South Africa's new Companies Act
Cost of doing businessOne of the key challenges facing small businesses in South Africa is that of the cost of doing business, and the new Act lends a helping hand to small businesses by reducing the regulatory burden placed on them. While the new Act still requires all companies, both large or small, to prepare annual financial statements, this is largely intended to encourage sound financial management, as well as promote the sustainability of companies of all sizes. "However, some enterprises will be exempted from having their financial statements audited or reviewed, depending on their size, workforce and nature of their activities," the DTI says. Further, the Act introduces an approach that increases the focus on substance over procedural complexities in relation to the registration and maintenance of companies. It offers a simplified framework on compliance issues, in respect of the structure, registration and maintenance of companies, so as to reduce the need for intermediaries, and save businesses time and money in the process.
Shareholder empowerment, activismThe new Act also promotes shareholder activism and empowerment, especially in relation to minority shareholders, some of whom may be foreign investors. In this regard, the required support for the calling of a shareholders meeting has now been reduced to 10%. It also makes provision for an audit committee to be appointed by shareholders of a company, which entrenches the role of shareholders and the level of independence that should be maintained between audit committees and boards of companies. In addition to this, more comprehensive corporate governance principles, to promote the effective functioning of companies, will henceforth be compulsory in terms of the new Act. "This Act will go a long way in promoting sound corporate governance, transparency, and access to information, among other regulatory oversight improvements," Ntuli said. "The country will also see a more effective and robust investigative approach to company complaints and the resolution thereof. The DTI will embark on a country-wide education and awareness campaign to ensure that the public and businesses are fully conversant with the new Act." SAinfo reporter
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