Trade and Industry Wants Companies Act in Effect by October

Department of Trade and Industry

The trade and industry department is determined to ensure that the Companies Act is implemented in the fourth quarter of 2010.

According to the South African Institute of Chartered Accountants (SAICA), this was revealed during recent meetings between SAICA and a DTI delegation led by minister Rob Davies. Also present at the meetings were the Cape Chamber of Commerce, Cape Law Society and Business Unity South Africa (BUSA).

At the meetings, the minister declared the new Act to be a “vast improvement” on the existing Act. He holds the view that the new legislation has to be introduced as soon as possible, in particular due to the provisions on business rescue.

The Act was signed into law on 8 April 2009. It comes into effect on a date still to be determined by the president via proclamation in the Government Gazette.

The business delegation raised concerns on sections dealing with solvency and liquidity tests, reckless trading, registration of external companies and business rescue procedures. The general consensus was that more detailed meetings were needed so that business could help in crafting viable solutions.

The department also notified the meetings that it had only recently received the Amendment Act. It was in the process of reviewing it.

The department had announced at the beginning of 2010 that it would amend certain provisions in the Act dealing with incomplete provisions as well as grammatical, technical and incorrect cross-references that affected interpretation of the provisions.

The SAICA statement declares that the department will consider all proposed amendments against the policy background of the Act.

The Amendment Act is still to be submitted to Parliament. The department emphasised that it would be subject to due process including a 30 day public comment period involving public hearings.

The department also reported that extensive public comment had been received on the Act’s draft regulations. This had resulted in substantial changes to the regulations. Therefore, they will be re-released as revised draft regulations for public comment.

At the meetings, the minister also expressed the opinion that BUSA was the correct channel to use in communicating with government as it was the recognised voice of business.

Sabinet Cape Town Office