A can of worms: Rushed legislation affects everyone
A great deal has been written about the manner in which government is pushing laws through Parliament of late. Complaints include insufficient consultation with industry players and a failure to consider the wider implications of the changes – especially
And the entire country did the same when the controversial Expropriation Bill was shelved in early September. The legislation will be back; but hopefully in a form more appropriate to the industries they regulate.
Continued and pointless meddling
Why such meddling? Democratic Alliance leader Helen Zille launched a scathing attack on ANC lawmakers in May this year. “The two bills in question have essentially the same aim. It is to deflect attention away from state failures, by blaming the market and then, perversely, giving more power to an incapacitated state,” she said. Zille was furious over the Expropriation Bill, which she believed “would enable the Land Affairs Minister to expropriate land ‘in the public interest’ – a term broad enough to equate to the whim of the Minister.” It’s clear that some ‘whims of State’ will win through regardless of the completeness of industry consultation.
If only government would heed the age-old “more haste – less speed” adage and spend enough time to properly assess the impact of proposed changes before implementing them. They seem to have applied their minds to the new Companies Bill. But problems still exist. “For all the widespread consultation that informed the crafting of new legislation governing South African companies over the last five years, the Companies Bill continues to court controversy as its enactment draws closer,” says Business Report. Consultation on the new Bill (which replaces the Companies Act of 1973) has been exhaustive; yet still meets resistance in certain sectors. Two major concerns about the Bill as it stands today are the onerous duties placed on directors of companies and the erosion of shareholder rights.
Close corporations will slip quietly into the history books
Among the plus points to the new legislation is one that will affect many financial services providers. The Bill proposes the abolishment of the Close Corporation. Once the Bill comes into effect the only business types for new companies will be “non-profit” companies, “profit companies” including public companies, state-owned enterprises and private companies, and personal-liability companies. There will probably be a window period for the conversion of existing Close Corporations to the appropriate private alternative, during which time existing businesses will still be governed by the Close Corporation Act 69 of 1984. Another big change proposed in the Companies Bill is the establishment of a business rescue provision. The Bill will allow the appointment of a ‘business rescue practitioner’ in an attempt to assist ailing businesses before they get all the way to liquidation stage.
And South Africa will have another Ombudsman. The Bill proposes the establishment of a Companies Ombud to voluntarily resolve disputes that arise from matters under the Bill. The existing CIPRO administrative function and DTI enforcement function will be combined and housed in a new Companies Intellectual Property Commission. The Bill largely decriminalises company law, preferring administrative enforcement over criminal sanction to ensure compliance.
Editor’s thoughts:
When you look at the amount of amendments flying through Parliament you can be excused for thinking that laws are being changed just for the sake of it. The truth is that legislation needs to be updated to ensure a better fit with changing practices and technologies. Do you think South African lawmakers spend enough time examining the impact of their legal amendments? Add your comments below, or send them to [email protected]
