The Companies Act 71 of 2008 (the Act) was signed into law on 8 April 2011 and its commencement date was 1 May 2011. The Companies Act 61 of 1973 (the previous Act) was repealed on 1 May 2011.

Schedule 5 of the Act sets out the transitional arrangements, which are summarised as follows.

Pre-existing companies

On 1 May 2011 every pre-existing company, that was formed in terms of the previous Act, continues to exist as a company with the same name and registration number under the new Act.

Annual financial statements for years ending before 1 May 2011

Companies with year ends before 1 May 2011, deal with the publishing, auditing and approval of the annual financial statements for those year ends in terms of the provisions of the previous Act.

Pending matters with the Registrar

Any submissions filed in terms of the previous Act with the Registrar before 1 May 2011 and not yet finalised by 1 May 2011, must be concluded by the Commission in terms of the previous Act.

Memorandum of Incorporation (MOI)

A pre-existing company is given 2 years from 1 May 2011 in which to amend its MOI and/or its name to bring it in harmony with the requirements of the Act. This may be done without any filing fee or charge payable to the Commission.

During these 2 years, if there is conflict between:

  • A provision of this Act, and a provision of the pre-existing company’s Memorandum and Articles of Association, the latter will prevail.
  • A provision between an existing shareholders agreement or an existing agreement with the same intent as of Rules under section 15 of the Act, and a provision of the Act, the existing agreements will prevail.

After the 2 years only the provisions of the existing agreements or Memorandum and Articles of Association that are consistent with the Act, will prevail.

During these 2 years the Commission may not issue a compliance notice in respect of conduct that is inconsistent with the Act, but consistent with the company’s Memorandum and Articles of Association.

Par value shares

Pre-existing companies that have issued shares with a nominal or par value, continue to have the nominal or par value shares assigned to them, until the Minister issues regulations of their transitional status and the conversion thereof into no par value shares.

Office bearers

All office bearers (directors, prescribed officers, company secretaries, auditors) in office of a pre-existing company before 1 May 2011, continue to hold that office as from 1 May 2011.

A pre-existing company is deemed to have a vacancy on the board if the actual directors as at 1 May 2011 are less than the required minimum as per the new Act. The minimum required directors per the Act are as follows:

Private Company & Personal Liability Company                       Minimum 1 director

Public Company & Non profit Company                                    Minimum 3 directors

Provisions which are effective immediately from 1 May 2011

  • The duties, conduct and liability provisions of directors
  • Rights of shareholders in terms of the new Act to receive notice or have access to information
  • Provisions with regard to meetings of shareholders or directors, and adoption of resolutions
  • Chapter 5 (Fundamental transactions, takeovers and offers) except to the extent that it is exempted by Chapter 5 itself.
  • Approval of distributions
  • Financial assistance
  • Insider share issues or options

Company names and reservations

The transitional arrangements determine that companies are deemed to have changed their names to comply with the Act.

Name ending  per Previous Act                          Name ending per New Act

S21 companies                                                   NPC

Inc/Incorporated                                               Inc/Incorporated

Limited                                                              Limited

(Propriety) Limited                                            (Propriety) Limited

Pre-existing companies that satisfy the definition of a state-owned company are deemed to have changed their name ending to SOC.

Companies limited by guarantee do not have a counter part in the new Act and such a company may choose to become a profit company, whether private or public. If it has not made this choice within 20 days after 1 May 2011, it is deemed to have changed its MOI to be a non-profit company.

Defensive names, translated names and shortened names that were registered under the previous Act, continue to be reserved under the new Act.

Court proceedings and orders

Any proceedings or orders in terms of the previous Act that were in process at 1 May 2011 are continued in terms of the previous Act.

Continued investigation and enforcement of the previous Act:

Any investigation by the Registrar of Companies and the Securities Regulation Panel pending on 1 May 2011 may be continued by the Commission and the Panel.

For a period of 3 years after 1 May 2011, the Commission may investigate and prosecute for breaches of the previous Act that occurred in the 3 years prior to 1 May 2011.

Lynette Burgess

Audit Partner, Tshwane