2 new business laws for South Africa open for public comment

 ·5 Sep 2023

The Portfolio Committee on Trade, Industry and Competition has opened the Companies Amendment Bill and the Companies Second Amendment Bill for public comment.

Interested parties will have until 12h00 on Monday, 2 October 2023 to submit comments to the Committee. Oral submissions on the Bill can also be requested, with public hearings scheduled for 17,18 and 20 October 2023.

One of the biggest changes seen in the Companies Amendment Bill is to force listed companies to disclose the ratio of the top-paid employees with those in the bottom-paid 5%.

Trade and Industry Minister Ebrahim Patel said that this Bill will help address South Africa’s rampant inequality – with South Africa the most unequal society in the world.

In South Africa, some top executives earn over R500,000 a day, whilst the average person makes R800 a day or the poverty line of just R25 a day.

There has also been a recent push amongst shareholders of listed companies to vote against high executive pay at Annual General Meetings.

The Bill seeks to amend the Companies Act, 2008 through the following:

  • Clarify when a Notice of Amendment of a Memorandum of Incorporation takes effect;

  • Differentiate where the right to gain access to companies’ records may be limited;

  • Provide for the preparation, presentation and voting on companies’ remuneration policy and directors’ remuneration report;

  • Provide for the filing of a copy of the annual financial statement;

  • Empower the court to validate the irregular creation, allotment or issue of shares;

  • Clarify how shares which are not fully paid are to be dealt with;

  • Exclude the subsidiary company from the requirements relating to financial assistance;

  • Provide for instances where a special resolution is required for acquisition of shares by the company;

  • Extend the definition of an employee share scheme to include situations where there are purchases of shares of a company;

  • Provide for the circumstances under which a private company will be a regulated company;

  • Deal with the composition of the social and ethics Committee;

  • Provide for the publication of the application for exemption from the requirement to appoint a social and ethics committee;

  • Provide for the presentation of the social and ethics committee report at the annual general meeting or shareholders’ meeting as the case may be;

  • Ensure the differentiation of duties between the chairperson of the Companies Tribunal and the Chief Operating Officer;

  • Provide for matters connected therewith.

On the other hand, the Companies Second Amendment Bill aims to adjust the time limits for legal measures related to recovering losses or damages for which a person can be held responsible according to section 77 of the Companies Act, 2008. It seeks to change the following:

  • Amend the time bar for the bringing of an application to declare a person delinquent in terms of section 162(2) and (3) of the Companies Act;

  • Provide for matters connected therewith.

Companies Amendment Bill and the Companies Second Amendment Bill can be found below:

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