The New Companies Act

The New Companies Act

The new Companies Act No. 71 of 2008, which fundamentally re-writes South African company law and accordingly will have far reaching effects, was promulgated in April 2009 and has been effective from 1 May 2011.

  • Click here to download the exclusive South African chapter of Willem J L Calkoen’s The Corporate Governance Review.

COMPANIES ACT PUBLICATIONS

IMPLEMENTING THE NEW COMPANIES ACT

While the new Companies Act does allow a two year transitional period for pre-existing companies to adjust, this period only applies to certain issues.

In almost all respects, the new act will be of full force on its effective date. Existing companies should therefore take immediate action to comply with the new act’s requirements and should not be complacent.

Werksmans’ Commercial Department has produced a checklist and an accompanying implementation guide to assist clients to ensure a smooth transition from the old to the new statutory regime.

IMPLEMENTATION CHECKLIST

  1. Adopt a new Memorandum of Incorporation
  2. Consider the role of existing shareholders’ agreements
  3. Change name to reflect new rules on name endings
  4. Identify prescribed officers
  5. Check
    that all directors, prescribed officers, committee members, company
    secretaries and auditors are eligible and not disqualified
  6. Educate directors, prescribed officers and other relevant staff as to their responsibilities
  7. Consider whether adequate indemnity and/or insurance has been provided for directors and public officers
  8. Establish audit committee and social and ethics committee with correct membership, if required
  9. Determine
    the extent of the company’s responsibility to have its financial
    statements audited and appoint an auditor where necessary
  10. Ensure that all notices to shareholders and other documents are in the prescribed form or in plain language
  11. Endorse share certificates where the transfer of shares is restricted
  12. Optional conversion of par value shares to shares having no par value
  13. Companies
    limited by guarantee must elect to become a profit company and make the
    necessary consequential changes or become a non-profit
    company
  14. Comply with the New Act, especially with the provisions dealing with:
    • the duties, conduct and liabilities of directors
    • rights of shareholders to receive notices and have access to information
    • meetings of shareholders and directors, and the adoption of resolutions
    • approvals
      required for any distributions, financial assistance (including
      intra-group loans), insider share issues and options
    • fundamental transactions, take-overs and offers,

    (except to the extent that the transitional arrangements delay its effect)

  15. Listed companies should comply with the amended JSE Listings Requirements

Click here to download a pdf

LEGAL BRIEFS

  • Guarantees are preferable under business rescue provisions
  • Labour law and the Companies Act
  • The impact of recent regulatory changes on corporate names
  • The new Companies Act, No. 71 of 2008 – reckless trading and the personal liability of directors
  • Fundamental transactions and their regulation by the Companies Act No. 71 of 2008
  • Business Rescue: A Guideline for the South African Banking Sector
  • The delinquent director: the death knell for negligent directors?
  • King Code and developments in corporate governance
  • Director’s Trading in Insolvent Circumstances
  • A corporate revolution in South Africa – The Companies Act No. 71 of 2008
  • The New Business Rescue Procedure: Chapter 6 of the Companies Act 71 of 2008
  • Regulatory agencies in terms of the Companies Act 71 of 2008
  • The Companies Bill 61 of 2008 – new categories of companies
  • Dealing with financial crises and looming insolvency – the director’s insolvency check list

MEDIA RELEASES

  • Companies Act reinforces rights of company directors who act honestly and reasonably: Eric Levenstein
  • Companies Act to achieve its goals: Kevin Trudgeon, Director
  • Business owners warned to avoid complacency over the new Companies Act: Caryn Leclerq, Director
  • Preparing for the new Companies Act: Caryn Leclercq, Director
  • Tax consequences of the Companies Act: Ernest Mazansky, Director
  • Multiple directorships a potential liability under new Companies Act: Eric Levenstein, Director
  • BEE deals face squeeze from new Companies Act: Wildu du Plessis and Amelia Heeger, Directors
  • A corporate revolution in South Africa – the companies act no 71 of 2008: Gareth Driver, Director
  • King III makes a brave foray into boardroom dealings with fundamental transactions: Gareth Driver, Director
  • South Africa Has Much To Learn From The Chrysler Bankruptcy Filing: Eric Levenstein, Director
  • The New Business Rescue Procedure: Chapter 6 of the Companies Bill, 2008: Eric Levenstein, Director
  • New Companies Bill May Send Directors Running For Cover: Wildu du Plessis, Director
  • Business Rescue provisions could jeopardise Creditors: Gareth Driver, Director
  • New companies bill introduces solvency & liquidity test of fairness: Wildu du Plessis, Director
  • SRP Expects Change in Form but not Substance: Gareth Driver, Director
  • A new Companies Act for South Africa: Gareth Driver, Director