Companies Amendment Bills Signed into Law

Companies Amendment Bills Signed into Law

• 31 July 2024
• Regulatory Compliance and Legislation
• South African Accounting Academy

Once gazetted, the effective date of the changes will be clear. As a result, it seems that they are not yet in force.

The two new pieces of legislation are expected (amongst other things) to ‘promote the ease of doing business and impose greater corporate transparency on the earnings gap between the highest and lowest paid persons in a company’.

In addition, the Companies Second Amendment Act ‘extend(s) the period during which proceedings may be launched to recover any loss, damages or costs for which a person may be held liable under the law’.

The most material changes introduced by the Bills are, inter alia:

• Remuneration disclosures
• Social and ethics committees
• Revised triggers for private company takeover regulation (the new thresholds that will trigger the requirement for private companies to comply with the Takeover Regulations and the scrutiny of the Takeover Regulation Panel (TRP) when implementing affected transactions)
• Relaxation of intra-group financial assistance provisions
• Relaxation of approval requirements for a buy-back
• Director liability

The Companies Amendment Act as signed by the President streamlines company law to be clear, user-friendly and less burdensome on the conduct of business. This reform is important for the efficient and effective conduct of the domestic economy as well as the attraction of foreign investment.

The Act is also aimed at achieving equity between directors and senior management on the one hand, and shareholders and workers on the other hand.

Access the Amendment Bills here:

• Companies Amendment Bill’ ‘B’ version https://static.pmg.org.za/B27B-2023_Companies_Amendment_Bill.pdf
• Companies Second Amendment Bill’s ‘B’ version https://static.pmg.org.za/B26B-2023_Companies_Second_Amendment.pdf

Click here to download the Media Statement:

https://www.gov.za/news/media-statements/president-cyril-ramaphosa-assents-laws-advancing-ease-doing-business-and

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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