20 February 2007
The Minister of Trade and Industry, Mr Mandisi Mpahlwa, addressed a media
briefing on the Companies Bill in Tshwane today. Mr Mpahlwa said the purpose of
the session was to provide an overview of the Bill, as well as to provide
journalists with an opportunity to engage with the department and to ask
questions.
He said the President had said in the State of the Nation Address that the
Companies Bill was approved in Cabinet on Wednesday, 7 February 2007, and was
published for comment on Monday, 12 February 2007. The initial public comment
period extends until Monday, 19 March 2007, but the dti only intend to take the
Bill back to Cabinet in June of this year, thus providing for a longer public
consultation process that will involve discussions on several drafts of the
legislation. The department hoped to be able to introduce the Bill into
Parliament at the end of the year. Parliament will of course provide further
opportunities for public engagement.
The Companies Bill is the culmination of a process that began in 2002. The
first part of the process involved the development of the policy context. To
this end, a discussion document outlining the envisaged objectives of the
reform, as well as some of the key principles, was released in June 2004. After
a fairly wide consultation process, the dti began drafting new legislation. The
first complete draft of the Companies Bill was put to focus groups consisting
of practitioners, business representatives, academics and government
stakeholders in July 2006, roughly two years later. What is important to note
is that the Bill has already been subjected to initial consultation and
scrutiny.
This reform is long overdue. It represents the first significant review of
South African company law in over 30 years. Much has changed in the intervening
years. Corporate structures and financial instruments have developed and
evolved significantly. The political and economic landscape for South Africa
has changed. Corporate failures here and elsewhere have raised questions about
standards of governance. These factors all set the scene for a significant
overhaul and modernisation of our company law.
The objectives of the reform are to reduce the cost of registering and
maintaining a company and the regulatory burden and compliance costs for small
and medium-sized businesses, while at the same time enhancing corporate
governance, transparency and accountability of large and widely-held firms. It
will also result in improved regulatory oversight and better redress for
shareholders. Very significantly, the Bill introduces a new business rescue
scheme that will facilitate the turnaround of struggling firms.
Issued by: Department of Trade and Industry
20 February 2007
