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What are the most significant changes in companies act 2008?

Chapter 2 – Question 2

Written by Dr. Adv. Leigh Hefer & Jayne Hunter-Rhys. COMPANY SECRETARY’S HANDBOOK (2021). Published by Genesis Corporate Services.

  1. Structure and flexibility of types of companies, based on intention, and not on number of shareholders;
  2. simplification of the formation of companies involving two forms – Notice of Incorporation (NOI) and Memorandum of Incorporation (MOI), and a payment of a prescribed fee (R175 – R475);
  3. a flexible single Constitution of the company, namely, the Memorandum of Incorporation (MOI) as opposed to a Memorandum of Association and Articles of Association, with alterable and unalterable provisions;
  4. a Capital Maintenance Rule based on a solvency and liquidity test (S & L Test), instead of par value and no par value;
  5. enhanced rights of shareholders and the interface of Shareholders Agreements with the MOI;
  6. enhanced directors and prescribed officers duties and liabilities, and the provision of indemnification;
  7. different types of companies with different public interest scores (PI Scores) will determine whether a company has to be audited, independently reviewed, or neither, and the scope of financial reporting and applicable financial reporting standards;
  8. public companies and state-owned companies have to comply with the enhanced accountability and transparency set out in Chapter 3 (External Audit, Company Secretary and Audit Committee) of Companies Act 2008 (the Act);
  9. a whole chapter of the Act, namely Chapter 6 has been dedicated to business rescue (as opposed to liquidation or judicial management) to facilitate the rehabilitation of financially distressed companies;
  10. the Act provides for the indefinite continuance of existing close corporations, but no new close corporations may be formed from 01 May 2011. However, in terms of Schedule 4 of the Act, close corporations have to comply with certain provisions of the Act and in certain circumstances require an audit and an annual general meeting (AGM) of the members;
  11. only public companies and state-owned companies must have a company secretary;
  12. audit committees are no longer a board committee but a corporate committee and will be appointed by shareholders at the AGM which require a minimum of three members;
  13. all public companies, listed companies and state-owned companies, and all other companies or close corporations with a PI Score in excess of 500 points must appoint a social and ethics committee;
  14. approvals required for any distributions, financial assistance (including intra-group loans), insider share issues and options;
  15. fundamental transaction, take-overs and offers;
  16. listed companies should comply with the amended Johannesburg Stock Exchange (JSE) Listings Requirements (LRs).

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