The implementation and balancing of interests between board of directors and shareholders of the company under Rwandan Law

Abstract

The study entitled "the implementation and balancing of interests between board of directors and shareholders of the company under Rwandan law" is meant to assess the efficiency of the law regulating companies in Rwanda as far as its responses to various issues are concerned. Indeed, there was wondered whether the company law adequately balance the Interests of shareholders, Board of Directors and company interests; whether the Registrar General has sufficient powers to enforce the balance of interests between Board of Directors and shareholders and whether the sanctions for breach of the Balance of interests between Board of Directors and shareholders sufficient under Rwanda Company law. There was then found out that the Registrar General detains sufficient powers to regulate the relationships between interests of the company, those of directors and those of shareholders and that besides, he is entitled to sue people in justice in case of disputes compromising such interests. In fact, the law governing companies in Rwanda managed to distinguish interests of the company as it has a dual nature, as an association of its members but also as a person separate from its members. Besides, sanctions established vary between fines estimated from thousands to millions and imprisonment amounting to 5 years and we deem all deterrent, dissuasive to prevent offences likely to be committed in this matter. Furthermore, if there is assumes that the law recognize that a company is a separate legal entity distinct from its shareholders. Therefore the courts usually do not look behind "the veil" to inquire why the company was formed or who really controls it. This trend may harm third parties interests, the reason why exceptionally such a veil must be lifted. in this respect, the fact that a company is treated as a separate legal person may work to the disadvantage of third parties. This is especially so in cases where creditors have negotiated with a natural person who then disclaims personal responsibility for the transaction on the basis that a company was the real actor and they were merely its conduit. It is, therefore, perhaps not surprising that the so-called „veil of incorporation‟ may be penetrated in certain circumstances that are prescribed by the common law and statute. However, this does not mean that a company is suddenly not incorporated (companies remain incorporated until deregistered) but it does mean that the fact of its incorporation will be ignored for the purposes of the impugned transaction.