Tag: Companies Act

The process of ‘business rescue’, as outlined in the Companies Act, has become heavily stigmatised in South Africa, leading to undue strain on corporates and an overall less healthy business environment. Companies, like people, can get 'sick' from time to time. When this occurs, a business is said to be suffering from 'financial distress', a condition caused by various factors.

In the current economic environment, there are various reasons why small and medium enterprises (SMEs) would require an audit of their annual financial statements. An audit could be required by law in terms of the Companies Act of South Africa, the company’s memorandum of incorporation, the bank during an application for funding, potential investors, or the regulators in the industry in which that SME operates (or any other legislation).

Mining companies are under increased pressure from regulators, investors, and communities to manage social and environmental risks arising from mine closure and rehabilitation. Abandoned mines and their dumps are common features of the South African mining landscape.

A recent decision of the Supreme Court of Appeal (SCA) upholds the rights of dissenting minority shareholders in situations where a company intends to repurchase more than 5% of its issued shares of any particular class.

Filing of Financial Accountability Supplements instead of Audited Annual Financial Statements during the period 01 April 2020 to 31 March 2021. On 01 July 2018, we mandated Extensible Business Reporting Language, which is a digital financial reporting mechanism for companies to file audited annual financial statements (AFSs) in an electronic format.

The removal of a director, by way of the shareholders’ inherent right to do so by an ordinary resolution, (section 71 of the Companies Act 2008) is the typical initial go-to remedy when a breakdown in the relationship amongst shareholders and directors arise.

Reading through the proposed amendments to the Companies Act again, it struck me that they are symptomatic of a general South African problem: too much regulation, too few results. No doubt some of these amendments are necessary, but will they actually address the big issues that concern us all?

Is it time to broaden the traditional concept that directors owe a duty to the company only? There is an interdependency between companies and South African society, which mirrors the African concept of Botho, otherwise known as Ubuntu, which translates to ‘I am because you are; you are because we are’.

In a recent judgment, Joseph v Killarney Engineering (Pty) Ltd and others (JR 586 18), the Labour Court found that it did not have jurisdiction to determine review proceedings for a liquidated company if the person who instituted the legal proceedings failed to deliver the necessary notice to the liquidators.

The Memorandum of Incorporation (MOI) is a cornerstone document for any company, laying out the rights, responsibilities and duties of shareholders and directors. It is obligatory that every company has an MOI filed with the Companies and Intellectual Property Commission (CIPC) and it is available for public viewing at a small fee.