Carrying on business in Fiji or Carrying on business with Fiji and Fijians?

An analysis of the recent decision of Bomco Foam Industries Limited and implications for foreign businesses

By Feizal Haniff

Introduction

The recent decision of Bomco Foam Industries Limited v A.C.C. Austpac Chemicals & Commodities Pty Limited[1](“Bomco”) examined the principles of ‘carrying on business’ in the context of setting aside a statutory demand notice under the Companies Act 2015.

Haniff Tuitoga Lawyers successfully represented the Respondent, Austpac Chemicals & Commodities Pty Limited in Bomco. The Court in Bomco held that there is no requirement for a company based overseas and one that does not have an established place of business to be registered under the Companies Act 2015. The Court also held that a foreign company is not prevented from instituting proceedings or filing a statutory demand to enforce their rights when doing business with Fiji or Fijians.

The Court in Bomco effectively overruled its own decision in Guangzhou Real Estate Investment Company Limited v Century Holdings Ltd which held that an unregistered company in Fiji had no standing to institute court proceedings I Fiji.

In the digital age where there is increasingly cross-border e-commerce as well as international business, the decision services as guidance about when a company ought to be registered to carry on business in Fiji.

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The Decision

In Bomco the High Court heard an application under s 517 of the Companies Act 2015 (the Act) to set aside a statutory demand notice. Bomco argued that Austpac Chemicals & Commodities Pty Limited was not registered in Fiji and therefore not entitled to issue a statutory demand notice under the Companies Act 2015 because it was not ‘carrying on business in Fiji’. Austpac – a company registered in Australia had supplied goods to Bomco – a company registered in Fiji. Bomco had defaulted on the payment to Austpac. Bomco did not dispute the amount of the debt owing to Austpac.

In dismissing the application, the Court heldt carrying on business in Fiji is a limited concept that does not cover all elements of commercial or private endeavour.[2]

The decision affirms that:

(1) there is no requirement for a company based overseas and that has not established a place of business in Fiji to be registered under the Act;[3]

(2) the Act does not prevent nor prohibit a company not registered in Fiji from doing business with Fiji or Fijians;[4] and

(3) the Act does not prevent an overseas company from instituting court proceedings or making a statutory demand in Fiji in order to enforce their rights when doing business with Fiji or Fijians.[5]

So what does this mean?

This decision will serve as encouragement to overseas businesses to continue and grow their operations with Fiji and Fijians and that it is not necessary as an overseas company to be registered in order to enforce a statutory demand in Fiji.

However, it also serves as a reminder for foreign/overseas companies and businesses to consider whether their actions could fall within the remit of carrying on business in Fiji which would require registration under the Act as well as the Foreign Investment Act 1999.[6]

Regulatory Approvals

A foreign company carrying on business in Fiji may also be subject to further regulatory approvals.

Investment Fiji operates to promote, facilitate and stimulate investments in Fiji. Under the Foreign Investment Act 1999 a foreign investor must not ‘carry on business’ in Fiji in a ‘relevant activity’ without a Foreign Investment Registration Certificate issued by Investment Fiji.[7] We note that Fiji has recently introduced the Investment Act 2021, which will remove the requirements for a FIRC along with a number of other reforms. However, until such time as this piece of legislation comes into force the existing requirements will remain.

The Reserve Bank of Fiji (RBF) operates to protect the value of currency in Fiji. RBF approval is usually required for the issue or transfer of shares to non-residents, remittance of funds outside of Fiji and payments made in foreign currency.[8] Furthermore, certain regulated activities in the financial sector need to be licensed and/or registered by the Reserve Bank.

The Fiji Revenue and Customs Service (FCRA) is responsible for administering tax and customs law in Fiji.[9] A foreign business carrying on business in Fiji should consider tax and customs implications under Fijian law.

Conclusion

Cross border and retail business can make things more difficult to judge when considering whether a business is carrying on business in Fiji.

If you think your business may be carrying on business in Fiji, or if you require further regulatory advice for foreign companies in Fiji, please do not hesitate to contact us.

Disclaimer

The information set out in this article is a general guide only about the laws in Fiji and is not intended as specific legal advice.

[1]Bomco Foam Industries Limited v A.C.C. Austpac Chemicals & Chemicals Pty Limited HBM 14/2019. [2]Bomco Foam Industries Limited v A.C.C. Austpac Chemicals & Chemicals Pty Limited HBM 14/2019 at [11]. [3] Ibid at [14]. [4] Ibid at [13]. [5] Ibid at [14] and [15]. [6]Foreign Investment Act 1999 s 4. [7]Foreign Investment Act 1999 s 4. [8]Exchange Control Act 1950 Part 3. [9] See Fiji Revenue and Customs Services Act 1998 schedule 1.