Rebutting the refusal of a local content certificate, Satram and Satram, lawyers for oil services company, Ramps Logistics, yesterday argued that the rationale provided by the Local Content Secretariat (LCS) was not in keeping with the powers conferred on it.
Writing directly to Director of the LCS, Martin Pertab, the law firm contended that Ramps Logistics has at all times satisfied the requirements of the Act for registration as a local company.
“We do not concede that your requests and/or demands are lawful and in keeping with powers conferred upon the Secretariat by the Local Content Act. We also do not accept and/or concede that the reasons offered by you on behalf of the Secretariat are relevant, adequate or justify the refusal of registration to the Applicant. Our client has decided to meet your demands entirely in the interest of expediency and in an effort to secure timely registration under the Act,” the attorneys argued in a three-page response to the LCS Director.
Pertab’s letter had identified the failure to provide accurate information in compliance with Guyana’s Local Content legislation, the submission of questionable documents which did not clearly state the amendments to incorporation, and failure to have their executive Board of Directors be 75 per cent Guyanese, as reasons behind the refusal for granting of the certificate.
In the June 27 correspondence to the company, in response to an application made on April 12, Pertab stated, “Upon a review of that application, the information submitted were found to be insufficient for a proper compliance evaluation to be done by the Secretariat in accordance with the requirements of the Act.”
He went on to explain that as a consequence of the review and based upon the foregoing observations, the application of Ramps Logistics was refused. “Please be advised that the secretariat uses an internal filing system which sends an automatic reply to an applicant whose application is refused,” Pertab noted in response to queries from Ramps Logistics.
Pertab had pointed out in his letter that the declaration of beneficial ownership dated March 30, 2022, did not show the individual who has beneficial ownership in Ramps Trinidad.
Further the information on declaration was inconsistent for the place and date of birth of Ramps Trinidad with information contained in the Articles of Incorporation of that company.
Providing a response to this position, Satram and Satram countered, “The observations made at point 9 do not at all constitute grounds for denying our client’s application. The documents to establish when the companies were incorporated were supplied to you.”
The company’s attorneys said that even as the LCS noticed the typographical inconsistency they declined to bring it to the company’s attention so that it could be rectified. “The error was a purely clerical one. Our client has since taken steps to rectify the clerical error and the correct position is now reflected in the attached beneficial ownership form.”
Moreover, the attorneys posited that the demands for annual returns showing information in relation to the allotment and issue of shares and audited financial statements “may be beyond the scope of your powers. We shall be grateful if you can point us to any provision of the Local Content Act (2021) which empowers you to demand the production of annual returns.”
Satram and Satram pointed out to the LCS Director that the Registrar of Companies is empowered under Section 487 of the Companies Act to deal with a failure to file annual returns.
The audit of the financial statements, he said had not been completed by Ram & McRae, Chartered Accountants, at the time the application was submitted.
Obligation
He went on to say the obligation to file the annual returns under Section 153 of the Companies Act had not yet arisen whereas the suggestion that the ownership of the issued shares of a company are only evidenced if they are reflected in the annual returns is erroneous.
“A share certificate is evidence of the ownership and issue of shares. In any event, annual returns and audited financials were prepared and filed for the year ending 2021. The total number of issued shares as at the time of our application will not be reflected in the said annual returns which covers the period ending 2021. The shares which were issued to Deepak Lall in March, 2022, will be reflected in the next Annual Returns, which are not yet due, to be filed by the Company,” the company’s attorney said.
Further, in the letter seen by this newspaper, the attorneys contended that the Secretariat has no authority, statutory or otherwise, to question or challenge the approved amendments. Shares may be issued at a price above the stated minimum value of the shares.
It was pointed out that by Section 5 (1) (d) of the Companies Act, it is necessary to set out in the Articles of Incorporation the minimum issue price in respect of shares or classes of shares. By Section 28 (3) the issue price of a share shall be determined by the Directors of the Company and by Section 28 (4) the issue price shall not be less than the minimum issue price stated in the Articles of the company.
The LCS Director in his response had pointed out that from the documents submitted, Ramps Logistics purports that one Deepak Lall ultimately exercises voting rights representing 51% of the total number of issued shares at a value of US$1,000,000, while Ramps Logistics Limited (“Ramps Trinidad”) exercises voting rights representing 49% of the total issued shares at a value of US$960,680. But in their Articles of Incorporation (without the schedule on share transfer restrictions annexed, although the said Article expressly referred to such an annexure) only the issue of 100 ordinary shares at the price of $1.00 GYD each is authorised.
The company said the amendments were approved by the Registrar of Companies in October 2021.
Under Section 28 (2) of the Companies Act, the lawyers highlighted, it is not applicable or relevant. They made the argument that the amendments were made and approved. That allowed for the issuance of the shares to Deepak Lall and Ramps Logistics Ltd of Trinidad and Tobago. Therefore, there is no contravention of the Act as the share issue was in accordance.
Responding to the claim by the director that no signed, filed and certified Company Resolutions, or extracts of the share register or a share certificate were submitted to the Secretariat which authorised and evidenced the sale, transfer, or issue of the number of shares allegedly issued to Guyanese national, Deepak Lall, or Ramps Trinidad, the attorneys said such information was not specifically requested by Ramps Logistics (Guyana) Inc.
The amendments, they claimed, reflect the changes to the Share Certificate in the name of Deepak Lall and Resolutions of the Board of Directors dated 18th October, 2021 and 9th March, 2022 authorising the company to issue shares to Ramps Logistics of Trinidad and Tobago and to Lall.
Flawed and erroneous
Responding directly to the issue of the number of Guyanese on the executive management board, the attorneys said that the directors’ position on Section 2 (a) (ii) of the Local Content Act (2021) is flawed and erroneous.
Pertab had informed the company that the information provided to the secretariat showed that only 60% of the company’s management was Guyanese despite having Lall as a director. He said that the percentage of representation has failed to account for the required 75% as situated in section 2 of the Local Content act.
The statutory requirement is that Guyanese Nationals must hold “at least 75% of executive and senior management positions.”
The Board of Directors is not as, “a matter of law, considered to comprise the management of the company. Even if they may be so considered, the Directors must be grouped together with the rest of the executive and senior management of the company in calculating the percentage requirement stipulated in the Act,” the company’s lawyers argued.
“It is plainly wrong to isolate the Board of Directors from the rest of the executive and senior management of the company and to suggest non- compliance with Section 2 of the Act because the Board is not comprised of 75% Guyanese Nationals. In the spirit of expediency and without any admission that a change was at all necessary to comply with the Act, our client has nevertheless taken steps to effect the change you have requested,” Satram and Satram noted.
According to the information provided, Ramps Logistics Director and Secretary, Trinidadian Rudy Rampersad had resigned from his post making way for Guyanese Samantha Cole to replace him as Company Secretary.
The attorney highlighted that three of the four directors on the board are Guyanese nationals.
“This change was effected without prejudice to the right of our client to challenge the correctness of the construction you have placed upon Section 2 (a) (ii) of the Act. It is clear that the composition of the Board prior to the changes did not result in non-compliance with the requirements of the Act.”
The company in their new documents provided to the secretariat, shared a copy of the Resignation of Rudy Rampersad, the Notice of Change of Directors, the Notice of Change of Secretary, and the relevant Resolution of the Board of Directors.
“In the spirit of an early resolution of the issues which were raised in your letter, our client has complied with all your demands even though, in our view, your requests are outside of the parameters of the powers vested in the Secretariat under the Act… We anticipate that the registration would now be granted without delay,” the letter concluded.
It was explained by Cole at a press conference in mid-June, that they approached the LCS in April to be added to the register of local companies to provide services to the oil & gas sector, but on June 8 received an automated message informing Ramps Logistics that its application had been denied. “Your application to the Local Content Register has been refused by the Minister. You have been denied access to Local Content Register,” the email stated.
Cole says that the denial now threatens the livelihoods of a number of Ramps’ employees. The Local Content Secretariat outlines documentation to be submitted by a Guyanese national or Guyanese company registering with the Secretariat in support of their application. According to the agency’s mandate, it “aims to ensure the prioritisation of Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the petroleum sector and to enable local capacity development.”
Ramps Logistics Guyana currently employs 398 Guyanese.
Guyana’s Local Content legislation states that the Secretariat must publish its register. “The Secretariat shall cause the Local Content Registers to be published on the website of the ministry responsible for petroleum or any other media of wide circulation,” the law states. It is unclear if any company has yet received certification as to date no company has been listed on the site. Companies which were “supplying goods or providing services to the petroleum sector”, prior to the enactment of the Local Content law have up to the end of June 2022 to submit their documents and be issued with their certification. The certificate lasts for only one year.
