This blog was co-authored by Stacy Smit, candidate attorney
The Companies Amendment Bill, 2021 published on 1 October 2021 for public comment proposes amendments to section 16 of the Companies Act of 2008 and provides clarity as to when a change to a company’s Memorandum of Incorporation (MOI) will take effect.
Section 16 of the Act sets out the process that a company must follow when amending their MOI. The Act currently provides that any amendment will become effective on the later of the date and time on which the notice of amendment is filed at the Companies and Intellectual Property Commission (CIPC) or the date provided for in the notice. A Notice is “filed” when it is delivered to the CIPC in the prescribed manner and form. The CIPC has previously stated that it does not consider any document as ‘filed’ unless it has been accepted by the CIPC. This has created uncertainty as to when an amendment to a company’s MOI is effective. In practice it is important for companies to understand when an amendment to their MOI is effective.
The Bill introduces clarity as to the effective date of the amendment of the company’s MOI. It provides that an amendment will be effective 10 business days after the CIPC has received the notice, unless the CIPC has endorsed it or rejected it prior to the 10 business days period lapsing.
The Amendment is not applicable to changing the name of a company as the Act prescribes that a change of name is only effective when the amended registration certification reflecting the name change is issued by the CIPC.
The 10 business day period is a welcome proposed amendment to the Act. Should the CIPC, after the expiry of the 10 business days, not have endorsed the notice or failed to deliver a rejection with reasons the notice will take effect.