http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.11Change: -0.09
R/$ = 10.74Change: -0.07
Au 1266.40 $/ozChange: 1.53
Pt 1411.50 $/ozChange: 2.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Nov 05, 2010

Generating praise and concern

Back
Deloitte accounting and auditing senior manager Dr Johan Erasmus discussing benefits and concerns in the new Companies Act.
Consulting|Deloitte|Johan Erasmus
Consulting||
consulting-company|deloitte|johan-erasmus
© Reuse this



Despite the concerns surrounding the new Companies Act, No 71 of 2008, and the lengthy period to finalise it, the aim of the Act is to make business proceedings easier, says global accounting and consulting firm Deloitte accounting and auditing senior manager Dr Johan Erasmus.

He says that most companies will find it easier to work through and comply with the new Act, as opposed to the current Act, as much of the red tape has been removed.

Public hearings for the Draft Companies Amendment Bill 2010 will take place in Parliament on November 9 and 10, and November 17. The Department of Trade and Industry indicated that the new Companies Act will be effective from April 1, 2011.

One of the improvements includes the alterations to the existing share capital regime, which will replace par value shares with ordinary shares. However, the process and regulations governing the conversion of par value shares into ordinary shares are yet to be finalised. Share premium accounts, which were not mentioned in the draft regulations, will have to be done away with if par value shares are no longer in use, he says. He believes that this will bring the country in line with most other jurisdictions.

The Act prescribes the composition of a Financial Reporting Standards Council, which will consist of experts on the financial reporting environment and which Erasmus believes will be bene- ficial. Financial reporting standards have been removed from the Companies Act and will be published in the regulations, which will be published in consultation with the Financial Reporting Standards Council.

He believes that the Act will support foreign investment as it allows foreign companies that want to operate in the country, to be domesticated and then to comply with the provisions of the Companies Act. The Act also allows for electronic participation in meetings, specifically shareholder meetings for public and State-owned companies and records can be stored electronically. He believes that this assists in bringing corporate law into the twenty-first century.

Although the new Act currently allows six months for financial statements to be prepared after the financial year-end, the Department of Trade and Industry (DTI) has indicated that it may change this period to a year, he says. Further, only one director needs to sign the financial statements (currently, two directors need to sign) and a copy need not be sent to every shareholder. Rather, shareholders must receive a summary of the annual financial statements and then have access to the full set of financial statements, which may be kept electronically.

Key provisions of the Act will be effective immediately, parti-cularly relating to issues such as shareholder rights and director liability. In most other instances, if there is a clash between the Act and the company's memorandum and articles, the memorandum and articles will prevail for a period of two years. This allows a company two years within which to amend its memorandum and articles and to bring it in line with the Act. Once the new memorandum of incorporation is filed with the Companies Intellectual Properties Commission, the grace period is up.

Concerns and Clarification
However, there is concern over the length of time given to businesses to prepare for the implementation of the Act, besides other concerns.

One example relates to the auditing requirement. The current Act requires all companies to be audited, while the new Act allows certain companies to have their statements independently reviewed, rather than undergo a full audit. The transitional arrangements in this respect are unclear. “If a company’s financial year-end is February or March, and it has not fulfilled the audit requirement under the current Act before April, would it still be required to undergo an audit once the new Act is effective, even if that particular company is only required in terms of the new Act to have its statements independently reviewed?” he questions.

He hopes that the DTI will clarify the transitional arrangements and specify exactly when the Act’s requirements will apply and when a company would be in breach of the Act. He suggests that companies familiarise themselves with the Act, but not make significant changes until the promulgation of the Companies Amendment Bill and the Regulations.

Edited by: Brindaveni Naidoo
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Macro and Micro News
Key players in South Africa’s tourism industry say the country’s new immigration rules, which came into effect in May, could damage the country’s tourism sector. The regulations require that visa applications be made in person so that biometric data can be...
LUSAPHO NJENGE New services include accessing information on incentives available to SMEs and market information to support their growth and access to information
The performance of government and the services it and development agencies provide can significantly improve the establishment and growth of small and medium-sized enterprises (SMEs), according to SME Survey 2014. The threat of crime is the main concern of SMEs, with...
Sacci CEO Neren Rau
The South African Chamber of Commerce and Industry (Sacci) would engage with Home Affairs director-general Mkuseli Apleni “as a matter of urgency to apprise him of the unintended consequences” of South Africa’s new immigration regulations, CEO Neren Rau said on...
More
 
 
Latest News
Despite various challenges related to the extraction of shale oil and gas, as countries grow accustomed to the idea, the use of shale as a form of energy will be more widely pursued, international oil and gas market analyst Michael Lynch said on Tuesday. Speaking at...
A consortium led by two Kenyan firms won a government tender to build a 1 000-MW, coal-fired power plant, company officials said on Tuesday, part of moves to satisfy rising demand for energy in East Africa's biggest economy. Kenya suffers from regular blackouts due...
TNPA CEO Tau Morwe
The announcement of the successful bidder for the construction of Durban’s long-awaited passenger cruise terminal was imminent, Transnet National Ports Authority (TNPA) CEO Tau Morwe told delegates at the African Ports Evolution Conference in Durban on Tuesday. ...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks