A guide to business rescue prepared by werksmans attorneys the long anticipated new companies act no. There are some essential things you would need to know before you decide to incorporate a company in south africa. The basis of the common law tarquand rule simply put, the common law tarquand rule means that an outsider contracting with a company in good faith is entitled to assume that the internal requirements and procedures have. South africa companies act 2008 south africa company law. The contention that section 207 of the companies act 71 of 2008 constitutes a codification of the common law tarquand rule. The companies act, 71 of 2008 act gives shareholders certain substantive powers which include, among others, the power to amend the memorandum of incorporation of the company moi, the power to elect and remove directors, and the power to approve the disposal of all or the greater part of the companys assets. Companies act, 2008 act 71 of 2008 eng regulations part a2. Companies act, 71 of 2008 series dommisse attorneys inc.
From 1 may 2011 company law in south africa was dramatically altered. It is not true that npcs or any companies have to adopt a new moi, and it is also not true that it has to be done by 30 april. In this memorandum of incorporation unless the context otherwise requires. Piercing the veil under section 209 of the companies act 71. Nonprofit law in south africa council on foundations. No new close corporations may be formed once that act comes into operation during 2010. Reference to the act shall, if the act is replaced by any other statute, be construed as a reference to the statute or statutes from time to time in force relating to companies. The companies act audit requirement and other matters. It furthermore proposes the transformation of three existing company law entities, namely the takeover regulation panel, the financial reporting. The draft regulations are released for further stakeholder engagement, and in preparing this draft regulations the dti took into account the companies act, 2008 and companies amendment bill as.
This paper critiques the corporate governance approach under the companies act 71 of 2008. The investigation identifies the lacuna in the law and makes recommendations for reform. A new direction, south african mercantile law journal, 262 307337 show full item record files in this item. One of the effects of the new companies act of 2008 is the phasing out of close corporations. The companies act 71 of 2008 new companies act will commence on 1 may 2011. Par value shares old act allowed par value and no par value share new act precludes creation of new authorised par value share existing par value shares remain may issue unissued par value shares from authorised capital as at 1 may 2011 if at least one such share issued new company cannot create or issue. Reservation of name for later use part b incorporation and legal status of companies. The companies act 2008 at a glance overview you have decided to start a business and you want to incorporate a company. Effect of conversion on legal status schedule 3 amendment of laws a. How does the new companies act impact small and medium. Understanding the new companies act pwc south africa. In 2011, the government adopted new companies act regulations under the companies act of 2008 that prescribe the reporting frameworks based on each individual companys public interest score. Those companies act regulations permit the use of either ifrs standards, the ifrs for smes standard, or sa gaap in specific instances.
Download a copy of the companies act, 2008 ammended companies act and. Pdf the south african companies act and the realisation of. Existing close corporations can elect to continue to exist until deregistered, dissolved or converted into a private company governed under the new companies act. The companies and intellectual property commission cipc has, on 28 june 2017, accredited the south african institute of chartered accountants saica as a professional body for business rescue practitioners in terms of section 8 1 of the companies act, 2008. Feb 19, 2019 the companies act, 71 of 2008 act gives shareholders certain substantive powers which include, among others, the power to amend the memorandum of incorporation of the company moi, the power to elect and remove directors, and the power to approve the disposal of all or the greater part of the companys assets. You will find below the key extracts from the south africa companies act along with the full act. South africas act consists of only 225 sections and five schedules, whereas the uks act consist of a whopping 1297 sections and over 16 schedules.
Company required to be established in terms of the companies act 1. The companies act audit requirement and other matters related. Rescue mechanisms in south africa have existed for almost a century through the companies act provisions relating to judicial management ss 427 to 440. The new modus operandi of a company has to comply with the companies act 712008, the companies. This information should be considered in conjunction with the act itself. The companies act proposes the establishment of a new institution, the. South africa company law is a set of rules and regulation formed under the south africa companies act 2008. Procedurally, the judicial manager was appointed by the master of the high court. The act was signed by the president on 8 april 2009, but implementation was deferred to accommodate necessary amendments. The south african companies act of 2008, which came into force on may 1, 2011, provides for the incorporation of a nonprofit company, which is recognized as a separate category of company.
The new companies act is now operative schoemanlaw inc. The act was signed by the president on the 9th april 2009 and gazetted in gazette no. When comparing south africas new act with the amended companies act of 2006 in the united kingdom, it is easy to spot the difference. The companies act 2008 was finally, after much debate and controversy, made law on 1 may 2011. Amendment act, 2011 the amendment act, and the companies regulations, 2011 the regulations came into effect on 1 may 2011. The apostolic faith mission of south africa private act repeal act, 2008 no. The new act comes with major changes in the company law system. Amendment of the companies act regulation, 2011 102kb pdf 5 february 2014. For guidance, the developers looked to south african company law for the 21st.
The reader is advised to consult a professional adviser for further assistance and. The act fundamentally rewrites south african company law and accordingly will have far reaching effects. Chapter 6 of the south african companies act 71 of 2008. Companies act institute of directors in southern africa iodsa. Like any new legislation, some of these changes still need to be revisited while others still need time to settle into our legal system. Constitution means the constitution of the republic of south africa, 1996. The cipc released the following additional information to assist in the application and implementation of the companies act. Pdf the companies act 71 of 2008 the companies act was promulgated in. The companies act the act provides for a new classification of companies. Feb 19, 2019 companies act, 71 of 2008 series part 1.
Audit and accounting requirements of the new companies act. The bill, if introduced in its current form, proposes a number of changes to the companies act, 2008. The new companies act master builders kwazulunatal. Recently many changes in the laws for south african companies have occurred. Jul 24, 2012 par value shares old act allowed par value and no par value share new act precludes creation of new authorised par value share existing par value shares remain may issue unissued par value shares from authorised capital as at 1 may 2011 if at least one such share issued new company cannot create or issue. The test is whether the company could surmount its difficulties and become a successful concern. Promote the development of the south african economy by. Corporate governance under the south african companies act.
The act introduces a multitude of requirements for companies in the areas of auditing and accounting. Substantial changes to the south african companies act 2008 companies act, which became law in 2011, have been proposed. This is the act which we refer to as the new act, though the gloss of newness is long gone. The new companies act 71 of 2008 chapter 6 being called business rescue and compromise with creditors was signed by the state president in april 2008 and is expected but nobody is sure to come into effect in november 2010. The companies act, 2008 the 2008 act provides that a companys memorandum of incorporation moi is subject to the 2008 act and must be consistent with its provisions. A guide to business rescue prepared by werksmans attorneys. Companies act 2008 and the companies amendment bill 2010 published in gazette no 33695 of 27 october 2010. After much anticipation, the 1 may 2011 saw the companies act 71 of 2008 come into operation. In other words, a company cannot fundamentally contract out of the companies act, 2008. Acts online provides legislation, including amendments and regulations, in an intuitive, online format.
The companies act 61 of 1973 the previous act was repealed on 1 may 2011. This note has been prepared on the basis of the new companies act, as amended by the latest version of the companies amendment bill and as read with the final companies regulations. Schedule 5 of the act sets out the transitional arrangements, which are summarised as follows. The cipc can issue guidance to the public by issuing explanatory notices outlining its procedures or publishing nonbinding opinions on the interpretation of any provisions of the act in terms of section 1882b of the companies act, 2008. A new direction, south african mercantile law journal, 262 307.
Companies act no 71 of 2008 by ira epstein fluxmans inc. Comments may be submitted to the sa department of trade and industry by 20 november 2018, and we encourage business to consider. Piercing the veil under section 209 of the companies act. We are the leading resource for freely available legislation in south africa and are used daily by thousands of professionals and industry leaders.
Preexisting companies on 1 may 2011 every preexisting company, that was formed in terms. Promote compliance with the bill of rights as provided for in the constitution in the application of company law. Companies amendment act 3 of 2011 act to provide for the incorporation, registration, organisation and management of companies, the capitalisation of profit companies, and the registration of offices of. The companies act implications for directors and prescribed.
Be it enacted by the parliament of the republic of south africa, as follows. The purpose of this writeup is to let you know what the essential compliance and preincorporation matters arising from the companies act, 71 of 2008, are before you embark on your entrepreneur journey. Cassim rehana, 2014 piercing the veil under section 209 of the companies act 71 of 2008. Companies act 71 of 2008 english text signed by the president assented to. What you need to know about the companies act of 2008. I have not come across a more appropriate legal firm for startups in south africa and they have really built up a broad range of knowledge in. The companies amendment bill, 2018 the bill was released for public comment by the minister of trade and industry on 21 september 2018. To the extent that a provision of the moi contravenes or is inconsistent with the 2008 act, it is void section. The new act and regulations became effective on 1 may 2011. The turquand rule has essentially been codified in section 207 of the companies act, 2008 which provides that a person dealing with a company in good faith, other than a director, prescribed officer or shareholder of the company, is entitled to presume that the company, in making any decision in the exercise of its powers, has complied with all of the formal and procedural requirements in. Companies act no 71 of 2008 western cape government. The long awaited south african companies amendment bill bill was published on 21 september 2018 for comment. Setting up your company if you are considering setting up a company, the two options that are available to you are to either incorporate a new company which is registered with the correct details from inception, or you can acquire a shelf company, transfer the shares held by the incorporator to the new.
List of alterable provisions in the companies act, 2008 1. A new era of company law dawned, and with it a host of new concepts, rights, remedies. Clarification of the turquand rule when contracting with. The new companies act of 2008 what about close corporations. Limitation of period to incorporate close corporations or convert companies 3. The draft regulations are released for further stakeholder engagement, and in preparing this draft regulations the dti took into account the companies act, 2008 and companies amendment bill as published. Apr 29, 2016 when comparing south africas new act with the amended companies act of 2006 in the united kingdom, it is easy to spot the difference. Act that is ineligible or disqualified from appointment in terms of the provisions of the companies act is regarded to have resigned that office as from the effective date of the act. A company falling within the definition of a soc in terms of new act, will. This act makes significant changes to south african law, including the capital rules. Guidelines for corporate law reform may 2004, a policy document developed by the department of trade and industry the dti. This act is called the companies act, 2008, and comes into operation on a date. With acts you are guaranteed the latest and most up to date resource for your legislative needs. Interestingly enough, it has enjoyed less attention than its cousin the consumer protection act, which became operational on 1 april 2011.
On 26 march 2020, the minister of mineral resources and energy published a notice amending schedule 2 of the electricity regulation act act no. For companies wishing to, the act provides for the simplest possible form of incorporation by use of a standard form of moi which permits the incorporators to accept the required provisions, as well as the default provisions with or without alteration. The minister of trade and industry has, in terms of section 223 and item 14 of schedule 5 of the companies act, published the companies regulations. Companies act 2008 south africa pty company registration. This implies that all companies have to determine which officers will be classified as prescribed officers once the new companies act becomes effective. For guidance, the developers looked to south african company law for the 21st century. This page is continuously updated to ensure that you can stay up date on the companies law of south africa. The simplicity and flexibility reflected in the act will contribute significantly to promote. A preexisting company may not authorise any new par value shares, or shares. Recently, south africa has undergone a major process of law reform, culminating in the companies act no.
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