South Africa has waited a long time for the Companies Act No. 71 of 2008 (“Companies Act”) amendment bill (“Amendment Bill”) to be published and finally it has. The Bill was published on 21 September 2018 for comments and is still open for comments until the 20 November 2018.
The following are a few of the key proposals made in the Amendment Bill:
Section 16 of the Companies Act – Clarity was needed in relation to when amendments to a company’s memorandum of incorporation will be effected. The Amendment Bill makes it clear going forward, that the Companies and Intellectual Property Commission (“CIPC”) has 10 (ten) days after receipt of the notice of amendments to reject the notice of amendment. The Amendment Bill proposes that amendments will take effect 10 (ten) business days after receipt of the notice of amendments, if CIPC after the 10 (ten) business days has not endorsed the notice or failed to deliver a reaction to the notice of amendments to the company with reasons.
Section 30 of the Companies Act – The Amendment Bill sets out that the disclosure of directors remuneration and states that each individual director or prescribed officer must be named.
Section 38A of the Companies Act – Section 38A is a new section that is proposed by the Amendment Bill which allows for the validation by the court of the irregular creation, allotment or issuing of shares
Section 45 of the Companies Act – The Companies Act provides that any financial assistance granted to its subsidiary must be authorised by the directors of the company as well as the shareholders of the company (by special resolution). The Amendment Bill proposes with a new subsection to limit the net of financial assistance to, or for the benefit of its own subsidiary. It is proposed that the special resolution requirement should not apply where a company gives financial assistance to its own subsidiary.
Section 48 of the Companies Act – The Amendment Bill requires that for shares when repurchased (share buy-back) from a director, a prescribed officer or a related person to the directors or prescribed officer, to be approved by special resolution has been amended and a special resolution is not required if a pro rata offer is made to all the shareholders.
Section 90 of the Companies Act – The Amendment Bill removes the requirement for auditors to be appointed at the annual general meeting. The problem was that private companies are not required to have annual general meetings. The auditors can now be appointed at a normal shareholders meeting.
Section 118 of the Companies Act – It is proposed by the Amendment Bill that the takeover regulations should only apply to an offer involving a private company or its securities, if the private company is required to have its annual financial statements audited or if its memorandum of incorporation requires it to do so.
Section 135 the Companies Act – The Companies Act Provides that any remuneration or reimbursement for expenses or another amount of money relating to employment becomes due and payable by a company to an employee during the company’s business rescue proceedings, but is not paid to the employee the money is regarded to be post commencement financing. The Amendment Bill provides that any amount owed by a company under business rescue to a landlord for rent or services will be regarded as post commencement financing and the landlord will have a voting interest in the business rescue proceedings to the extent of the claim.
The Amendment Bill is still open for comments to the public and comments should be submitted by any interested parties. Companies and individuals should comment on the amendments as they have the right to. These amendments can have a great effect on the future of registered companies or new companies. Comments should be submitted before 20 November 2018.
15 October 2018