President Irfaan Ali on Wednesday emphasised that his administration would be continually reviewing Guyana’s Local Content Act to close loopholes that could be exploited by investors.
Ali made the statement in light of the recent controversy surrounding Ramps Logistics and its efforts to acquire a local content certificate in Guyana.
Ramps Logistics, a company with 49% Trinidadian ownership and a controversial 51% Guyanese beneficial ownership, has been denied certification on several grounds but has since contended that it satisfied all of the requirements of the law.
Since the passage of the legislation, the local private sector has been complaining about foreign companies transferring shares to junior employees in an effort to satisfy the requirements.
“You know, in any system people look at loopholes and there are a number of ways in which you can crack down on this. For someone to sign up a document as a partner in a national company or a large company that is doing different sizes or volumes of work they have to have some amount of shareholding. [Now] they have to prove where they got their money from to get the shareholding. They have to also show beneficial interest, so there are ways [we are going to crack down on this],” Ali told reporters.
The president added that he has already instructed the relevant agencies and institutions to ensure that these situations are monitored and that the relevant criteria are satisfied.
“We are young in this [business of monitoring local content compliance and] we just passed the local content legislation so there is continuous review. There will be continuous analysis to deal with loopholes and to deal with areas which people think they can manipulate,” he added.
On Tuesday, at the Guyana Manufacturing and Services Association (GMSA) Mid-Year Dinner, Vice President Bharrat Jagdeo also addressed the issue of companies utilizing junior staff to meet local content requirements.
“There are many people who are trying to bypass the provisions of the legislation. It has been brought to my attention, for example, that a company that may have had maybe three foreign directors/managers in the old dispensation, now to get past the legislation since there is a 75 per cent management team (requirement)…to get past that position, they simply take junior staff and change their designations. So, the management team now becomes larger. So, they fulfil that requirement. But it’s just a designation for junior staff. When you look at their salary structure, their salaries have not changed,” he said.
The Local Content Act was passed in the National Assembly and assented to by Ali in December last year. It states that to deliver on its legislative target, it “puts in place regulatory mechanisms to implement, investigate, supervise, coordinate, monitor, and evaluate participation in local content in Guyana.
The law states that a “Guyanese company” should be interpreted to mean “any company incorporated under the Companies Act – (a) which is beneficially owned by Guyanese nationals who ultimately exercise, individually or jointly, voting rights representing at least fifty-one per cent of the total issued shares of the company; and (b) that has Guyanese nationals holding at least seventy-five per cent of executive and senior management positions and at least ninety per cent of non-managerial and other positions.”
A “Guyanese national” means a citizen of Guyana.
