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What are the purposes of companies act 71 of 2008?

Chapter 2 – Question 1

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

The purposes of Companies Act, Act 71 of 2008 are to:

    1. Promote compliance with the Bill of Rights as provided for in the Constitution, in the application of company law;
  1. Promote the development of the South African economy by:
    • 2.1 Encouraging entrepreneurship and enterprise efficiency;
    • 2.2 Creating flexibility and simplicity in the formation and maintenance of companies;
    • 2.3 Encouraging transparency and high standards of corporate governance as appropriate, given the significant role of enterprises within the social and economic life of the nation;
  2. Promote innovation and investment in the South African markets;
  3. Reaffirm the concept of the company as a means of achieving economic and social benefits;
  4. Continue to provide for the creation and use of companies, in a manner that enhances the economic welfare of South Africa as a partner within the global economy;
  5. Promote the development of companies within all sectors of the economy, and encourage active participation in economic organisation, management and productivity;
  6. Create optimum conditions for the aggregation of capital for productive purposes, and for the investment of that capital in enterprises and the spreading of economic risk;
  7. Provide for the formation, operation and accountability of non-profit companies in a manner designed to promote, support and enhance the capacity of such companies to perform their functions;
  8. Balance the rights and obligations of directors and shareholders within the companies;
  9. Encourage the efficient and responsible management of companies;
  10. Provide for the efficient rescue and recovery of financially distressed companies in a manner that balances the rights and interests of all relevant stakeholders;
  11. Provide a predictable and effective environment for the efficient regulation of companies.
    Source: Section 7 of Companies Act 71 of 2008

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