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Draft Companies Amendment Bill on Track

October 9, 2020

Department of Trade, Industry and Competition

The process of the Draft Companies Amendment Bill at the National Economic Development and Labour Council (NEDLAC) has been concluded.

The trade, industry and competition department confirmed this in a briefing in parliament on its first quarter performance report for 2020/21.

According to the department, the report was finalised and signed by all NEDLAC overall convenors (constituencies).

The department added that the Socio-Economic Impact Assessment System on the draft bill was submitted to the planning, monitoring and evaluation department and a certificate was issued in June 2020.

The draft bill aims to:

• amend the Companies Act, 2008, so as to change the definition of securities;
• clarify when a Notice of Amendment of a Memorandum of Incorporation takes effect;
• empower a court to validate the irregular creation, allotment or issue of shares;
• clarify how shares which are not fully paid are to be dealt with;
• exempt a company from the requirements applicable to financial assistance between a company and its subsidiaries;
• amend the instances where approval of shareholders will be required for any share buybacks by the company;
• extend the definition of an employee share scheme to include those where there are purchases of shares of a company;
• limit the circumstances under which a private company will be a regulated company;
• deal with the composition of the social and ethics committee and its functions;
• ensure differentiation of duties between the chairperson of the Tribunal and the executive director thereof; and
• provide for matters related thereto.

The draft bill was published for comment in 2018.

According to the draft bill’s memorandum, the overarching purpose of the proposed amendments is to review and identify all problematic areas arising from the implementation of the act and the regulations as from May 2011.

The proposed legislation also seeks to align the act with modern international corporate trends.

In 2019 a revised bill was referred to the Nedlac Trade and Industry Chamber for consideration.

In terms of competition policy and economic planning, the department highlighted the issuing of COVID-19 block exemptions, the designation of the sugar industry and the data price reduction agreement with MTN.