A new business model has been introduced in Solomon Islands, specifically designed to take account of Melanesian culture.

The 'community company' will make it easier to distribute benefits throughout the community and be safer for landowners and villagers to do business.

The Asian Development Bank (ADB) has been working with the government in Solomon Islands to roll out the business model.

Other changes include an electronic company’s register - a system which makes it much easier for people to register their business online.

Eighteen 'community companies' have already registered, while a similar initiative is being considered in Vanuatu, the ADB said.

The ADB's Pacific law reform expert Aaron Levine says the new companies register is making a big difference.

"What it does is simplifies enormously the process of registering and maintaining your company," he said.

"It covers private companies, public companies, overseas companies and also a new form of company called the 'community company'.

"With an electronic register everything is transparent: So we know exactly who is in charge, exactly who is set to benefit."

Special rules also reduce the risk of corruption, by forbidding loans to directors and requiring 75 per cent agreement for the sale of major assets.

The reforms are part of the Pacific Private Sector Development Initiative (PSDI), co-funded by the ADB, Australia and New Zealand. The PSDI aims to lift barriers to business in the Pacific region and help the private sector grow and create jobs.

Mr Levine says the idea of the community company is to make a profit, but with community benefit and cultural practices in mind.

"What it does is... it accepts the profit motive is there to stay, but it also acknowledges the cultural norms of sharing the benefits of labour, so to speak.

"So what it is is a limited company but it has extra protections compared to a normal company.

"For example, you don't issue dividends to shareholders. Any profits that are made are retained and used for a particular community purpose and that community purpose needs to be defined by the company."

 

Source: http://www.radioaustralia.net.au/international/2014-03-25/new-kind-of-company-helps-melanesians-go-into-business/1285128