A lack of capacity at the Companies and Intellectual Property Registration Office (Cipro) and a delay in finalising the regulations that will accompany the new Companies Act are the only remaining significant concerns relating to the April 1 implementation date that was confirmed by Trade and Industry Minister Rob Davies in Parliament on Tuesday.
During this week’s debate on the Companies Amendment Bill, DA spokesman for trade and industry Tim Harris said Cipro was operating at two-thirds of the capacity required to enforce the law. It also appeared that plans to address Cipro’s backlog had to be postponed for a week. Cipro will have a much greater role to play under the new act.
However, last-minute changes to the bill appear to have addressed many of the concerns raised by the accounting and legal professions as well as opposition parties. The changes were thrashed out in lengthy meetings between MPs on the portfolio committee on trade and industry and legal representatives of the Department of Trade and Industry.
Ewald Müller, the senior executive of standards at the SA Institute of Chartered Accountants, said yesterday that while he still had some concerns about the April 1 deadline, he was very pleased with the last-minute changes made to the bill.
He also referred to welcome reports of some important changes to the regulations.
Such changes included the easing of the thresholds for audits and reviews. In addition it appeared that companies with February year-ends would be able to apply the current act (of 1973) in drawing up their financial statements.
Müller was now confident that larger companies would be able to implement the new act on April 1. However, he said that small companies might face some challenges.
The DA, Cope, IFP and FF Plus all voted against the bill. Harris said that while the DA “strongly supports the broader effort to reform our corporate law”, he opposed the five-year disqualification of fraudulent directors, arguing instead for a lifetime ban subject to judicial review. Harris also called for the April 1 implementation date to be postponed for five months.
Davies dismissed the concerns of the opposition, which he described as “overstated”. He said the new act marked “an important step forward in reforming and modernising South Africa’s company law for the benefit of all the population”.
A key aspect of the new law was that it recognised employees’ rights to participate in company rescue procedures. He pointed out that the department had been working for two years and was ready for the launch of the “new” Cipro.
Davies said the department “had engaged over and above the call of duty” and eventually such engagement had to be halted and the legislation implemented.
“If we detect problems as we move, we will fix them”. - Ann Crotty