Close Corporations Amendment Bill: adoption

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Trade and Industry

31 May 2005
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Meeting Summary

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Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
1 June 2005
CLOSE CORPORATIONS AMENDMENT BILL: ADOPTION

Chairperson:

Mr B Martins (ANC)

Documents handed out:
 

Amendments Proposed: Close Corporations Amendment Bill
Close Corporations Amendment Bill [B6-2005]
Institute of Certified Public Accountants submission

SUMMARY
The Department responded to submissions that had been raised by the Institute of Certified Public Accountants. It rejected the proposal that section 60(4) also provide for the appointment of an incorporated private company as an accounting officer. It agreed with the proposal that the words "of its accounting functions" in the proposed section 60(4)(c) be amended to read "of its duties in terms of section 62".

The Department proposed a new clause 2 to amend section 29 of Act 69 of 1984 as amended. The amendment would make section 29(1A) also applicable to a juristic person and not only to a natural person. The proposed section 60 (4)(a) (current clause 2 in the Bill) should include natural persons.

The Committee agreed to the desirability of the Bill and adopted the Bill with amendments.

MINUTES
The Department ‘s delegation consisted of Mr M Moeletsi (Department Chief Director: Policy and Legislation), Mr J Strydom (Department drafter) and Mr M Netshitenzhe. The main purpose of the meeting was for the Department to respond to submissions by Institute of Certified Public Accountants.

The Institute of Certified Public Accountants (ICPA) had proposed that section 60(4) should also provide for the appointment of an incorporated private company (section 53(b) of the Companies Act) as an Accounting Officer.

Mr Strydom said that this proposal should not be entertained because it would require the Department to conduct extensive consultation with members of the profession. There was a pending court case which might touch on the issues raised by the proposal. The Department did not want to take sides until the issue had been decided by court. It was important for the court case not to be decided through an Amendment Bill. The proposal had a bearing on companies. The Department would have to consider other issues relating to company law should the proposal be accepted. An uncoming major law review would touch on this and it was therefore appropriate to leave the matter to that process. A bill on this major company law review would soon be tabled in Parliament.

The ICPA had also proposed that the words "of its accounting functions" in the proposed section 60(4)(c) be amended to read "of its duties in terms of section 62".

Mr Strydom referred to the heading of section 62 of the Close Corporations Amendment Act, "Duties of accounting officers". It was logical for the Department to accept the proposal given the heading of section 62.

Mr Strydom reminded the Committee that the Close Corporation Act prohibited a member of a trust inter vivos to be a member of a Close Corporation. This had been necessitated by tax considerations. These considerations no longer applied and there was therefore no reason for the prohibition. He proposed a new clause 2 to amend section 29 of Act 69 of 1984 as amended. Section 29(1A) would also apply to a juristic person and not only a natural person.

Mr Labuschagne (DA) asked for details of the case that Mr Strydom had referred to when addressing the submissions by the ICPA. He was aware that the matter was sub judice.

Mr Netshitenzhe replied that public accountants and registered auditors were ‘fighting for the market’. The ICPA was asking ‘what registered auditors could do that chartered accountants could not do’. The Minister had been advised not to be party to these proceedings. The Department was monitoring the issue. The fight was similar to that between attorneys and advocates on the right to appear in High Court. One of the proposals by the ICPA seemed to want to achieve a solution to the issue before the court.

Mr Strydom said that the proposed section 60 (4)(a) (current clause 2 in the Bill) should include natural persons.

The Chairperson read the Motion of Desirability and the Committee agreed. The Committee adopted the Bill with amendments.

The meeting was adjourned.

 

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