The Committee continued its deliberations on recommended changes to the Companies Amendment Bill. Clause 16 and discussions on the appropriate length of rehabilitation for directors guilty of fraud, were flagged for later. The Department of Trade and Industry was asked to clarify at the next meeting whether the wording about share schemes in Clause 55 was intended to include employees and other associates. Many of the issues raised by the Committee were clarified by the legal advisors representing the Department of Trade and Industry and Advocate Kathy Idensohn from the Department of Commercial Law: University of Cape Town. No recommendations were settled on for many of the clauses.
The Department of Trade and Industry briefing on its response to the State of Nation address was postponed to a later date as a meeting regarding the Companies Bill was more pressing.
The Chairperson opened the meeting thanking the advocates for their studies and opinions. The meeting continued deliberations by the Committee on the Companies Amendment Bill:
Clause 41 (pg 32-33 of summary, pg 10 of response, pg 11 of proposal)
Mr T. Harris (DA) raised the point that a comment was made by Webber Wentzel at a previous meeting that there may not be enough directors to fill the number of positions asked for. Mr Harris also proposed that Clause 16 should be flagged for later discussion.
The Chairperson responded that a director may sit on three boards concurrently and that Clause 16 would be discussed later in the meeting.
Mr Harris commented that even with having directors sitting on multiple boards there might not be enough directors to fill these places.
Adv Kathy Idensohn, a consultant from the Department of Commercial Law: University of Cape Town, was asked to comment and she responded that the recommended number of a minimum of three directors was desired and was not exorbitant and that in time directors will be found to fill all the places needed.
No further recommendations were made.
No recommendations were made.
Mr Harris said that the response in the Proposals for Consideration by the Portfolio Committee was progressive but there were still issues that needed further discussion and asked for this clause to be flagged.
The Chairperson responded that the issues were recently addressed in detail on page 11 of the Proposals for Consideration by the Portfolio Committee and did not require further discussion.
Dr M Ambrosini-Oriani (IFP) suggested that this clause was disempowering companies and these issues should be left to the shareholders. The Chairperson asked Ms Idensohn to respond.
Ms Idensohn disagreed strongly with Dr Ambrosini-Oriani as the clause allowed that dishonest people may be shareholders but not directors so as dishonest people should not be allowed to influence companies by acting as directors of them.
Mr Harris asked that the length of rehabilitation should be discussed.
Mr J Smalle (DA) asked that the proposal by the Department of Justice (DOJ) about the Registrar of the Court in its Legal Opinion should be flagged.
The Chairperson replied that the proposal by the DOJ had been responded to in detail and that the question of length of rehabilitation should be discussed at a later time under sections for review.
Mr B Radebe (ANC) raised the point that the minimum of five years rehabilitation was important.
The Chairperson concluded this clause stating that differences in opinion should be flagged for discussion at a further time.
Dr Ambrosini-Oriani said that the viewpoint that Section 72(4) should be deleted was insubstantial as this should fall under the Bill and not under Regulations.
Ms Idensohn responded that the detail on companies should be within the Regulations as these details would result in the Bill becoming cumbersome. If this section fell under Regulations, this would not result in the Minister having free reign over this piece of legislation.
No recommendations were concluded on this clause.
Ms Idensohn asked for a unified definition of ‘director’ that would cover all sections. This would be decided on in a future meeting.
No issues were raised
Mr Smalle asked about the accountability of the directors and if this clause spoke to relieving a director of accountability if the documents were not finalised.
Mr Flip Dwinger, Legal Services: CIPRO of the Department of Trade and Industry (DTI), responded that this clause did not leave directors unaccountable.
Mrs Idensohn suggested that Section 218(1) be amended to clarify these concerns. This suggestion was accepted by the Committee.
Clauses 48 and 49
No issued were raised.
Mr Smalle said that the DTI’s response to this clause was insubstantial.
Mr Rory Voller, Director: DTI Legal and Regulatory Services, responded that this section was structured as such so that the legislation did not over burden smaller private companies.
Dr Ambrosini-Oriani said that the prohibition of an auditor to be a company secretary was an additional burden to companies.
Mr Dwinger responded that this was made such so that an auditor remained objective and independent of a company.
No issues were raised.
The Chairperson said that a cross reference to Section 91 (Clause 53 pg 32 line 9) be made.
The Chairperson stated that pages 12 to 13 of the Proposals for Consideration by the Portfolio Committee document addressed the clarity asked for by the Committee.
The DTI proposed an addition to the wording of ‘employee share schemes’ to restrict the share schemes to employees.
Mr Harris said that the wording proposed by the DTI included employees and other associates.
Mr Dwinger responded that the comment was to restrict the share schemes to employees and he was not sure why the clause was extended to associates.
The Chairperson asked the DTI to confirm and clarify this wording at the next meeting.
Clauses 56 to 66
No issues were raised.
There were amendments to syntax and grammar in Section 115.
Mr Smalle referred to an opinion from Ms Idensohn that this clause required clarification.
Ms Idensohn responded that other approvals were still necessary and that this should be further spelled out in the Bill.
No issues were raised.
The Chairperson said that paragraph three should be omitted,
No issues were raised.
The use of the word legislation in place of legislature was debated at length. Ms Idensohn clarified that the use of legislature was correct as it referred to the intention of the Committee.
The Chairperson adjourned the meeting, thanking the participants for a constructive session.
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