SOUTH AFRICA: PROCESS TO AMEND COMPANIES ACT UNDERWAY

PRETORIA, The Department of Trade and Industry (dti) has commenced with the process of amending the Companies Act 2008.

Speaking at the international company law seminar in Sandton, the Department of Trade and Industry’s (dti) acting Deputy Director-General for Consumer and Corporate Regulations, MacDonald Netshitenzhe, said the move is a result of the company law reform aimed at instilling corporate accountability, transparency and reduction of regulatory burden.

The Companies Act, which was signed by President Jacob Zuma on 8 April 2009, replaces the Companies Act, 61 of 1973.

The acting DDG said the purpose of amending the Act was to align problematic areas and enhance better interpretation of the provisions of the Act.

We are going to Cabinet for broader consultations. Stakeholders and role players should be ready to engage during the public consultations to ensure policy objectives become a success. It is important for the dti to engage, so as to understand the sections that are posing a challenge to practitioners as well as the economy at large, said Netshitenzhe on Thursday.

He highlighted that the Act encourages economic stability through good governance that will enhance investor confidence and international and domestic competitiveness in the South African economy.

The provisions of the Act and its Regulations have been benchmarked with other jurisdictions and found to be the best in the world. This is due to the fact that the Act, among others, makes provisions for accountability and transparency, and the regulatory burden has been reduced tremendously.

Amongst others, the highlight is on three issues that may be relevant to this seminar for consideration, namely business rescue, social and ethics committees and the role of the Companies Tribunal, said Netshitenzhe.

The dti commissioned research on various cases of business rescue. The research revealed the fact that if business rescue ends in liquidation, it does not necessarily mean the rescue was a failure.

He added that when measuring the success of business rescue, numbers of companies that emerged from business rescue as compared to those that have been liquidated must not be a barometer.

Netshitenzhe stressed that the establishment of social and ethics committees in companies is not only important to protect the communities and the environment where companies operate, but for the protection of shareholders’ interests. Companies can now be held liable for not adhering to legislative standards.

The acting DDG pointed out the importance of raising awareness of the role of the Companies Tribunal, as it is still appropriate and can be the best dispute resolution mechanism if utilised effectively, by means of mediation, conciliation or arbitration.

The seminar was held at the Industrial Development Corporation offices.

Source: NAM NEWS NETWORK

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