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Proposed amendments to the Companies Act

Tracy Liebenberg
October 2018

“Over the past few years I’ve come to understand what the Companies Act 71
of 2008 requires of me to manage my business legally and effectively. With talk
of more amendments on the way, what should I be preparing for?”
The Companies Act 71 of 2008 has, for the past seven years, been functioning
without any major amendment thereto. In September 2018 however an Commercial
amendment Bill has been published for public comment. Some of the proposed
changes are certainly welcome with certain existing laborious practices slated
for simplification and certain processes clarified.

The most notable proposed amendments affecting the day to day running of
your business and your business structure are set out below:
1. Amendments to the Memorandum of Incorporation (“MOI”)

In terms of the amendment Bill, the Companies and Intellectual Property
Commission (“CIPC”) will have to endorse or reject a submitted MOI within 10
business days after receipt of the notice of amendment. After such period, if the
CIPC has not reverted, the MOI will be deemed effective. This will help speed up
MOI submissions and approvals.
2. Remuneration report: Directors’ remuneration

The newly proposed section 30A of the Bill requires the preparation of a
remuneration report by public companies detailing the directors’ annual
remuneration to be considered by the shareholders at the annual general
meeting. The detail thereof must be in line with section 30A(2) and it is further
opined that the King IV (2016) will also have bearing on the proposed content.
3. Share capital matters: Court validation

The existing Companies Act does not provide for instances where the share
register must be corrected due to erroneous or irregular issuances or allotments.
The proposed amendment will empower any affected party to approach
a competent court to validate or correct the share issuance or erroneous
allotment.
4. Intra-group financial assistance

The proposed amendment will do away with the often-arduous regulatory
burden of having the decision to provide financial assistance to a subsidiary
company be approved by the board and shareholders. Only the board will
have to approve such financial assistance.

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