My Business Matters

In addition, there are over 50 ready-to-use office stationery forms to keep your day-to-day administration running smoothly.

The advent of the new Companies Act No 71 of 2008, which came into effect on 9th April 2009 and the Amendment Act thereto, which was adapted by Parliament in March 2011, which corrected many errors and ambiguities in the Act, should be borne in mind when starting a new business. The new Act severed the umbilical cord with British/European Company Law influences and much of our Case Law of the last 150 years. The new foreign influence now present is from Company Law as practised in the small American state of Delaware (where 60% of American companies are registered due to its light regulatory approach) and in Canada. The amended Act was implemented on 1st May 2011. The regulations became available on 28th April 2011. New concepts and rules, hitherto unknown in South Africa, have been created, and will need to be applied and tested in practice. Our customary Memorandum of Association and Articles of Association have been replaced by one central document, the Memorandum ofIncorporation whichis of cardinalimportance.The governance system of a company which has hitherto been the Articles of Association has now been replaced by the Act itself. Existing companies have two years from 1st May 2011 to adapt their Memorandum and Articles of Association and Shareholders Agreement to the new Memorandum of Incorporation and to the Act. If this is not done these documents will only be valid to the extent that they are compatible with the new Act. It is probably better to adopt a Memorandum of Incorporation than to patch up the existing Memorandum and Articles of Association. The shareholders of a company may enter into any agreement with one another concerning a new matter relating to the company but such agreement must be consistent with the Act and the Company’s Memorandum of Incorporation. Any inconsistent provision is void. In particular, Shareholders’ Agreements regulating the exercise of voting rights may not fall foul of the Act. Under the new Act a public company need have only one member and a private company can have an unlimited number of members. The company finances are to be regulated on a capital maintenance regime based on solvency and liquidity. The concept of par value and nominal value shares is abolished. It is no longer possible to register Close Corporations nor to convert a company to a Close Corporation. A Close Corporation may be converted to a company. Close Corporations will no longer have to disclose the names of members on their business letters as Section 41 is repealed. The Business Rescue Plan of the Companies Act now applies to Close Corporations as well.

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