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Following the amendment of the Companies Act of 2024, the Department of Trade, Industry and Competition (DTIC) has welcomed the proclamation by President Cyril Ramaphosa of two Companies Amendment Acts of 2024.
The DTIC says the Acts were published in the government Gazette on 27 December 2024 and have become operational. This means it will be relatively easy to do business in South Africa, which will encourage investment and entrepreneurship in the country which can be a significant boost towards local economy.
The Spokesperson for the department Bongani Lukhele explained that; some sections of the Companies Amendment Act 16 of 2024 and the entire Companies Second Amendment Act 17 of 2024 came into operation on 27 December 2024. He said this is a significant milestone in corporate law South Africa. The Companies Amendment Act focuses on the ease of doing business by clarifying, simplifying and strengthening certain sections of the Act. Sections that include 16, 25, 40, 48, 61, 90, 95, 135 and 204 amongst others are now effective and can be implemented by companies in South Africa.
“However, not all sections of the Amendment Act are operational. The sections requiring Regulations will only commence after the regulations have been finalised. The other sections including on the requirements on the duty to prepare and present a remuneration report and remuneration policy and the related requirements to disclose pay gap ratios, for transparency and addressing inequality of pays between top executives (directors) and low earning workers in state owned companies and public companies, will only come into operation on the dates to be determined in 2025.
The Companies Second Amendment Act is operational in its entirety. The Act addresses the recommendations from the Zondo Commission into State Capture to extend the time bar of when an application can be brought to court to make an order to declare a Director delinquent or under probation, in terms of section 162 of the Act. The time bar was extended from 24 months (two years) to 60 months (five years).
The application of the law is retrospective including for acts that took place before this Act or the extension of the time bar. In addition, the court has been empowered to extend the time bar to hold directors liable for costs, losses or damages incurred for acts that breach fiduciary duties and the court can extend the time bar of such damages or losses on good cause shown beyond three years. Overall, the court can extend the time bar beyond five years on good cause shown should circumstances require,” said Lukhele.
“The two Acts were assented into law by President Ramaphosa on 26 July 2024,” he concluded.
