So perhaps there is someone out there who is listening! My next question of course, is that it's great that this legislation has been drafted, but when will it be promulgated and when will the bill be signed thereby entering it into the pages of the law books?

Stifling red tape to be slashed
Jocelyn Newmarch
16 February 2007 11:59

Small business received a boost recently with the publication of the draft Companies Bill, intended to replace the three-decade-old Companies Act. The small business sector contributes about 41% to South Africa’s GDP and is most likely to create jobs. Because of this, legislation that helps the sector is also likely to boost economic growth. Government has been widely criticised for not doing enough to promote entrepreneurship and small business development.

Experts say the draft legislation will cut red tape for the sector and reduce the cost of compliance while promoting greater transparency and accountability. The BEE Codes of Good Practice, gazetted last week, also allow significant exclusions for small business. Taken together, these documents show that government is serious about helping small and medium-sized businesses. The document, published for comment on Monday, proposes new forms of companies — widely and closely held — to replace the existing distinction between public and private. Closely held companies will replace private companies and close corporations, and will need to meet fewer transparency and disclosure requirements.

They will not be required to appoint an auditor or an accounting officer to report on the financial statements. Some forms of closely held companies will only have to submit financial statements as required, for example by banks, but tax returns will still be mandatory. Widely held companies will have to meet two out of three requirements in a three-year rolling period. Turnover should be R50-million or higher, with R25-million worth of assets or higher and at least 200 employees for these companies.

Public interest companies, which include widely held companies and companies that have a significant impact on the economy, have to meet higher standards of transparency and disclosure, according to Piet Delport, head of mercantile law at the University of Pretoria. The Bill encourages corporate governance, transparency and accountability for these institutions, sets up corporate tribunals, protects minority shareholders and amends takeover and business rescue provisions.

But government will need to look at a massive education drive for both businesses and shareholders, said Nicolaas van Wyk of the SA Institute of Public Accountants. Van Wyk said there are a million registered close corporations and proprietary (Pty) companies that will need to convert, though some of these may be dormant. There are also concerns about whether the Companies and Intellectual Property Office will be able to cope with the demand. The Bill is a much-needed overhaul of the outdated Companies Act, which became law in 1973 and brings South Africa in line with international trends in company law.