The South African Institute of Chartered Accountants (Saica) has welcomed the proposal by the Department of Trade and Industry to the Presidency to defer the effective date of the new Companies Act until May 1.
On Friday, Saica said it believed that companies would need at least three months from the publication of the final amendments, regulations and forms to comply with the new requirements.
The Act was targeted to come into effect today, April 1.
The subject of much anticipation and review, the Act promised to increase business transparency; improve director accountability; provide a simplified administration; allow for greater flexibility for corporate auditing and review; and provide for innovative new business rescue provisions, Saica noted.
“However, companies would never have been able to implement an Act that is not yet available in consolidated form after substantial amendment; a position exacerbated by the absence of the final regulations that are essential for companies to comply with the Act,” said Ewald Muller, Saica's senior executive for standards.
“We are pleased that government has been responsive to calls by Saica, the JSE and other market commentators to delay the implementation of the Act, but are concerned South African companies will not have enough time to prepare and comply with its provisions. This will be the biggest overhaul of a highly complex area of company law in many decades. It will change the ground rules of business - and we must get it right.
“We should not subcontract the resolution of legislative contradictions and regulatory anomalies to protracted costly court cases.”
Over the past few months the Department of Trade and Industry, with input from other stakeholders including Saica, had already made “great improvements” to the Act through the Amendment Bill and the regulations.
Saica, on behalf of SA's more than 30,000 chartered accountants, said it welcomed the opportunity to continue this collaboration.
The provisions of the new Act were to be administered by the newly formed Companies and Intellectual Properties Commission, a successor organisation to the Companies and Intellectual Property Registration Office.
Muller cautioned that the expanded remit of the Companies and Intellectual Properties Commission would pose a severe challenge to any organisation.
“Our members, who are responsible for helping SA's companies comply with regulations and who must deal with the new body, will be pleased that it will now have an opportunity to fine-tune its new systems before the Act is implemented.”
Saica was working with the Companies and Intellectual Property Registration Office to help reduce the backlog in a number of areas.
“We anticipate, indeed we welcome, the opportunity this postponement gives us to also make a contribution to the success of the future Companies and Intellectual Properties Commission.” - I-Net Bridge