Cabinet passes Companies Bill

By Leon Engelbrecht, ITWeb senior writer

Johannesburg, 16 May 2008

Cabinet has approved a draft law, which will change the way businesses in SA are run, for introduction to Parliament and eventual enactment.

Cabinet spokesman Themba Maseko yesterday said Cabinet had cleared the way for the Companies Bill - which will replace the 1973 Companies Act - to be tabled in the National Assembly.

Cabinet also approved the Intellectual Property Rights from Publicly Financed Research Bill, which will let the state benefit from patents and trademarks developed from research paid for by government.

Trade and industry minister Mandisi Mpahlwa last February announced the Bill with great fanfare after a protracted development period. At the time, it was hoped to have the Bill before Parliament by October last year and made law by February this year. That did not happen. Parliament's legislative programme had the Bill down for introduction in March, but that did not happen either.

It is not clear when the Companies Bill will reach Parliament, which has shortened its session for the year in order to prepare for next year's general elections.

There is often a delay of up to several months between Cabinet approving a Bill for tabling and the actual tabling. Even if promptly introduced, the Bill may not make it through the lawmaker this year and is equally unlikely to make it past pre-occupied MPs before next May's sea change.

Changes to business

Once it does become law, the new Companies Act will completely change the way business does business. Mpahlwa last February told reporters that firms would have three years to align themselves with the new system and close corporations would have 10.

The minister sketched the objectives of the Bill as including reducing the cost of registering and maintaining a company, and the regulatory burden and compliance costs for small and medium businesses, while at the same time enhancing corporate governance, transparency and accountability of large and publicly held firms. It will also result in improved regulatory oversight and better redress for shareholders, he noted.

The concept of "public interest companies" is one change that will affect the ICT industry. This will allow government to declare certain companies or industries subject to extra scrutiny. Indications are this would include the telecommunications giants and perhaps Internet service providers.

Innovation boost

The Intellectual Property Rights from Publicly Financed Research Bill is being pushed by the Department of Science and Technology. It is part of minister Mosibudi Mangena's drive towards a "national system of innovation" that seeks a return on investment on research in the form of marketable patents and collectable royalties.

This includes research funded in part or wholly by, for example, the Council for Scientific and Industrial Research's Meraka Institute. The Bill will also benefit black economic empowerment firms, as well as small and medium enterprises.

Unlike the Companies Bill, Mangena's draft law is on time, and was scheduled for introduction into Parliament this quarter.