This blog was co-authored by Uzair Bulbulia, candidate attorney
On 1 October 2021, the Ministry of Trade, Industry and Competition published the Companies Amendment Bill, 2021 (2021 Bill) for public comment. The 2021 Bill seeks to amend the Companies Act, 2008 and is a revision of the bill that was published for public comment in September 2018. Comments must be submitted to firstname.lastname@example.org, by no later than Sunday, 31 October 2021.
The changes that the 2021 Bill introduces include the following:
- Amending the definition of “securities” to include only shares and debentures;
- Providing for the definition of a true owner to identify holders of beneficial interests in the company;
- The naming of directors and prescribed officers who receive remuneration and benefits.
- Providing for the preparation, presentation and voting on companies’ remuneration policy and directors’ remuneration;
- Where the public interest score of a company exceeds the limits in the Act, providing for the filing by the company of its latest annual financial statements, securities register and register of disclosure of beneficial interests with the Companies and Intellectual Property Commission;
- Giving the right to any person to inspect and copy certain company records, including the company’s Memorandum of Incorporation, annual financial statements, securities register and the register of beneficial interests of the company, in terms of section 26 of the Act. This right of inspection will however not apply to smaller private companies, personal liability and non-profit companies where the annual financial statements have been internally prepared (and such company has a public interest score of less than 100) or the annual financial statements have been independently prepared by the company (and such company has a public interest score of less than 350);
- Providing clarity that a notice of amendment to a Memorandum of Incorporation takes effect 10 business days after receipt of the notice by the Companies and Intellectual Property Commission in terms of section 16 of the Act;
- Empowering the court to validate the irregular creation, allotment or issue of shares;
- Clarifying aspects relating to partly paid shares in terms of section 40 of the Act;
- Excluding subsidiary companies from the requirements of section 45 of the Act relating to financial assistance;
- Providing that a special resolution of shareholders is required for a share buy-back under section 48 of the Act where shares are to be bought back from directors, prescribed officers and persons related to directors and prescribed officers;
- Extending the definition of an employee share scheme to include situations where there are purchases of shares of a company;
- Amending section 118 of the Act to provide that a private company will be a regulated company in the context of affected transactions where it has 10 or more shareholders and it meets or exceeds a financial threshold of annual turnover or asset value to be determined by the Minister in consultation with the Takeover Regulation Panel;
- Providing for circumstances where a company is unable to identify persons who hold a beneficial interest in its securities;
- The composition of the social and ethics committee, and the publication of an exemption from the requirement to appoint such committee; and
- The presentation and approval of the social and ethics committee report at the annual general meeting or other meetings of shareholders.
The 2021 Bill is a redrafted bill with significant amendments that seek to reduce the regulatory regime on businesses; tighten anti-money laundering gaps; strengthen disclosure requirements, and enhance shareholder powers.
In this series, we will outline and unpack the amendments proposed by the 2021 Bill. Look out for our further blogs on the 2021 Bill.