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# What are the purposes of companies act 71 of 2008?

Written by Dr. Adv. Leigh Hefer & Jayne Hunter-Rhys. *COMPANY SECRETARY’S HANDBOOK (2021)*. Published by [Genesis Corporate Services](https://genesiscorporate.co.za/publications/publications/company-secretarys-handbook?utm_source=infodocs&utm_medium=blog&utm_campaign=What%20is%20the%20definition%20of%20a%20company%20secretary?).

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;

2. 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;

3. Promote innovation and investment in the South African markets;

4. Reaffirm the concept of the company as a means of achieving economic and social benefits;

5. 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;

6. Promote the development of companies within all sectors of the economy, and encourage active participation in economic organisation, management and productivity;

7. 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;

8. 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;

9. Balance the rights and obligations of directors and shareholders within the companies;

10. Encourage the efficient and responsible management of companies;

11. Provide for the efficient rescue and recovery of financially distressed companies in a manner that balances the rights and interests of all relevant stakeholders;

12. 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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