173What Counts as Carrying on Business in PNG?
The definition of “carrying on business” in section 3 of the PNG Investment Promotion Act 1992 — what triggers the certification requirement and what does not.
Read the answer → No. 174What Is the Investment Promotion Authority?
The Investment Promotion Authority under the PNG Investment Promotion Act 1992: its functions, powers, Board, Managing Director, and its power to unblock delays in other agencies.
Read the answer → No. 175Does a Foreign Company Need an IPA Certificate?
When a foreign enterprise needs an IPA certificate under the PNG Investment Promotion Act 1992, the consequences of not having one, and the section 26 exemption.
Read the answer → No. 176How Do I Apply for an IPA Certificate?
How to apply for a certificate under section 28 of the PNG Investment Promotion Act 1992: the requirements, the 35-day decision period, the deposit power, and the duty to notify changes.
Read the answer → No. 178What Does an IPA Certificate Contain?
Sections 29, 30 and 31 of the PNG Investment Promotion Act 1992: the contents of a certificate, the Register of Certificates, and public inspection.
Read the answer → No. 179What Are Reserved Activities?
Section 27 of the PNG Investment Promotion Act 1992: reserved activities, the review obligation, the grandfathering rules, and the offences for breach.
Read the answer → No. 180What Happens if Ownership of a Certified Enterprise Changes?
Section 32 of the PNG Investment Promotion Act 1992: when a change of ownership triggers a fresh application, the thresholds, the exclusions, and variation under section 33.
Read the answer → No. 181When Can an IPA Certificate Be Cancelled or Suspended?
Section 36 of the PNG Investment Promotion Act 1992: the grounds for cancelling or suspending a certificate, the notice requirements, and winding up after cancellation.
Read the answer → No. 182What Is Certification to Participate in a National Enterprise?
Part IVA of the PNG Investment Promotion Act 1992: sections 36A to 36G, relevant interests, applications, certificates and the transitional rules.
Read the answer → No. 184What Are the Offences Under the Investment Promotion Act?
Sections 41 to 44B of the PNG Investment Promotion Act 1992: the offences, the reversed burden of proof, void contracts, false statements, prosecutions and cease orders.
Read the answer → No. 185How Do I Appeal an IPA Decision?
Section 40 of the PNG Investment Promotion Act 1992: the five appellable decisions, the 20-working-day deadline, the Minister’s duties, and judicial review.
Read the answer →Acts are amended, and figures and time limits change. Every article names the sections it relies on so you can read them. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.