The new legal framework for companies will now only come into effect on 1 January 2010, says the Department of Trade and Industry (DTI).
The new Companies Act will completely change the regulatory environment in which companies operate. The DTI still plans to have the Companies Bill enacted next year, but will then wait another 13 months before bringing the law into effect.
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.
The DTI has in mind those organisations that have a disproportionate impact on the economy or environment, even if they are private companies. It is likely SA's telecommunications enterprises and perhaps Internet service providers will fall into this category.
Tshepo Mongalo, the DTI manager in charge of the project, says the Bill should become law around July next year and ought to be promulgated by the following November or December.
Mongalo says the delay is the result of better-than-expected public response. "We received more comments than anticipated. Secondly, the consultation process continued from February to the end of June and the public service strike had an impact on the process. And finally, procedural hurdles relating to the approval of contracts of certain individuals had to be cleared."
Aim and objectives
Trade and industry minister Mandisi Mpahlwa in February told reporters that companies would have three years to align themselves with the new system and close corporations would have 10.
Speaking at the same briefing, DTI director-general Tshediso Matona said the law recognised the value of ICT in speeding up decision-making in the boardroom and improving corporate governance.
DTI deputy director-general for consumer and corporate regulation Astrid Ludin said the department keeps track of about 1.7 million companies and close corporations. In addition, it believes there are 749 500 more unregistered entities in the informal economy and 699 166 sole proprietorships active in the South African economy.
Mpahlwa acknowledged the reform the Bill will bring about is long overdue. "It represents the first significant review of South African company law in over 30 years.
"Much has changed in the intervening years. Corporate structures and financial instruments have developed and evolved significantly. The political and economic landscape for SA has changed. Corporate failures here and elsewhere have raised questions about standards of governance. These factors all set the scene for a significant overhaul and modernisation of our company law."
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 widely-held (publicly held) firms.
It will also result in improved regulatory oversight and better redress for shareholders, he noted.
Company suffixes will change once the Bill becomes law. The names of Section 21 companies will be followed by "NPC" for Non-Profit Company, (Pty) Ltds and Close Corporations will become "CHCs" (Closely-Held Companies) and JSE Securities Exchange-listed companies will become known as "WHCs" or Widely-Held Companies.
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