Proposed amendments to the Companies Act of 2008 are aimed at aligning problem areas and enhancing interpretation of its provisions, while instilling corporate accountability, transparency and reducing regulatory burden.
MacDonald Netshitenzhe, acting deputy director general for consumer and corporate regulations, Department of Trade and Industry
The Act encourages economic stability through good governance that will enhance investor confidence and international and domestic competitiveness in the South African economy, MacDonald Netshitenzhe, acting deputy director general for consumer and corporate regulations at the Department of Trade and Industry (DTI), said.
The provisions of the Act and its regulations have been benchmarked with other jurisdictions and found to be the best in the world.
“Amongst others, the highlight is on three issues, namely business rescue, social and ethics committees and the role of the Companies Tribunal. The DTI commissioned research on various cases of business rescue, which revealed that if business rescue ends in liquidation, it does not necessarily mean the rescue was a failure,” said Netshitenzhe.
He added that when measuring the success of business rescue, numbers of companies that emerged from business rescue as compared to those that have been liquidated must not be a barometer.
Furthermore, Netshitenzhe stressed that the establishment of social and ethics committees in companies was important not only to protect the communities and the environment where companies operate, but for the protection of shareholders’ interests. Companies can now be held liable for not adhering to legislative standards.
He pointed out the importance of raising awareness of the role of the Companies Tribunal, as it is still appropriate and can be the best dispute resolution mechanism if utilised effectively, by means of mediation, conciliation or arbitration. The processes are easy and cost effective and quicker than going through the normal courts.
“We are going to Cabinet for broader consultations. Stakeholders and role players should be ready to engage during the public consultations to ensure policy objectives become a success. It is important for the DTI to engage, so as to understand the sections that are posing a challenge to practitioners as well as the economy at large.
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