Companies Amendment Acts finally gazetted

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Companies Amendment Acts finally gazetted

• 06 January 2025
• Regulatory Compliance and Legislation
• South African Accounting Academy

Summary:

The 2 Companies Amendment Acts which were assented into law by the President on 26 July 2024 and were published in the government Gazette on 27 December 2024, have finally become operational. This is a significant milestone in corporate law South Africa.

Article:

South Africa's corporate landscape is set to transform as two Companies Amendment Acts become operational, and the Department of Trade, Industry and Competition (the dtic) has welcomed the proclamation of the two Companies Amendment Acts of 2024 by the President.

Some sections of the Companies Amendment Act 16 of 2024 and the entire Companies Second Act 17 of 2024 came into operation on 27 December 2024.

The Companies Amendment Act focuses on the ease of doing business by clarifying, simplifying and strengthening certain sections of the Act. Sections that include 16, 25, 40, 48, 61, 90, 95, 135 and 204 amongst others are now effective and can be implemented by companies in South Africa."

However, not all sections of the Amendment Act are operational. The sections that require regulations will only commence after the regulations have been finalised.

Other sections that will only come into operation on dates that will be determined in 2025, include:

• requirements on the duty to prepare and present a remuneration report and remuneration policy
• the related requirements to disclose pay gap ratios, for transparency and addressing inequality of pays between top executives (directors) and low earning workers in state owned companies and public companies

According to the dtic, the Companies Second Amendment Act is operational in its entirety.

• The Act addresses the recommendations from the Zondo Commission into State Capture to extend the time bar of when an application can be brought to court to make an order to declare a Director delinquent or under probation, in terms of section 162 of the Act.
• The time bar was extended from 24 months (two years) to 60 months (five years). The application of the law is retrospective including for acts that took place before this Act or the extension of the time bar.
• Plus, the court also has the power to extend the time bar to hold directors liable for costs, losses or damages incurred for acts that breach fiduciary duties. The court can extend the time bar of such damages or losses on good cause shown beyond three years.

Overall, the court can extend the time bar beyond five years on good cause shown should circumstances require, according to the dtic.

The Companies Amendment Act, 2024 includes provisions to enhance transparency and provide for more disclosure by companies. The Companies Second Amendment Act, 2024 extends the time bars applicable to applications for director delinquency and proceedings to recover loss due to director liability.

Click here to download the gazetted Amendment Acts:

https://18a66295-3a0f-41fb-a13d-9849edd3b2a3.usrfiles.com/ugd/18a662_e6a60ccd044d4803bcc5c90eca0b3bb3.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The Companies Act (including the relevant amendments) is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• As an auditor, independent reviewer and accountant, you need to consider your client’s compliance with the Companies Act.
• As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies and company secretarial practitioners to keep abreast of such changes in so that companies continue to meet their compliance obligations.

Relevance to Your Clients:

• An entity (company or close corporation) has a duty to comply with the Companies Act, and directors have to fulfil their duties accordingly, otherwise they could be held liable.
• As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies to be aware of the latest changes that may affect their compliance obligations.

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