Summarised Changes of the New Companies Act
The new Companies Act which should come into effect on 01 July 2010 will have a significant impact on Corporate Governance in South Africa.
There are numerous changes and the Act now regulates items like fundamental transactions.
Fundamental transactions can be classified as transactions involving the disposal of a majority of the Company's assets, schemes of arrangement and mergers.
Creditors will have to be informed of merger's that will be taking place and will have the right of recourse to the law if they feel that they are being unfairly prejudiced.
Furthermore fundamental transaction will require approval of the transaction by a 75% majority of shareholders voting on the transaction.
Shareholder's rights will also be increased.
Shareholders who unsuccessfully oppose fundamental or other such actions in the prescribed manner will thereafter be able to compel the company to repurchase all of their shares for their fair value, unless a court orders otherwise.
There are also new procedures that empower shareholder's to remove a director if his duties are being neglected.
The Act also gives directors increased powers and responsibility in relation to corporate finance actions such as the issue of shares and the making of distributions to shareholders.
Companies will no longer be able to make distributions with only the approval of shareholders: the approval of the directors will be a necessary prerequisite.
Close Corporation Changes If a close corporation fits into the space of a public interest company there is a possibility it could be required to be audited.
Up until the new Act comes into effect new close corporations can still be formed.
Close Corporation already in existence can choose to either convert to a company or continue as they are.
There will be no automatic dissolutions.
There is also a new requirement that financial statement of for-profit companies will have to be prepared within six months of the financial year -end instead of the previous nine month rule.
This means that companies will need to ensure that they adequately plan and prepare for year end.
There are numerous changes and the Act now regulates items like fundamental transactions.
Fundamental transactions can be classified as transactions involving the disposal of a majority of the Company's assets, schemes of arrangement and mergers.
Creditors will have to be informed of merger's that will be taking place and will have the right of recourse to the law if they feel that they are being unfairly prejudiced.
Furthermore fundamental transaction will require approval of the transaction by a 75% majority of shareholders voting on the transaction.
Shareholder's rights will also be increased.
Shareholders who unsuccessfully oppose fundamental or other such actions in the prescribed manner will thereafter be able to compel the company to repurchase all of their shares for their fair value, unless a court orders otherwise.
There are also new procedures that empower shareholder's to remove a director if his duties are being neglected.
The Act also gives directors increased powers and responsibility in relation to corporate finance actions such as the issue of shares and the making of distributions to shareholders.
Companies will no longer be able to make distributions with only the approval of shareholders: the approval of the directors will be a necessary prerequisite.
Close Corporation Changes If a close corporation fits into the space of a public interest company there is a possibility it could be required to be audited.
Up until the new Act comes into effect new close corporations can still be formed.
Close Corporation already in existence can choose to either convert to a company or continue as they are.
There will be no automatic dissolutions.
There is also a new requirement that financial statement of for-profit companies will have to be prepared within six months of the financial year -end instead of the previous nine month rule.
This means that companies will need to ensure that they adequately plan and prepare for year end.
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