THE new Companies Bill, to re place the ageing Companies Act, will promote transparency and corporate governance and align us with international best prac tice. Rudolph du Plessis, partner at Bowman Gilfillan, says the incorporation of companies will be simplified. "The bill cuts down on the number of statu tory forms required to incorpo rate a company. Current legisla tion requires filing a certificate of incorporation, a certificate to commence business, and lodg ing a memorandum of associa tion and articles of association with the Registrar of Compa nies. The bill proposes a mem orandum of incorporation and filing of a notice of incorpora tion," he says.
"Upon incorporation, the Commissioner, who will replace the Registrar of Companies, issues a registration certificate."
He says not all companies would have to file their memo randum of incorporation with the Commissioner. "Certain cat egories of companies will keep their constitutional documents in-house. This will alleviate the Commissioner’s administrative functions and make it easier to request and review the compa ny’s constitutional documents."
The board of directors can change the memorandum of incorporation to correct an obvious error without going through cumbersome formal procedures.
The bill provides that an act of a company is not void solely because it or its directors did not have the relevant authority.
Another new provision, he says, is that if the memorandum of incorporation limits or re stricts a company’s powers or activities, the shareholders may pass a special resolution to con firm and approve any action that was inconsistent with such limits or restriction .
He says companies can now make certain governance rules themselves. The board can for mulate and give shareholders these governance rules , which become permanent rules regu lating the company’s gover nance after they are ratified at the next general meeting of shareholders. "This gives com panies flexibility to determine their own rules on specific gov ernance issues ."
Du Plessis says one of the bill’s most important innova tions is the application of differ ent rules to different categories of companies. "This approach recognises that smaller private companies should not have the same corporate governance and financial reporting burdens as large companies."
The bill categorises compa nies as nonprofit and profit . Profit companies either do not contain restrictions on transfer ability of their shares and do not prohibit offers to the public (larger public companies); or they contain restrictions on transferability of their shares that prohibit offers to the public (smaller private companies). Different responsibilities would apply, he says.