Companies Amendment Bills: Parliamentary Legal Advisor Input; DTIC response to public submissions

Meeting report

Opening Remarks
The Chairperson stated that the Committee would be briefed by the Parliamentary Legal Advisor, Ms Ebrahim, on the submissions received on the Companies Amendment Bills, highlighting some of the drafting challenges, the proposed amendments and matters that fell outside the scope of the Bill, requiring the permission of the National Assembly for the Portfolio Committee to attend to the matters. If the Committee wished to pursue any of those matters, the Chairperson reminded them that Ms Ebrahim was not required to pronounce on any policy matter, as that resided with the Department of Trade, Industry and Competition (DTIC). Together with the Committee Content Advisor and the Committee Research Support, Ms Ebrahim would remind the Committee of any concerns that might have been raised during the public participation process. It was important to note that the legal principle of separation of powers between the executive, judicial and legislative functions of government underpinned the legislative process. However, the spirit of collective governance applied. The Bills were before the Committee and the final decision on Amendments would reside with Parliament.

She added that after the Legal Advisor’s presentation, the DTIC would brief the Committee on its detailed inputs on the Companies Second Amendment Bill. The Committee would then deliberate on the inputs received from the DTIC and the parliamentary Legal Advisor on the submissions received from the public on the Companies Second Amendment Bill. After the deliberation, the Committee should have an in-principle position on the two clauses to allow the team to proceed with a redrafting of the clauses about retrospectivity.

The Chairperson indicated that in the second part of the deliberation, if time permitted, the Committee would focus on the Companies Amendment Bill, and the DTIC would brief the Committee on concerns raised by the public about the Companies Amendment Bill and its response, using its matrix. The Committee would engage on the matters raised by the DTIC.

She invited the Parliamentary Legal Advisor to proceed with her presentation to the Committee.

Presentation by the Legal Advisor
Ms Fatima Ebrahim presented.

Bill B27- 2023
Constitutionality
Clause 4, an Amendment of section 26 extended the right to inspect and copy the Annual Financial Statements of private companies above a certain threshold. The Promotion of Access to Information Act, 2000 (PAIA) and the Constitution declared that the right to privacy was not absolute. The question was whether the limitation on the right to privacy held by a company was reasonable and justifiable in an open and democratic society. Several considerations were presented.

Clause 5 – Directors and prescribed officers had to be named for purposes of consideration of remuneration and benefits in the Annual Financial Statements. Public submissions suggested that clause 5 infringed on the right to privacy and contravened the Protection of Personal Information Act, 2013 (POPIA). The question was whether it was reasonable and justifiable in an open and democratic society to limit the right to privacy for those persons and whether it was necessary to name the person to address the wage gap. Various points for consideration were listed.

Extending the scope of the Amendments above would require the Committee to seek the permission of the House of Assembly

Bill B26- 2023
A.  Constitutionality
Clause 2 extended the time bar for declaring a person delinquent in relation to the recovery of losses, damages or costs to from 24 months to 60 months. The extension of time was based on a recommendation by the Zondo Commission to prevent potentially guilty persons from escaping prosecution owing to the limited time in which that could be done. The Constitution did not prevent retrospectivity in civil law, although the presumption of law was against retrospectivity, unless rational, reasonable, and proportionate. If the time bar were to be changed, the clause would be retrospective and would require some re-drafting.

(See Presentation)

Presentation by the Department of Trade, Industry and Competition on the Companies Second Amendment Bill
The presentation was made by the Deputy Director-General for Consumer and Corporate Regulation at the Department of Trade, Industry and Competition (DTIC), Dr Evelyn Masotja. She commenced with an oral response to issues raised by Ms Ebrahim.

Dr Masotja stated that the DTIC had been engaged with the Legal Services team from Parliament on the Bills. DTIC would be working very closely with them in terms of addressing the issues and other matters that arose in the processes of the deliberations on the Bills. On the constitutionality issues that had been noted, especially around access to information, the DTIC was in agreement that POPIA had implications for the section that dealt with the naming of directors and prescribed officers. The DTIC was in the process of consulting with the Information Regulator on the implications in terms of remuneration, disclosure and implications and, if necessary would request an exemption. When it came to the question of safety for named directors and prescribed officers, there were ways that could be addressed. Some companies had been engaged in voluntary processes on the disclosure of remuneration and names. Some companies used letters and abbreviations or numbers to indicate the names of officers and directors. DTIC would check how that provision could be dealt with in terms of the law to ensure that there were no unintended consequences.

In terms of the policy rationale, Dr Masotja explained that it was one of the areas that had been debated extensively at NEDLAC. The rationale for the provision was that there had historically been an inequality of income in South Africa and that continued to prevail. There could be sensitivity in terms of the salaries but ensuring that there was transparency and openness about salaries, would put the information out there and should ensure some level of balance around the remuneration of directors and prescribed officers. The matter had been debated extensively, especially in the current context in South Africa where disparities kept on growing and salaries were increasing at the upper end. One stakeholder said that there could be conflict between workers when officials knew that a particular person was earning so much. Other consequences were also raised by the public.

The DTIC noted the presentations by stakeholders regarding the gender pay gaps. Noting the importance of women's empowerment in South Africa, Dr Masotja said that it was an issue that should fit within the remuneration and income distribution clause about equality of pay. DTIC supported the proposal and requested that the Members apply their minds to the issue. However, there was a need to afford space to evaluate it and to do the required work before inserting that matter in the Bill. There might be other considerations that had not been well thought-out. However, the Department was open to the recommendations of the Committee, if it were considered necessary to include it in the current Bill.                                             

The DTIC agreed with the other issues raised by Ms Ebrahim as they would require a new process for proper consideration and they would have to be teased out from a policy point of view. Those issues would be addressed outside the current process.

Dr Masotja addressed the PowerPoint presentation on the Companies Second Amendment Bill (B26-2023). It was a new Bill that took into consideration the recommendation from the State Capture Report of the Zondo Commission. As such, it had not formed part of the initial processes of legislation, but the DTIC saw it as an obligation on the part of the Department to respond to the recommendations of the Zondo Commission. It was a separate Bill because separate processes had been undertaken in conceptualisation, public comment and so on.

The recommendation was that section 162 of the Companies Act be amended to ensure that the application for a declaration of delinquency could be brought even beyond the two years allowed for in the Act on good cause shown. The current Companies Act contained a time bar of two years, after which directors could not be prosecuted:
   
162(2) A company, a shareholder, director, company secretary or prescribed officer of a company, a registered trade union that represents employees of the company or another representative of the employees of a company may apply to a court for an order declaring a person delinquent or under probation if—
(a) the person is a director of that company or, within the 24 months immediately preceding the application, was a director of that company;

Research showed that other countries had a time bar of five years to address that issue and that period of time was considered more appropriate than the current two years.

The DTIC had consequently drafted the Companies Second Amendment Bill in which the second part of the Bill was around the shift in the time bar from 24 months to 60 months. Very few submissions were received, but the feedback in those was positive. The Auditor-General of South Africa said the Bill was very welcome in terms of accountability. Other stakeholders also welcomed it with comments that were mostly very technical - the comments were about technical drafting issues where the language was not clear. Ms Ebrahim spoke about how the wording read versus the intention of the Bill. The DTIC had considered deleting some words, but it was best if there were a re-drafting of the clause. Everyone understood the rationale behind the issue as it came from the Zondo Commission Report.

On the issue of retrospectivity that Ms Ebrahim had spoken about, the Department, from a policy perspective was of the view that the legislation should apply retrospectively, although it noted the issues around case law on retrospectivity. The law needed to be retrospective because of the need for accountability in the public interest - that recommendation would go a long way in assisting the country to deal with issues of that nature. It should apply across the board where there is a need to bring such applications. She added that the Bill gave the courts discretion when those matters went to court.

The Department recommended re-drafting to ensure that the language did not obscure the intention of the section.

(See Department presentation)

Discussion
Mr D Macpherson (DA) realised that there was a lot to be considered, especially as Dr Masotja had said one of the sections was going to have to be redrafted. It was important to see what that redrafting would look like in its finalised text before the Committee started further discussions. So, when would the Committee have the redrafted version?

Mr S Mbuyane (ANC) asked the Department to write down all the recommendations from the Zondo Commission Report that the Bill responded to. He needed more clarity on the issue of retrospectivity. How was the DTIC going to deal with the application, especially concerning the errors but also in terms of the wording? Why did the Department feel that it needed to retain retrospectivity?

The Chairperson stated that Mr Macpherson had proposed that Members give the drafters an opportunity to re-draft the retrospectivity clause. Did Members support the proposal?

Mr Macpherson confirmed his proposal. He also asked Ms Ebrahim about the burden of responsibility being moved to shareholders in that they had to inform companies of changes of addresses, telephone numbers, and so on and so forth. Could that be encapsulated in a clause being amended or would a new one be required? Could that be dealt with in the same way and as effectively as what had been proposed regarding gender pay gaps? Could that amendment be lumped in the same basket so that it would not require additional consultation with the National Assembly?

The Chairperson asked for a response on the matter of the drafting team going ahead with the redrafting of the retrospectivity clause.

Mr S Mbuyane (ANC) agreed with the issue of the redrafting. He also suggested that the Committee Members be given an opportunity to read the draft in terms of retrospectivity and other wording challenges that had been raised by the stakeholders, and also the issue of gender pay gap inclusion.
                                                                                                                                                                                                                                                                                                                                                                                                                                             
Mr Macpherson could not give a clause reference but ComputerShare had made the point that the problem was that companies carried a huge expense of having to communicate with shareholders about annual general meetings and so on via post. He asked whether the onus should be on shareholders to advise companies of changes of personal details, so that better information could be shared and so that there was more interaction with shareholders by the companies. Several people had supported that proposal and whether it was possible to include that, not necessarily as an addition to the Bill but to be viewed in the same way as the gender pay gap issue, so that it was not an entirely new section that required permission from the National Assembly.

Ms Ebrahim responded, stating that the difficulty was that the National Assembly laws required the Committee to seek approval for extending a Bill and for clauses that were not being amended. She understood that it would require an amendment to a clause that was not currently being amended. The Department could advise whether it would require changes to a section that was not in the process of being amended.

She said that the matter would require some public participation, although not as much as the issue of the gender pay gap because it was not as impactful as the gender pay gap matter. Nevertheless, it would still require some public participation, possibly in the form of writing to those who had made proposals on the Bill and asking them if they had anything to add on that matter.

Dr Masotja agreed with Ms Ebrahim that the issue raised around the electronic communication and including in the Act a provision that created more clarity and simplified processes as Mr Macpherson suggested, would require a new Amendment as it was an issue that was not in the Bill. She had noted the constraints on including that change, not even considering the cost implications, but listening to how the matter was presented, she would look at it just to be very sure that was the case. However, it was in line with the other proposals that were not in the Bill.

Regarding the drafting issue, the Chairperson had already addressed that matter and the drafters had to attend to it to allow the Committee to engage on the specific issues. The Department would be part of the processes. In response to Mr Mbuyane’s question on the Zondo Commission recommendation, she said that it was very straightforward. It talked about a recommendation that she could provide. It was mainly about extending the time bar which was contained in Section 162 of the Companies Act. The recommendation was to address some of the mischief on the part of companies and directors. The extension of the time bar was in section 162. She would make that available through the Committee Secretary. The DTIC reviewed it and discussed it with Ms Ebrahim in terms of the motivation, and with Professor Katz and the Minister. The Department thought that, in the context of what happened in the state capture findings, the retrospective aspect should be retained in the Bill. The Department's assessment, together with its legal advisors, was that it would not be contrary to the Constitution.

The Department’s other concern was that it was important that directors be held liable for the losses and damages, as well as costs and that should not be restricted by time. What made it a very good provision was that it caught those involved in the processes as there was objectivity and fairness, especially on good cause shown and each case would be dealt with on its own merit. The Department needed to determine how to approach the issue in a more constitutionally sound way and a fair and balanced manner. It motivated for retrospectivity as it would go a long way to dealing with issues of accountability over time. It extended the Bill beyond two and three years in terms of liability. It gave the authority to the courts to extend and to ensure that there was accountability and transparency and a better, cleaner society in terms of accountability, especially when it came to matters related to state capture.

Resolution: The Legal Advisor and the Department would submit a re-draft on the matter of retrospectivity.

Presentation on the Companies Amendment Bill (B 27- 2023)
Dr Masotja presented the Department’s response to issues raised by the public on the Companies Amendment Bill. She presented a matrix containing full details of all submissions received per clause as well as the responses to those submissions. The 41 substantive submissions received were included in the matrix.

Clause 1, Section 1
Various comments by stakeholders on the definition of securities. More clarity was requested about what securities were and others suggested that because the definition of securities looked at debentures as a form of an instrument, debentures should be defined in the Bill. The stakeholders proposed that the definition of beneficial ownership be brought in alignment with the requirements of the Financial Action Task Force related to the grey-listing. The DTIC was of the view that the Bill did not talk about that. An amendment to the grey-listing legislation did not form part of the current Amendments because the matter of grey-listing had been dealt with in the General Laws Amendment Act. The recommendation was that the definition of securities be retained as proposed by Ms Ebrahim.

Clause 2, Section 16
The effective date for an amendment to a memorandum of incorporation (MOI) was a concern to stakeholders. The proposal was for section 16 to be amended by providing that a Notice of Amendment of a company's Memorandum of Incorporation will take effect ten business days after the receipt of the Notice of Amendment to the Memorandum of Incorporation. Stakeholders were unclear about the effective date on which the MOI would take effect. They recommended that the word “filing” be used to confirm that date. In the previous dispensation, it had been difficult to know when incorporation had been effected because of a lack of clarity in the legislation around the effective date. An overwhelming number of stakeholders spoke of “filing” and not “receipt.” It was the difference between using the process of “filing” and the single action of “receipt” that had led to the confusion. The Companies and Intellectual Property Commission (CIPC) advised the Department that it was important to use the word “receipt” because the date of receipt could be determined.

The Department recommended retaining the proposed Amendment, although DTIC was not opposed to changing “filing” to “receipt” which had a verification method, including a number that could be used to track it. it was important that the Regulator was provided with support to be able to address the issue of the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        changes in the Memorandum of Incorporation in an efficient way. Dr Masotja added that DTIC was not opposed to any changes proposed by the parliamentary Legal Services.                                                                                                                                                       

Clause 3, Section 25(2)
The amendment dealt with the location of the office of a company. The Amendment proposed that the CIPC would publish a notice in terms of the location of a company. CIPC had processes for dealing with notices and publications as well as addressing issues of filing on an ongoing basis.
The DTIC did not recommend the amendment to the Bill as it believed that it was an issue of regulations and did not affect the Bill.

Clause 4, Section 26
The section addressed access to records, including beneficial owners, etc. and Ms Ebrahim had spoken about it extensively. There had been many recommendations by companies, some of whom were concerned about security implications for their annual financial statements. Some submissions showed concern about the public interest threshold below which companies did not have to disclose information; others asked for certain companies to be excluded, such as private companies or subsidiaries of companies. Dr Masotja said that the Minister had clarified that all companies out to the public should be prepared to disclose information. Beneficial owners
The DTIC did not propose an amendment to the Bill.

Stakeholders expressed concern about the original Act which, in section 26, referred to “The register of members and register of directors of a company, must, during business hours for reasonable periods be open to inspection…” Stakeholders were confused about the meaning of “reasonable periods”.
The DTIC was prepared to remove “reasonable periods” if that term was confusing.

Another issue was around the number of days allowed for before one could have access to those records. In the current Act, it was 14 days. Initially, DTIC had proposed five days so that there could be quicker turnaround times when it came to accessing information. DTIC had amended the time to 10 days.

Technical suggestions were made by the Western Cape government, recommending consistency of wording in the subsections. The DTIC supported those recommendations and would be guided by the parliamentary Legal Services.
                                                                                                                                                    
Clause five, Section 30
The effect of the Amendment was that the remuneration and benefits received by each director or prescribed
officer must be disclosed and such individual must be named. The required disclosure of the names of directors and prescribed officers received many comments. Some proposed a definition of the prescribed officer, others called for clarity in terms of who would benefit from the section, while others called for the rationale behind naming those officers. Dr Masotja explained that the clause was not unique to South Africa; it occurred in other jurisdictions.
The DTIC noted that it needed to consult with the Information Regulator about the implications of POPIA and the extent of the disclosure. The Information Regulator would be requested to guide the Department on the matter of the naming of directors and prescribed officers to ensure alignment with the legislation.
The Department agreed to replace the word “or” with the word “and” to clarify that the names of both directors and prescribed officers had to be disclosed.

The Companies Act recognised that the establishment of a company was not purely a private matter and might impact the public in several ways. It therefore sought to impose strong rights of access in respect of very specific information, but ultimately limited types of information held by companies. All companies had to have a remuneration policy; the information on actual remuneration, including the names of directors and prescribed officers, would be included in a remuneration report and the Minister had spoken on that matter extensively in a previous meeting.
                                                                                                             
The added requirement was for the remuneration report to be a legal requirement. There were many proposals made on a remuneration policy and how it should be presented in public. The major concerns were around the voting, with most stakeholders suggesting that the voting be limited only to the policy and that the implementation report should be advisory and issue the consequences for directors in terms of the standing-down rule, the one-strike rule versus the two-strike rule. The Minister had proposed in terms of drafting and addressing the technical issues around the wording of the implementation report versus the remuneration report versus the implementation of the remuneration policy. Part of the proposed wording was to clarify the issues. The Department needed to apply its mind to that one. It would require further work and it would require further public participation. The DTIC would look at the role of shareholders versus directors.
The Policy issues remained.
As the Minister had proposed, DTIC would re-draft to clarify issues and to look at binding votes and the consequences of the legislation.

A concern was raised by the Independent Regulatory Board for Auditors (IRBA) about the standards of auditing, the fact that the implementation report should not be audited because there were no standards available. However, the policy position of the DTIC was to retain the requirement to audit the report because it was a very important Amendment; the implementation report should be viewed as an important part of the disclosures of remuneration in the country.

On including the gender wage gap in the Bill, the DTIC held the view that it required more consideration by the Department and that it should be considered in the next process of Amendments. It required a clearer focus in terms of what it was about and the different aspects that needed to be taken into consideration. It would also require public participation.

Clause 7, Section 33
Dr Masotja stated that public companies were those that owned a company or any other profit or nonprofit company whose public interest score exceeded a particular limit in the public interest score. Most of the stakeholder questions were about specific amendments, but they were mainly around issues of clarity and the thresholds of the public interest score. The Portfolio Committee Members would recall that in the public hearings, many stakeholders spoke about the public interest score and the need for it to be reviewed as it was so low. There were no amendments proposed for Section 33 as the clause was intended to clarify the link between the public interest score and the companies that were affected.

Clause 8, Section 38A
The Amendment empowered a Court to validate the creation, allotment or issue of shares which would otherwise be invalid, even where there were good reasons for doing so. It clarified shares and allotment of shares and the validation of those shares. Clarity was provided in section 38A to empower a court to validate the creation, allotment or issue of shares, which would otherwise be invalid, upon application before the court by a company or any person who holds an interest in the company within 60 days paid shares to be transferred to a stakeholder and held in terms of stakeholder agreement, until fully paid. There was a suggestion that the proposed Amendment was unnecessary but DTIC believed that some shareholders could be prejudiced if courts were not given such powers.
The Department did not propose a change to the Bill.

Clause 9, Section 40
The stakeholder agreement was that the monies were to be held in trust. An independent party assisted with that process. The Amendment addressed the confusion by clarifying the stakeholder agreement and defining a stakeholder. In the current Act, people were confused by the section because of the use of the word “trusted.” Submissions queried the independent person called a “trusted peer.” Who was the Act referring to? The section referred to a trusted stakeholder and also gave some details about the nature of the stakeholder agreement. The matter had been discussed with Legal Services in Parliament and it was agreed that the word “trust” should be reconsidered and substituted with the words “such as independent” to remove the confusion between trust deeds and the role of an independent person in overseeing a particular agreement.
The Department recommended a change by substituting ‘independent’ for ‘trusted.’

Clause 10 Section 45
The Amendment prohibited the giving of financial assistance by a company to its holding company, its fellow subsidiaries and its subsidiaries. Many stakeholders recommended incorporating the financial support or financial transactions between groups of companies and that the foreign companies should also be included. However, considering the implications of foreign company law and the fact that it would be dealing with other jurisdictions, the DTIC had noted the concerns of many stakeholders but was of the view that the foreign subsidiaries should not be included in the provision because of the complications about other laws, other countries and their jurisdictions and how they dealt with financial laws, corporate law issues and so on. Section 45 on financial support only applied to financial support provided between related companies or subsidiaries.
The Department did not propose a change to the Bill.

Clause 11, Section 48
Share Buy Back. The only comment submitted was based on a misreading of the Bill.
The DTIC was not proposing any changes to section 48.

Clause 12, Section 61
Some technical issues were raised around section 61 in terms of the wording and exclusions, some of which had policy implications, for example, to say certain companies were not required to have social and ethics committees, etc. It was clear which companies were required to have an ethics committee.
The DTIC did not recommend any changes to Section 61.

Clause 13, Section 72
Social and Ethics Committee. Some comments requested greater clarity. The DTIC needed to clarify what the regulations said about which companies were to have a social and ethics committee. That issue interfaced with the public interest score because that score determined which companies were required to have a social and ethics committee. The section dealt with the issues of the composition of the social and ethics committee and the qualifications of the members. It included a provision that dealt with members who were excluded and a company that needed to be exempted from having a social and ethics committee. There was a process whereby the Companies Tribunal was able to determine the exclusion of certain companies from the requirement of the social and ethics committee as a result of particular criteria.
The DTIC had added requirements to the section in the Bill to clarify the processes and to simplify them.

The overall amendments were around the appointments and how many members should comprise the social and ethics committee and the procedure for exemption. The current context was that companies were applying for and being exempted from having social and ethics committees as the current status permitted.
The recommendation was that consideration could be given for executive directors to serve on the social and ethics committee, subject always to the three non-executive directors remaining in the majority.

In section 72, the word “not” had inadvertently been omitted; that error would be corrected.

Clause 14, Section 90
 The appointment of auditors and the cooling-off period. Stakeholders had questions of clarity on when companies should appoint an auditor, especially those that did not hold shareholders’ meetings. The Amendment in clause 14 clarified appointment processes while shifting the cooling-off period from five years to two years. The Bill was clear as drafted.
No amendments were contemplated.

Clause 15, Section 95
No changes.

Section 118
The concept of "indirect shareholding" and the challenges that the takeover regulation panel had been suffering with a lack of clarity about private companies. There was a concern about the use of the wording “indirect shareholding” when it came to that particular subsection. The concept of “indirect shareholders” occurred in the corporate law space, but the concept itself should be clarified. Given the context of the takeover regulation panel work and the kind of transactions they addressed as well as the rationale of the subsection, the DTIC was of the view that the Amendments should not be factored into that particular section.
DTIC was open to recommendations as to whether the Amendments needed to stay to provide more clarity.

Clause 17, Section 135
Utilities and fee costs related to municipal rates, etc. Stakeholders were concerned that the section talked about rental amounts. The intention was not to permit any fees or other amounts, except utilities, rates and taxes and electricity bills, to make sure that the business rescue was a success and did not suffer any disadvantages.
The DTIC did not recommend any changes to section 135.

Clause 18, Section 160
It was a more technical section about the work of the Tribunal and provided some clarity. One submission asked for clarity but did not recommend a specific action.
 DTIC was of the opinion that it was clear enough in terms of how the Companies Tribunal dealt with issues of administrative orders and no change was recommended.

Clause 19, Section 166.
The section dealt with arbitration and stated that members who were involved in mediation and conciliation should not form part of the arbitration process.
The DTIC did not propose any amendments but supported a plain-language redraft of Section 166.

Clause 20 – no change.

Clause 21, Section 194
The reappointment of the Chief Operating Officer and the powers of the Chairperson to appoint The DTIC noted the comments made about the role of the chairperson and the chief operating officer. The section talked about the governance of the Companies Tribunal in terms of the appointment process of the CEO and the powers of the chairperson. It also talked about the role of the Minister in the processes of the Companies Tribunal.
Based on the comments received, the DTIC recommended that the Amendment be retained without change.

Clause 22, Section 195
There were comments on the functions of the Companies Tribunal which DTIC noted but was of the view that the section did not need to be amended.

Clause 23, Section 204
The clause included the issue of financial reporting pronouncements by the Financial Reporting Standard Council. It cancelled mandates and functions that dealt with International Financial Reporting Standards. There were not many comments. One of the comments was based on the previous publication saying that there was a need to define it. Definitions were in the Bill. Some raised an issue around the use of capital letters for financial reporting pronouncements instead of lower letters. That was noted.
DTIC was not proposing any changes.

Other comments did not relate to the Companies Amendment Bill but to the Act itself. There was a comment about the Public Interest score needing to be increased but that was a matter of regulations and was being addressed.

One of the stakeholders commented on the regulatory impact assessment. Dr Masotja assured the Committee that a socio-economic impact assessment had been undertaken on the Bill. The Department had done a few assessments at different stages before the Cabinet processes.

(See Department presentation)

Comments on the Companies Second Amendment Bill were not presented as Dr Masotja had addressed that Bill earlier.

Discussion
The Chairperson called for questions of clarity on the presentation. Members would need to go away and go through the presentations very carefully because they were quite substantive. The following day, the Committee would deliberate clause by clause.

Mr W Thring (ACDP) stated that the Department had responded to quite a few comments with the word, “noted.” That response could almost be dismissive. In some cases, it was because the Department had already provided clarification on similar submissions. Could he take it that in all of the comments where the Department said “noted,” the clarification had been given elsewhere and that it was not just a dismissive statement?

Dr Masotja replied that in most cases, the matter had been clarified. Some were based on the fact that the submitters were raising issues that were not linked to the Bill. She avoided using words, such as, “This does not apply to the Bill” but wished to indicate that the Department had read them and considered them. In one of the departmental audits on the legislative process, she was asked why some blocks in the matrix were left empty as if a stakeholder had said something and the Department had not seen it. So, although “noted” was subject to interpretation, it gave an assurance that it had been considered. The intention was not to be dismissive.

The Chairperson stated that the only matter left was for the Committee to consider how to proceed on the matters that fell outside the scope of the Bill, such as the gender pay gap disclosure. Did Members want to wait until the following day to make an in-principle decision on the matter?

Mr Mbuyane suggested that several issues placed before the Committee needed serious attention. There was an issue of the remuneration versus the packages, and also the role of stakeholders. All of that had to be clarified so that Members could get a greater understanding of the issues. There was also an issue relating to conflict with workers… (connectivity cut)

The Chairperson asked Dr Masotja if she had gathered what Mr Mbuyane was saying.

Dr Masotja presumed that he was identifying areas that had been raised about packages versus the remuneration policy and also the conflict with workers. Some stakeholders had raised the view that if the remuneration of directors and prescribed officers were made public, it could have unintended consequences, such as disputes in companies between employers and workers about their remuneration. The Department pointed to such processes in other companies and how the Department wished to promote openness and transparency of remuneration disclosures. That would assist in closing the wage gap in the country and income distribution and equity. There was a high degree of disparity between workers and top-earning senior executives.

Ms Ebrahim had nothing to add but she would raise certain issues during the deliberations, reminding Members about the matters that submitters had drawn attention to and also where improvements could be made to the Bill.

The Chairperson thanked the DTIC team and the parliamentary Legal Adviser for their input.

Concluding remarks
The Chairperson informed Members that the Committee had received an invitation to attend the AGOA Summit on Friday and Saturday, 3 and 4 November 2023.

The Secretary requested that Members provide information on attendance as the secretariat needed to attend to the logistical matters. He would forward the invitation to Members and, on Mr Macpherson's request, he would try to get a copy of the programme. Attendance was still subject to the approval of the House Chairperson.

The Chairperson indicated that there would be changes to the Committee Programme.

The Secretary stated that if the House Chairperson approved of the Members attending the AGOA Summit, the programme would be adjusted. It was proposed that the Committee meet on Thursday morning, 2 November 2023 from 8 am to 10 am to continue the deliberations on the legislation before the Committee.

Mr Thring thanked the Chairperson for her efforts in securing the invitation but, at such short notice, he was unable to change his schedule that weekend. He certainly wished that Members had been given earlier notice, even if it were just a tentative saying that it might be possible to attend the summit so that he could have blocked off those two days.

The Chairperson apologised but indicated the difficulties in informing Members when she did not know if it would happen.
 
Mr F Mulder (FF+) also thanked the Chairperson for her efforts but he too had prior arrangements. He would have loved to attend.

The Chairperson asked the Committee Secretary to note the two apologies.

She stated that the Committee would continue its deliberations the following day, going through the Amendments clause by clause and would make a decision about matters that fell outside the scope of the Bill. She adjourned the meeting.

The meeting was adjourned.