Corporate Laws Amendment Bill: NCOP Amendments; Accreditation for Conformity Assessment Bill; Measurement Units & Standards Bill: hearings

Meeting report

TRADE AND INDUSTRY COMMITTEE
21 September 2006
CORPORATE LAWS AMENDMENT BILL: CONSIDERATION OF NCOP AMENDMENTS; ACCREDITATION FOR CONFORMITY ASSESSMENT BILL; MEASUREMENT UNITS & MEASUREMENTS STANDARDS BILL: HEARINGS
 

Chairperson: Mr B Martins (ANC)

Documents handed out:

Corporate Laws Amendment Bill [B6D-2006] Final version as accepted by this Committee
Department changes to Bill as proposed in Select Committee on Economic Affairs [B6C-2006]
Corporate Laws Amendment Bill [B6B-2006] - as amended by Portfolio Committee 7 June 2006
Corporate Laws Amendment Bill [B6-2006] - as introduced on 21 April 2006
Accreditation for Conformity Assessment, Calibration and Good Laboratory Practice Bill [B29-2006]
Measurement Units and Measurement Standards Bill [B21-2006]
Business Unity South Africa submission on Accreditation for Conformity Assessment Bill & the Measurement Units & Measurements Standards Bill

SUMMARY
The Department of Trade and Industry went through the changes to the Corporate Laws Amendment Bill as proposed by the Select Committee on Economic Affairs. Most of the changes involved the substitution of "public interest company" with "widely held company." The need to make the change arose out of an oversight by the drafters. The Department discovered that the term "public interest company" in these interim amendments had the same meaning as the term "widely held company." So for purposes of consistency, it was better not to have two terms that meant the same thing. The Committee agreed to pass the Bill with these amendments.

In its submission on the on the Accreditation for Conformity Assessment and the Measurement Units & Measurements Standards Bills, Business Unity South Africa welcomed the tabling of the Bills and looked forward to their promulgation next year. Government had to play a leading role in the economy by providing the enabling environment that promoted enterprise development. The importance of these Bills was reflected in the positive impact that they could have on some of the binding constraints to growth identified by ASGISA.

MINUTES
Consideration of NCOP Amendments to the Corporate Laws Amendment Bill
Mr Johan Strydom, the Department of Trade and Industry (DTI) Senior Legal Advisor, went through the changes that were proposed to the Bill in the National Council of Province. Firstly, there was to be a new clause that read:

Amendment of section 35 of Act 61 of 1973
8. Section 35 of the Companies Act, 1973 is hereby amended by the substitution for the proviso thereto of the following proviso:
"provided that the memorandum of its registration contains as an object of such company the ratification or adoption of rights and obligations in respect of such contract and that [two copies] of such contract [one of which shall be certified by a notary public] have been lodged with the Registrar together with the lodgement of the memorandum and articles of the company."

On page 6, from line 22 in Clause 11, to omit "together with a certificate by a notary public to the effect that the articles of the company have been truly stated" and insert "[together with a certificate by a notary public to the effect that the articles of the company have been truly stated ]."

Later on there was another new clause added that read:
Amendment of section 173 of Act 61 of 1973
Section 173 of the Companies Act, 1973 is hereby amended by the addition of the following subsection:
"(4) The information required in terms of this Act, as contained in the latest annual return of a company will, in the absence of any subsequent conmpliance with the relevant disclosure requirement of this Act, be regarded as the latest disclosed information in respect of the company concerned."

He said there was an oversight by the drafters in Clause 32. On page 13, in line 26, after "that" "[in the conduct of the affairs of the company]" had to be inserted. After "place" in line 28 "[which has caused or is likely to cause financial loss to the company or to any of its members or creditors]" had to be inserted. The wrong numbering and cross referencing in Clause 54 was also corrected. The phrase "must for the purposes of this Act" was omitted and replaced with "will" in Clause 59.

Most of the changes however, concerned one issue: the substitution of "public interest company" with "widely held company." The need to make the change arose out of an oversight by the drafters. Cabinet had just approved the policy on company law reform recently and the Department was drafting a new companies bill. The reason for these interim amendments in the Corporate Laws Amendment Bill was that there were some issues that could not wait until the new companies bill was drafted. In the wider law reform process, the term "widely held company" was used. The Department then discovered that the term "public interest company" in these interim amendments had the same meaning as the term "widely held company." So for purposes of consistency, it was better not to have two terms that meant the same thing. Thus, the change was made accordingly in the long title and clauses 1; 22; 23; 25; 26; 27; 28; 30; 34; 43; 44; 45; 51 and 54.

The Chairperson then noted that the Committee had duly considered the Select Committee's proposals and read out the motion of desirability. The Committee agreed and passed the Bill with these amendments.

Hearings on Accreditation for Conformity Assessment Bill & Measurement Units & Measurements Standards Bill
Business Unity South Africa (BUSA)
Dr Lorraine Lotter (BUSA board member) noted that the technical regulatory infrastructure (TRI) in a country comprised of a network of institutions that supported technical regulation, like the standards authority, an accreditation system and calibration facilities and regulators that could be either government departments or regulatory agencies. The operation of these institutions and the development and implementation of the wide range of technical regulations that national governments promulgated to protect consumers' health, safety and environment were required to comply with the World Trade Organisation Agreement on Technical Barriers to Trade. BUSA viewed industrial policy as an important framework within which more detailed strategies for key sub sectors and cross cutting interventions could be developed and implemented.

BUSA had always recognised the need for Government to play a leading role in the economy but had argued for this role to be focused on providing the enabling environment that promoted enterprise development. Business supported a more assertive approach to market access issues such as specific non-tariff barriers. Business supported the development of specific implementation strategies for each bilateral agreement and believed that this approach which had been agreed in Nedlac had to be initiated urgently. The national accreditation and metrology systems could play major roles in the successful implementation of such strategies and had to be incorporated.

The development of more refined foreign direct investment and export promotion strategies were underway. Discussion had already commenced on a draft export strategy which should contain specific reference to the role of the TRI including these Bills in facilitating market access. BBBEE was an integral element of industrial policy and BUSA welcomed the application of accreditation criteria to BBBEE scorecard verification agencies as this provided clear framework within which all verification agencies would operate, thus increasing the credibility of the scorecards.

The importance of these Bills was reflected in the positive impact that they could have on some of the binding constraints to growth identified by ASGISA. While the accreditation and measurement systems had been in place for a while, acceptance of the role, particularly amongst regulators had been slower than business would have liked. The establishment of these systems as statutory bodies would raise the profile of these institutions, especially amongst government institutions so that greater use was made of them in technical regulation. This should lead to a more effective use of resources in that companies that made use of accredited facilities to certify performance would be able to demonstrate this, thus relieving the regulator of the need to check compliance.

Implementation of the system could alleviate the enforcement burden on the state and should increase the enforcement effectiveness in the critical areas of safety, health and environmental performance in particular. Increasingly companies were using external verification of their safety, health and environmental performance and as such use accredited certification agencies. Authorised inspection authorities were also being used to supplement the state's capacity to enforce occupational health and safety legislation.

Some examples of the use of accreditation in the key sectors identified by ASGISA included the chemical sector where safety testing results were accepted by major trading partners. Biofuels would be produced to comply with a national standard still to be developed. Testing for compliance with that standard would be undertaken by accredited testing facilities. 'White goods' like household appliances were also required to conform with safety standards against which products had to be tested. In agriculture, produce had to be tested for pesticide residues and diseases. Drug testing during the 2010 World Cup could be carried out in South Africa by a testing facility accredited by the National Accreditation System (NAS). In addition to the benefits to key manufacturing sectors, the value to the regulatory system in pursuit of key government social development objectives should also not be overlooked.

BUSA wanted to highlight that the finalisation of the review of the TRI was recognised as a key action in the draft industrial strategy. Achievement of economic growth targets required increased access to global markets. Such access could be facilitated by a strong NAS that enjoyed international recognition as the country needed to be able to demonstrate comparability to international standards. BUSA had been consulted on the Bills and believed that they achieved their purpose as drafted. Therefore BUSA welcomed the tabling of these Bills and looked forward to their promulgation next year.

Discussion
Mr D Dlali (ANC) asked why BUSA thought that the value to the regulatory system in pursuit of key government social development objectives should not be overlooked. What were their concerns about the use of accreditation in agriculture. Would not the use of sugar and maize for biofuel ultimately drive their price up? This would negatively affect poor people who often used these commodities.

Dr Lotter replied that agriculture was a challenge in Africa as a whole because of the prevalence of pests so many pesticides had to be used. However, this left a chemical residue on the produce and some countries had certain standards about pesticide levels, and in particular, the European Union (EU) standards were very strict. Now South Africa was in a position to do the required tests up to a level that the certificate produced could be accepted by the EU. An added challenge was that the big retailers in the EU had their own standards therefore anything that could improve South Africa's accreditation system such as the Bills, was welcomed.

She said that accreditation and measurements were not only about business, there were social objectives to meet also. Therefore, accreditation services were provided to blood transfusion facilities, phamaceutical and medical laboratories for example.

She agreed that the debate about what would happen to commodity prices as a result of biofuel needs was going to be a long one. Some people would say that food should never be diverted to fuel but others would say that there was a need to get the most value out of the commodities. Ultimately, the issue was one of balance. However, she expected that the Government would regulate biofuel as stringently as normal fuel, and food security would one of the considerations in that exercise.

Ms M Ntuli (ANC) said she wanted more information on 'white goods' and accreditation and how this related to the 'second economy.'

Dr Lotter replied that the issue of the 'second economy' and metrology was historically a challenging one as the public did not really understand the relationship therefore it was important for there to be a link between these Bills and the Consumer Protection Bill to help consumers become more aware. Public education programmes were very important as well.

Mr S Rasmeni (ANC) asked which regulator she was referring to who would be relieved "of the need to check compliance."

Dr Lotter replied that, for example, the Department of Labour had health and safety regulations in workplaces where the company had to use accredited inspecting authorities that were approved by the regulator to assess their procedures at the company's expense. Therefore, some of the inspection burden was taken from the regulator.

It was noted that the Committee had also received a submission from the South African Scale Company but this would be looked at closely when they considered the actual provisions of the Bills and any possible amendments.

The meeting was adjourned.