Posted: March 15, 2011
Companies Amendment Bill to be Tabled In the National Assembly
The passage by Parliament of the Companies Amendment Bill before the House today will mark an important step forward in reforming and modernising our Companies legislation to the benefit of the vast majority of corporate citizens and to small business in particular.
In 2008 Parliament passed the Companies Act No 68 of that year. The 2008 Act introduces important features into our legislation that places South Africa among the world leaders in company legislation. Among other things, the 2008 Act provides for flexibility through the introduction of alterable and unalterable provisions to effectively regulate companies of all sizes, simplification in registration processes to cut red tape, codification of directors duties without replacing the common law principles, enhanced protection for minority shareholders to increase shareholder activism and minimise the scourge of company scandals, recognition of employees’ rights to participate in company governance and the business rescue provisions for early detection and turnaround of companies in financial distress which will go a long way towards saving jobs.
This Act was assented to by the President on 9 April 2009 for implementation twelve months thereafter. We then announced the effective date for implementation of 1 October 2010, but at the request of business for more time, I deferred the implementation to 1 April 2011, effectively giving a full two years (24 months) preparation time for stakeholders and government.
In 2009 as we were developing Regulations, it was discovered that the Act had a number of technical errors and omissions that could affect the interpretation of various provisions. We therefore commissioned a top team, led by Judge Dennis Davis, to identify these and draft amendments to rectify such errors prior to the Act coming into effect in order to create greater certainty. The result of this work was a Companies Amendment Bill which was approved by Cabinet and introduced in Parliament in November 2010. The Amendment Bill I should stress did not seek to extend to opening policy issues that accordingly, remain intact in the Act of 2008. The Bill has been thoroughly canvassed in public hearings organised by the Portfolio Committee which has developed a number of further amendments to accommodate legitimate concerns and issues raised by stakeholders. The result is that we are now presenting a significantly improved Amendment Bill to the House, but a Bill which nevertheless retains the policy balance struck in the 2008 Act. I want to commend both the Portfolio Committee and dti officials for a job very well done.
The time allocated to me does not permit a detailed discussion of the provisions in the Amendment Bill. These will be dealt with by speakers that follow me.
What I want to say in my remaining time is that parallel with the processing of this Amendment Bill, the dti has been making the necessary administrative steps to begin implementing the new Companies Act on 1 April 2011. We are ready to launch the new Companies and Intellectual Property Commission and open our doors for business on the due date.
I want to conclude by quoting from a letter I received from one of the top corporate lawyers in this country, Michael Katz of Edward Nathan Sonnebergs. Mr Katz wrote of the new Companies Act, and I quote “I respectfully submit that it is an excellent piece of legislation that will put South Africa among the leaders of the world in company legislation” He then went on to urge that the commencement of the Act should not be further delayed, arguing that for some time we have been living in “two worlds” with the old Act still in force but market players knowing the new would come into operation. He added that there had been more than adequate time for preparation. Mr Katz concluded; “whenever significant new legislation comes into operation there will be teething problems in the legislation itself and problems of getting ready for compliance. This is not sufficient reason to justify the deferral of the implementation of the new Companies Act scheduled for 1 April.”
I believe he is right. As the President often tells us the priority now is not further debate, diagnosis or lamentation but rather implementation. By approving this Act today we will be taking an important further step towards implementation of a major reform that will be of enormous benefit to the vast majority of our corporate citizens and will therefore facilitate economic growth and development and the creation of decent work.
I commend this Bill to the House.