The National Assembly has passed a host of bills this week, including two that will directly impact businesses and their reporting structures.
On Thursday (30 November) the NA passed the following bills:
- The Rates and Monetary Amounts and Amendment of Revenue Laws Bill
- The Taxation Laws Amendment Bill
- The Tax Administration Laws Amendment Bill
- The Independent Municipal Demarcation Authority Bill
- The South African Post Office SOC Ltd Amendment Bill,
- The Industry and Competition Companies Amendment Bill and
- The Competition on Companies Second Amendment Bill
The three money bills – the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, the Taxation Laws Amendment Bill, and the Tax Administration Laws Amendment Bill – are all related to the budget and form a typical annual process by National Treasury.
One of the proposals in the Rates Bill, for example, is to adjust tax tables and rebates to account for an estimated inflation rate of 4.9%. This means that the income thresholds and the tax rates at which individuals are taxed will be modified to reflect the increase in the general price level (inflation).
The Bill also proposes to adjust medical tax credits to account for the estimated inflation of 4.9%. Medical tax credits are deductions that taxpayers can claim to offset the cost of medical scheme contributions. For the first two members of a medical scheme, the monthly tax credit will increase from R347 to R364. For additional members beyond the first two, the monthly tax credit will increase from R234 to R246.
After considering the three bills, the Standing Committee on Finance recommended that the NA pass them with amendments.
However, the other four bills are more notable – particularly the Company bills.
Companies Amendment Bill
The Companies Amendment Bill proposes amendments to the Companies Act, 2008 (Act No. 71 of 2008).
The changes include redefining securities, inserting new definitions, clarifying when a Notice of Amendment of a Memorandum of Incorporation takes effect, and distinguishing when the right to access companies’ records may be limited.
The Bill also proposes provisions for the preparation, presentation, and voting on a company’s remuneration policy and its remuneration report.
It also provides for filing a copy of the annual financial statement. Furthermore, the Bill seeks to empower the court to validate the irregular creation, allotment, or issue of shares and to clarify how shares that are not fully paid are to be dealt with, amongst others.
One of the key changes being introduced in the bill is to force listed companies in the country to disclose the ratio of the top-paid to the bottom-paid 5% of workers in their reporting.
This is purportedly being done to address South Africa’s inequality issues.
South Africa currently ranks as one of the, if not the most unequal countries in the world, with massive gaps in wealth distribution among top and bottom earners.
High levels of executive pay have become a contentious issue the world over, but stands out in a country like South Africa where some top executives earn over R500,000 a day, compared to the average of R800 a day, or the poverty line of R25 a day.
In recent years, there has been a significant spike in shareholders of listed companies voting against high executive pay at Annual General Meetings, particularly in the finance sector.
The Companies Second Amendment Bill proposes to amend the time bars for proceedings to recover any loss, damages, or costs for which a person may be held liable in terms of section 77 of the Companies Act.
It also seeks to address the time bar for bringing an application to declare a person delinquent or under probation in terms of section 162(2) and (3) of the Companies Act and all matters connected therewith.
The Independent Municipal Demarcation Authority Bill
The Independent Municipal Demarcation Authority Bill suggests various changes to the Municipal Demarcation Act of 1998 to tackle several demarcation-related issues. It aims to address the problem of non-viable municipal amalgamations by proposing amendments to the current legislation.
The Bill proposes the repeal and replacement of the Municipal Demarcation Act of 1998 to bring it in line with current demarcation board practices. This includes transferring the current Municipal Demarcation Board’s functions from the Municipal Structure Act of 1998 to the new Bill.
The Bill recommends the creation of the Independent Demarcations Appeal Authority (IMDA) to replace the Municipal Demarcation Board. It also proposes that the IMDA Board may only determine or re-determine a municipal boundary every 10 years to minimise disruption and ensure stability, as the current timeframe is not sufficient to allow a municipality to establish itself and function properly.
The South African Post Office SOC Ltd Amendment Bill
The South African Post Office SOC Ltd Amendment Bill proposes amendments to the South African Post Office SOC Ltd Act of 2011.
The changes aim to expand the mandate of the South African Post Office (SAPO) to provide diversified and expanded services, extract value from infrastructure capacity and forge partnerships with other stakeholders.
The Bill also suggests revising the current governance structure and addressing problematic provisions identified during the implementation of the SAPO Act.
SAPO will serve as a logistics and e-commerce provider and partner for other e-commerce and logistics players, including SMMEs and informal traders.
Having considered all committee reports, the NA adopted the reports, and the Bills will now be sent to the NCOP for concurrence.