Sabinet's Parliamentary Information Service in Cape Town reports that the published draft of the Companies Bill, which was submitted to public scrutiny recently, produced more than 134 written submissions from stakeholders, interest groups, government departments, agencies and individuals - in all amounting to some 2 000 pages of written material.
This has resulted in yet further changes to the final draft submitted to the government printers and which will be tabled in a few days.
The final document, now circulating among parliamentarians, is over 220 pages long, but despite its length and complexity, Zodwa Ntuli, deputy director-general of consumer and corporate regulation at the Department of Trade and Industry (DTI), told the parliamentary trade and industry portfolio committee that every effort had been made to simplify the regulations and use every-day language in its presentation.
Ntuli was presenting a "high-level overview" of the Bill, as well as introducing the main recommendations, to Parliament. She was accompanied by Tshepo Mongalo, project manager of the DTI's company law reform department, who told parliamentarians that there had been a number of changes to the last draft circulated for comment.
Both said that, in general, public comments had supported the objectives, principles and policies of the reforms made, although there had been some "challenges which emerged finally" that had led to a few substantive changes in the final document about to be tabled in the next 72 hours.
Ntuli reconfirmed that the new Bill continues to emphasise certification as a right instead of a privilege and clarified changes in business rescue schemes which, she said, still laid emphasis on "businesses in distress" rather than wait for ultimate need to liquidate a business. She referred to attempts to make provision for complaint procedures, application of ongoing governance principle checks and administrative fines rather than to rely on criminal procedures after the event.
The focus, she said, moved away from formality to a process that added value to the operations of companies and despite the size of the new Bill, the idea was to simplify the implementation of company law.
Chapter one is about reducing this formality, improving flexibility and allowing the introduction of electronic documents which, said Ntuli, was changing the whole scenario of business interaction with government.
The Bill, Ntuli said, right from the start enhances compliance, prevents avoidance and sets out with simple definitions, such as the plain definition that a non-profit company must have at least one public benefit or social or cultural objective and may not merge with a public company.
The Bill then goes on to deal with profit companies which may be public companies, be state-owned, be personal liability or private companies and this portion of the Bill is extensive in detail. The Bill also deals with foreign companies and external companies, but in a straightforward manner, said Ntuli.
Freedom to associate and to contract is encouraged, she said, but the Bill stills falls back on the need for a memorandum to be signed and which must be filed. A company may be incorporated before it is established or registered "whether or not the name is available", she said.
The memorandum must set out the number of authorised shares, rights, and terms of shares. There are also provisions in the Bill to prevent "name squatting". A registered office must be maintained and records kept for seven years, to which shareholders always have rights of access. A company must have an annual financial year and must file annual statements.
On mergers and takeovers, transfers, acquisitions and disposals, Tshepo Mongalo said this was where most of the changes between the final draft and the Bill about to be introduced had occurred. The chapter involved had been divided into three parts: sale or disposal of all or the greater part of assets, merger and amalgamation, and schemes of arrangement.
He said the definitions of amalgamation and mergers had been combined and there were a number of changes with regard to schemes of arrangement. The main requirement was that in such events the company must retain an independent expert who is duly qualified for such duties, apart from all stakeholders on matters of declared interests and able to express opinions, exercise judgement and make decisions impartially.
This person must prepare for the board a report on the issues involved and state all relevant prescribed information, identify securities and subsequently ensure that the correct procedures are followed.
On the issue of business rescue, Mongalo said that after relevant discussions and dealings with NEDLAC, the chapter now brings in, after much consideration, additional wording on the issues of re-training of employees and the fact that creditors must enter into discussions regarding the plan with unions in terms of the Labour Relations Act to ensure that the business rescue plan is relevant, will work and is integrated properly.
Ntuli said that with regard to the tandem Close Corporation Act, it had been decided that this Act will not allow the registration of any further CCs as from the date of implementation of the revised Companies Act and that existing "CCs" would remain subject to regulations as they existed under the appropriate law, which would be left intact for the present.
The new Bill is now awaited as a tabled document and the date for hearings in the new parliamentary session in August will no doubt also be announced shortly. www.sabinet.co.za
(See Sabinet's Policy Documents http://www.sabinet.co.za/prod_billtracker.html for more information about Sabinet's service.)
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