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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