The new draft law amending the existing law could help attract new investments to the country if all proposed changes by the Government are approved by the parliament. The amended law seeks to improve the existing one and create an enabling legal environment for the Kigali International Financial Centre (KIFC), according to officials. The amended law is expected to allow adoption of best practices in corporate governance, and business structures According to Richard Kayibanda, the Registrar General at Rwanda Development Board, it will also reflect the developmental strategy of the Kigali International Financial Centre. “The proposed changes concern mostly new companies that will be registering or the existing companies that would want, let’s say to change from their current structure to one of the new types introduced in the company law,” he told The New Times in an email. Among other proposed changes, the amended law redefines who an independent director in a company is, and introduces a threshold of shareholding for individuals in a firm. In a nutshell, the law will now allow an independent director to own shares in the company they oversee, in that way enabling companies to attract directors with the required skills and expertise. However, a maximum threshold of 2 percent of shareholding will be introduced to safeguard the independence of decision making, according to the Registrar General. The draft law, once gazetted, will introduce another key aspect that allows the Government to collect and keep the information about the beneficial ownership of companies. The current draft proposes that the information shall be collected and kept by the company secretary who is also bound to share a copy as well as any subsequent change with the Registrar General. However, at the time of initial registration, entities required to provide beneficial ownership information shall be required to provide the same with the Registrar General. Other changes The draft law also introduces new types of companies – Protected Cell Companies (PCC) and limited life companies – as well as the transfer of registration which enables the companies to transfer their registration from one country to another. Kayibanda says the draft law considers a protected cell company as a single legal entity which consists of a core that is linked to several cells that have separate assets and liabilities. That is to say, “each cell shall be independent from each other and the company core; but the entire unit will be a single entity.” That is expected to help investors in one cell to be protected from the risks and liabilities of other cells, but will only be used in regulated investment funds activities. A limited life company, on other hand, would be described as a company that is incorporated for a pre-determined time of existence. But the maximum is 50 years which can be extended. Such type of company, which is especially used in fund and investment business helps investor to know from the very beginning the time when they would exit the business Richard Balenzi, a Partner at Trust Law Chambers and former chairman of AB Bank’s Board said the amendment of the law could attract new companies that want to set up base in Rwanda. “It is offering more options to investors in terms of the entities that they can form in Rwanda. The effect of that would be to make Rwanda an attractive place for business,” he noted. Amending the law, he added, is not some sort of new work especially for “a country that wants to be competitive and stay ahead of the game.” Believably, the amended law will enable Rwanda to comply with international practices and standards such as those pertaining to anti-money laundering and countering the financing of terrorism. It could similarly attract more investors mostly those who are attracted by investment vehicles that they are familiar with that are available in other financial centres worldwide. “The thinking is that the new proposed changes could push the Kigali International Financial Centre to another level,” Balenzi said, adding that it is part of many other laws such as the partnership law. In August, the cabinet approved the partnership law, which allows partnership businesses to be structured in Rwanda, which was previously non-existent in the country. The legislation is aimed at attracting additional capital and private funding for investments in Rwanda. Just recently, the cabinet appointed key figures in the financial industry to help drive the country’s agenda towards positioning Rwanda as a financial services hub in the region. Key among those is Tidjane Thiam, renowned Ivorian-French banker who is the immediate former Chief Executive Officer of Swiss bank Credit Suisse, one of the largest financial institutions.
