New Companies Act will affect all businesses
by Hayley Callanan

ayley Callanan, a senior consultant Statucor in Durban, identifies some of the key regulations arising from the Companies Act 2008, which became effective on the 1st of May 2011.

“Non-compliance with the Act and its accompanying regulations could have dire consequences for all companies”, states Hayley.

“One of the changes that will affect businesses owners is that all companies are required to adopt a Memorandum of Incorporation (MOI).

This MOI will replace the current Memorandum of Association and Articles of Association, which are currently governing the company concerned”. Hayley warns, “Such MOI will need to be adopted before the effective date of 1 May 2013, otherwise the Act will take preference over the current Memo & Articles. This could have a dire effect on companies, especially those with shareholders agreements, as the agreement will only continue to have the same effect, to the extent that it is consistent with the Act and the company’s MOI”. Hayley advises that “It is therefore in the best interest of the company to ensure they remain compliant and register their new MOI before 1 May 2013”.

“This adoption of the new MOI will require a Special Resolution by the shareholders of a company, so larger companies will need to have this MOI approved at their Annual General Meeting (AGM), keeping in mind that the 1 May 2013 deadline is looming.”

Another change companies should note of is that until companies adopt the new MOI, they will be required to undergo an audit, unless their current Memo & Articles are silent on the matter. It doesn’t affect public companies and those required to undergo an audit according to their Public Interest Score, as the Act requires that these companies have an audit, irrespective of the provisions of their current Memo & Articles. All public companies, state owned companies, and those who have voluntarily decided to have an audit, must ensure that they are meeting the regulatory requirements of such in terms of the Act.
It is also a requirement of the Act that any company that is mandated to have an audit must also appoint an Audit Committee. The Audit Committee must be appointed at each AGM, and must comprise of at least 3 independent non-executive directors. The committee members are also required to have the relevant knowledge and experience, and may also require minimum qualifications as prescribed by the Minister of Trade and Industry.

For further information on the New Companies Act and how it may affect your business, contact Hayley Callanan from Statucor on: 031-514 7150.

Statucor is a full-service company secretarial services firm, specialising in Corporate Governance and compliance with respect to the Companies Act.