Articles on: Cosec

What are the most significant changes in companies act 2008?

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

Structure and flexibility of types of companies, based on intention, and not on number of shareholders;
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);
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;
a Capital Maintenance Rule based on a solvency and liquidity test (S & L Test), instead of par value and no par value;
enhanced rights of shareholders and the interface of Shareholders Agreements with the MOI;
enhanced directors and prescribed officers duties and liabilities, and the provision of indemnification;
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;
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);
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;
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;
only public companies and state-owned companies must have a company secretary;
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;
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;
approvals required for any distributions, financial assistance (including intra-group loans), insider share issues and options;
fundamental transaction, take-overs and offers;
listed companies should comply with the amended Johannesburg Stock Exchange (JSE) Listings Requirements (LRs).

Hard copy and E-Book Publications for the Professionals, Company Secretaries, Company Directors and Prescribed Officers, Members of CCs, Business Owners, Lecturers and Students on various business, compliance and legislative topics.

Updated on: 23/05/2023

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