Companies Bill: Department response to public submissions (continue)

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Trade and Industry

24 August 2008
Chairperson: Mr B Martins (ANC)
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Meeting Summary

In its continuing response to submissions, the dti said that on the question of auditing, the change agreed upon now was that every company would be required to produce financial statements, but that the majority of companies would be exempt from undergoing an audit. The ethos of the Companies Bill was reducing the cost of compliance for businesses and making compliance as simple as possible. Without wishing to be misguided about Annual Financial Statements the intention was that companies should have sound and sustainable financial management structures without the cost of audits. It intended to leave the imposition of standards to the Financial Regulatory Standards Council as it could move faster than a parliamentary / ministerial process. The issue of shareholder activism was paramount and it was conceded that in the requirements of Clause 61(3), the 25% could perhaps be reduced to 10%. It said that business rescue proceedings (BRP) were to advance upon the current judicial management provisions and should not be viewed as a step towards liquidation, as seemed to be viewed by Labour.

Some Committee members were still concerned that there was not sufficient consultation with organized labour in business rescue proceedings and that the provisions of the Labour Relations Act were subordinate to the business rescue proceedings. They said that it was problematic that management and even the supervisor had an advantage over the trade union. Some did not like the use of the term Supervisor which had unpleasant connotations of factory supervisors, the bullying disciplinarians constantly taking management’s side. It was suggested that the National Productivity Institute could play a role in the business rescue proceedings. They also felt that the proposals regarding decriminalization were inappropriate. There had been too many corporate scandals recently and they asked whether decriminalization was not making things too easy.

Meeting report

Ms Zodwa Ntuli, Deputy Director-General for Consumer and Corporate Regulation, dti, provided the following response:

Annual Financial Statements (AFS)
Originally the dti’s thinking had been to exempt the majority of businesses from the obligation to produce such. However, it had now become recognized that the best intentions might not be the most efficacious or beneficial. So the dti’s current thought was to amend the Bill to provided for the production of such, in the interests of imposing sound [financial] management principles on companies, thereby promoting sustainability of the enterprises and initiating responsive management, and management practices, but to exempt the majority of businesses from having those financial statements audited, or reviewed, by auditing professionals with the accompanying expenses. Equally, it must not be overlooked that Annual Financial Statements may be required by other Regulatory Authorities such as the Tax Authorities and so AFS may assist with regulation by other departments but should not be compulsory in terms of the Companies Legislation.

The ethos of the Companies Bill was reducing the cost for businesses of complying with the Companies Act and making compliance with the Companies Act as simple as possible. Without wishing to be misguided about AFS the intention was that Companies should have sound and sustainable financial management structures without the cost of audits, bearing in mind that audited AFS may be required by other Departments of State.

Financial Regulatory Standards Council (FRSC)
It was intended to leave to this Council the imposition of standards as it was felt that this FRSC could move faster than the delayed Parliamentary / Ministerial process, should there be changes from the International Regulatory bodies and other developments necessitating changes. If necessary, there could be provision for the standards set by the FRCS to be endorsed by the Minister in an effort to give ministerial or legislative backing to such standards. It was felt that such an approach was in line with the thinking behind the Corporate Laws Amendment Act. The FRCS was to be predominately advisory; and if the Minister was satisfied the advisories could be turned into regulations. It was felt that this would answer the request by Member of Parliament, Prof Chang, for speed for it was recognized that SA Company law needed to stay abreast of developments internationally. This was an attempt to reduce the number of public hearings at which persons without a real interest made submissions which were “red herrings” but yet stay within the requirement for public participation in the legislative process.

Auditing and Audit Committees
It was recommended that the Audit Committees were sub committees of the Board of directors, independent of the Auditors, themselves and any other stakeholders to ensure that the AFS as audited by the Auditors, in line with their obligations in terms of the Auditing Profession Act were as independent and impartial as humanly possible. The issue of shareholder activism was paramount and the shareholders were to appoint the members of the Audit Committees. The members of the Audit Committee should have sufficient knowledge and experience to be able to select auditors appropriately. It was recognized that there might be a concern that the shareholders would appoint members of the Audit Committee for other reasons than auditing (political reasons) but, like directors, shareholders should work in the best interests of their companies and for no other reasons. In addition as part of the AFS, the Audit Committee was required to give a report annually which should be incorporated with or made available with the AFS. If there should be a vacancy on the Audit Committee, the shareholders themselves should make the appointment. With regard to the appointment and liability of Auditors there was no desire to mingle with or lessen the liability of the Auditors, which was set in terms of the Auditing Professions Act. The intention of the Companies Bill was not to impact upon any other legislation. The dti still held that the total length of an appointment for an auditor should be 5 years, but was prepared to consent to the cooling off period being reduced to 2 years. With regard to the problems faced by business enterprises in rural areas, the difficulties were recognized but most rural enterprises may not need to be audited, or audit reviewed, and so there was no agreement that there could be exemptions, on a rural basis. The requirement for audit independence and impartiality was non negotiable.

Shareholder protections / activism
This concern was mainly raised by Hermes in their submission. It was conceded that in the requirements of Clause 61(3), the 25% could be reduced to 10% and that the Memorandum of Incorporation (MOI) could provide for this; but it was something which would be considered by dti. The dti’s position was that it favoured shareholder activism or participation, but shareholders had a role to play and must not expect to be spoon-fed, the price of independence was eternal vigilance regarding one’s own affairs.

Abstentions taken as a vote against: The dti feels that this should be amended and an abstention left as an abstention and not turned into a vote, one way or the other. The MOI does not relieve the shareholders of the necessity of participating in their company’s activities.

Removal of directors: Once a director becomes ineligible, the shareholders should vote to remove such person. It was not a question of following any procedure, let alone due procedure. If the director was discovered to have a conviction, to be an unrehabilitated insolvent or to have acted contrary to the interests of the company, he was ineligible to continue as a director and the next meeting of the shareholders would note that, and vote for his removal. The LRA does not apply for a director who is not an employee.

Quorums: The provision in the current Act was now intended to be carried forward in Clause 73 of this Bill.

Pre-emption rights: The concern by Hermes was noted, and the intention was to make this applicable to State Owned Enterprises as well. With regard to Public Companies it was felt that pre-emption rights undermine the principle of public offerings and the intention was that there was to be no pre-emptive rights unless such were stipulated in the MOI.

The thresholds of voting: Ordinary resolutions were 50% plus 1 and Special resolutions were 75 %. Hermes suggested that such thresholds were too high and should be reduced. dti felt that the MOIs should set the threshold but it would be reviewed.

Clause 78(3) no indemnification of directors: The dti was opposed to indemnification of directors and felt that directors should be liable, civilly and criminally, personally.

Business Rescue Proceedings (BRP)
Mr Fungai Sibanda, Chief Director: Policy and Regulations, dti, continued, saying that the business rescue proceedings (BRP) were to advance upon the current Judicial Management provisions and should not be viewed as a step towards liquidation, as seem to be viewed by Labour. The BRPs were designed to provide a mechanism in cases where there was a good prospect of rescue or success and so dti was prepared to delete Clause 128(f)(i) while leaving the Insolvency Act to deal with the intricacies of liquidation. It was felt that the Bill provided the mechanism for speedy address to the situation where a company required the BRP.

Some submissions were that the Business Supervisor had too much power, other that he had too little power. The dti believed that it had managed to achieve a balance because the BRP was not to be forever or a long drawn out process. If a BRP was appointed and there was a chance that the business could be rescued, this must be soon apparent and if not, then it must be liquidated. It was a voluntary process which was why there was provision for a company resolution and the appointment by the Company of the Supervisor. There must not be a case of talk, and talk, and talk. There must be action. Labour’s concerns had been noted but organized labour was but one element, and organized labour’s claims were but one set of claims, and these claims were not aligned with the provisions of the Insolvency Laws but were intended to be speedy effective handling of claims until the business had been rescued and was able to pay its way.

There had been a concern that there would not be sufficient Supervisors. With the National Credit Act, there was concern that there would not be enough Debt Councillors but notwithstanding such concerns there seemed to be more than enough and it was felt that the same would eventuate with the Supervisors. Part of the duties of the Supervisor was (Clause 150) to devise a rescue plan, a business plan, and if the Supervisor encountered any misconduct in drawing up such plan he was required to report it to the correct authority and should he not do so he in turn committed misconduct and fell prey to sanctions. Additionally, the Supervisor was required to place a copy of such report before the shareholders.

Pension schemes: Provident Funds would be incorporated therein.

Voting: It was felt that in the BRP, voting by interest would be preferable to voting by numbers.

Access to Information: It was felt that the BRP was not fully understood and appreciated. The intention was to get the business on its feet again and there might be a great deal of information of a very confidential nature which should not be made known to organized labour and this was recognized and treated accordingly. Thus, Clause 113 of the current Companies Act would be incorporated unchanged.

Equally, with the question of whistle blowing: Just what was confidential and how far did this extend? A balance had to be maintained.

Ms Ntuli explained that this Bill had to be regarded from all aspects, in the light of constitutional imperatives, and not one aspect or set of interests should be over emphasised, and the reference in the Preamble to the Constitution was felt to suffice and that it was not necessary to repeat the constitutional imperatives again in the section dealing with directors, who were NOT employees but office bearers. Also with regard to the regulations to be published in terms of the Bill, such would be canvassed with the stakeholders and the summations considered by the Minister and published as regulations, without a tedious public participation process by which time what was necessary might be too late. In similar fashion, the matter of the design and form of the forms would be handled.

The funding of agencies created in terms of the Bill would be looked at.

The grammatical and typing errors would be looked at, as would the use of the term Ombud which might be too clumsy to convey the full import of such position. Equally the Commission was to be an ongoing commission and in this regard there might have to be special attention given to labour intensive businesses as opposed to other businesses which were not so labour intensive.

Discussion
Mr D Oliphant (ANC) expressed concern about the special difficulties faced by businesses in rural or areas far removed from the major centres where auditing firms proliferate and being able to comply with the audit requirements, the change of auditors and the cooling off period for auditors. He expressed the opinion that this could be problematic. Additionally, he felt that if there was not wise consultation with organized labour as in terms of the Bill, the workers could lose out. He stated that Labour had a genuine desire to preserve and save all businesses.

Dr P Rabie (DA) commented that he felt that the Supervisors of BRPs should have some experience in the field of the business to which they might be appointed and submitted that it was not ideal to appoint a person with retail experience to supervise the BRP of a manufacturing enterprise.

Mr S Njikelana (ANC) stated that regulations were usually gazetted and it would be interesting to see what the gazetted regulations provided compared to what was being said today. He added that he had been looking at the Auditing Professions Act and its definition of audit and the definition of audit in this Bill and wondered whether there was any similarity. He also wondered about the shareholders speedily filling a vacancy on the Audit Committee so as to maintain efficiency and he still felt it necessary to focus on the obligation of companies to provided AFS. Additionally, did a company and shareholders not have to follow due process when a director was disqualified? Further, with a BRP was there sufficient distinction between a Supervisor and a Liquidator? Also the solvency test to be applied for BRP concerned him. With regard to the question of voting by numbers, he felt that numbers had a greater socio economic impact than interest. With regard to the requirement for the Supervisor to consult he was worried because the Supervisor seemed to have more powers than the directors and Management and he felt that this conflicted with the provisions of Clause 7. Additionally he felt that the provisions of the Labour Relations Act were subordinate to the BRP and this troubled him, for were trade unions not direct stakeholders in a business? Also how would the funding of the sub-ordinate agencies proceed and what would be done about loans and other arrangements for the directors?

Mr Flip Dwinger, Legal Consultant to CIPRO, said that it was correct to have regard to the extended definition of audit in the Auditing Professions Act for an audit meant, not implied, more than just counting the beans. With regard to vacancies on Audit Committees, even if the board made temporary appointments to Audit Committees, such appointments need to be endorsed by the shareholders at a meeting - for the shareholders were the ultimate controllers, owners and guardians of the company. He added that if a director should become disqualified, for any reason, he was then disqualified and there was certainly no question of due process in removing him. The remaining directors were obliged to remove any such disqualified director from the Board, otherwise they, themselves, failed in their duty to act in the best interests of the company and they, too, were disqualifying themselves. If loans etc had been made to the directors then Clause 45 should operate, and all such loans etc were void.

Mr Njikelana raised the question of Parliament’s oversight over the envisaged regulations, to determine whether the Minister was exercising ministerial powers and it was confirmed that Parliament was to be consulted. He further addressed himself to the BRP Supervisor and the difference between “in consultation” and “after consultation”.

Again he was informed by the Department spokesman that this was a consultation, not a negotiation, process. It should not be equalled to negotiation about wages where consensus was required. The BRP Supervisor’s task and duty was to rescue the business entity, as soon as possible. The Supervisor should have expertise but it was important to remember that business principles were business principles and transferable from one field of activity to another. There was a world of difference between Supervisor and Liquidator and the functionaries had different functions, the Supervisor was required to rescue the business entity and the Liquidator to end it, obtaining the greatest possible price for the remains of the business. Perhaps the term Supervisor could be replaced by another but great thought should be given to such a name change. The Supervisor was granted Clause 140 great powers, powers that temporarily exceeded those of the Board of directors, for it was intended that the BRP Supervisor should be in control for a short period of time, to do his job, or to leave the business wreck for the Liquidator. The Supervisor’s task was to bring the company to its feet and whilst doing such, it was required of the BRP Supervisor to develop a business plan. On whether the BRP Supervisor and plan gave the trade unions more information (as trade unions often struggled to acquire information), the answer lay within the discretion of the Supervisor whose task was to rescue the business not play games with trade unions. The directors, the Supervisors, the trade creditors had access to court and should not the envisaged Company Commission under CIPRO not also have locus standi in Court?

The Chair asked about the funding of the envisaged agencies and the possibility of exceptions. In response he was advised that CIPRO was currently self funding under the dti and that the envisaged agencies were also seen as self funding. The envisaged budget for the Ombud’s Office was R80 million, the Financial Records Council was R6 million and they would be self funding, as at present with CIPRO. On the question of Auditing, the change as agreed upon now was that every Company would be required to produce financial statements, but that the majority of companies would be exempt from undergoing an audit or having their financial statements reviewed professionally and that decisions would be made upon on ad hoc basis. Tax legislation would have other requirements and the ethos of the Companies Bill was that where other legislation was more onerous, it should take precedence over the Companies legislation.

Ms N Khunou (ANC) asked why the trade unions had only limited access to the financial information which the BRP Supervisor might have and how were the Trade unions to acquire such information? It seemed that Management and even the Supervisor had an advantage over the trade union and she viewed this as problematic. Addressing the envisaged sum of R80 million, she asked if people would have access to this money for where else could they acquire money as the banks were too strict in their lending criteria and persons could not gain access to finance.

At this point the Chair commented that the term Supervisor did not sit well with him for he thought constantly of factory supervisors which as a former trade unionist, he viewed as bullying disciplinarians taking management’s side constantly.

Ms Khunou interjected and said that from figures presented by the Department, there were more than three million companies or business entities and she asked whether the Companies Commission would have the capacity to monitor all of these adequately.

The Chair pointed out that the Committee had been informed earlier that the Debtor Monitors required in terms of the National Credit Act had appeared out of nowhere and he thought the Supervisors would come from the same area.

Mr Njikelana agreed with the Chair’s observations that the word Supervisor had unpleasant connotations and asked that thought be given to utilising another word to describe this functionary. He agreed with Prof Chang’s views that the BRP required speed and he felt the Companies Commission also had a duty to advise when a business needed rescue. He added that the whole concept of Audit Committees needed to be looked at afresh and felt that they were not doing their work, for if they did, there was no necessity for a company audit. He felt that any investigation in terms of Clause 169 should be reported to trade unions as well. Regarding the envisaged budgets for the subordinate bodies to CIPRO, he said that these were good and would bring many businesses currently off the radar screen into the process but he speculated whether this would actually be so. He appreciated the submissions that emphasised human rights which he saw as the preserve of the workers and he wanted the directors to be liable for any transgressions against human rights in their personal capacities and he wanted the two million companies to be anchored in human rights. He returned to the National Productivity Institute and asked that it become more active in monitoring company activity. The NPI could play an important role on the BRP process. With regard to the proposals regarding de-criminalization he personally felt that such were inappropriate.

Dr Rabie added that when he thought of shareholders, the widow with her mite came to mind and he felt that she was often induced to invest in a company which the directors and others then abused and he wanted protection for minority shareholders to be strengthened. There had been too many corporate scandals recently and directors were stripping the assets of companies, which assets they should be guarding with a fiduciary interest, to the detriment of the weak and underprivileged, the pensioners, the widows and orphans and the financially illiterate, who were just lumped together as minority shareholders. He emphasised that such should be protected by legislation

At the invitation of the Chair, Ms Ntuli directed the questions and observations to Mr Macdonald Netshitenzhe, Director: Compliance Law and Policy, in the dti for reply.

Mr Netshitenzhe pointed out that in his opinion many of the problems raised by the members could be cured by insertion in the Memorandum of Incorporation (MOI) which could now, by either a Special or an Ordinary Resolution, be changed by the shareholders. Further the position of the creditors, prior to a BRP process being embarked upon, also required protection and they had a justified claim against the company for if they were not protected, a chain of BRP processes would ensue, to the detriment of the economy and the workers employed by all such companies and their position would be checked. With regard to the observation by Dr Rabie about widows and minors he felt that such should be looked at.

Mr Dwinger added that “Audit” was defined in terms of the Auditing Professions Act. He appreciated the point raised by Dr Rabie about asset stripping of companies and conceded that it was a grave problem. He felt that the answer had been provided in the Bill, provided shareholders became more active and exercised their rights. He added that people could not be forced to exercise their rights and that in SA shareholder activism was at a low level and he personally felt that shareholder activism should be encouraged. Whereas in previous company legislation it had been envisaged that the regulatory authorities would be reactive, in terms of this Bill it was envisaged that such authorities, as far as possible, would be proactive, much like the regulatory authorities in the Competition Laws which, of themselves, picked up reports of interest and followed them to their logical conclusion.

Mr Njikelana said that it seemed that the Bill contemplated bringing unregistered entities into the process. From the figures provided by the Department, about 54% of businesses were registered and about 45 % were not registered. He felt that the more that were registered, the lower the tax rates would be and this was to everyone’s benefit, especially the workers. He believed that the efforts to simply and ease the registration process would entice more entities to comply.

Ms Ntuli said it was envisaged that CIPRO would be expanded as a body, and in fact arrangements were being made for CIPRO to retain its Head Office in Pretoria but for it to be represented at every Post Office in the country, so that CIPRO would thereby be brought to the people. Technological advances would be utilized so that persons at Post Offices would be trained to answer frequently asked questions (FAQs) and certain provinces already had Post Offices capable of representing CIPRO and more were coming on stream. The role of the Companies Commission was seen as very important in pointing out to those neglecting their duties, their neglect and the decriminalization process would, it was hoped, lead to rectifications thereof. With regard to the Bill of Rights and human rights, the feeling was that this Bill did not need to make more than passing reference to it, that the companies should incorporate such references in the MOIs but to make it mandatory would frustrate the whole process.

Ms Khunou said she felt her questions were not being answered. She wanted to know where the Commission would be based and if it would be in each and every province. She had personal knowledge of a company in Thaba Nchu in the Eastern Cape where the directors lived in smart houses and drove expensive cars but when the people asked for money they were fobbed off with the answer that there was no money. She felt that this was wrong and that the directors were hiding money. She asked if the Commission would apply only to big companies or also to small companies.

The Chair added that he foresaw the Companies Bill applying to spaza shops which he wanted to be grown into challenges to OK Bazaars after all OK Bazaars must have been small at one time. Financial statements were useful to all as a management tool and there was a need for accounting to attract foreign investment.

Ms Khunou agreed that there was a need for training and she wanted the Commission to do this. If a spaza shop owner had R10, he should be encouraged to plough back R8 for more stock and only pay himself R2.

The Chair answered that there were different businesses with different needs and no Bill could provide for every eventuality. He cautioned that Members must raise the main issues.

Mr Njikelana agreed and once again referred to the NPI and he wished to know whether the NPI could not play a role in the BRP Supervisor’s business plan to ascertain that it was correctly drawn up. He added that he was not happy with the plans for decriminalization and he wanted directors to be jailed. He asked why Clause 49(5) provided for Audit Committees and why if there was an internal audit, it was necessary to have another audit, with expensive fees. He felt that this was the responsibility of the Company Secretary for otherwise what functions did the Company Secretary fulfill? Referring to Clause 33(1) he asked what information was prescribed. He added that companies would take risk management strategies and make sure that they only appeared before the less onerous of the regulatory authorities and that there would be a type of forum shopping. With regard to shareholders duties, he felt that the MOIs should make this compulsory and that MOIs should incorporate constitutional imperatives. Referring to directors, shareholders and senior management, he wanted to know why directors should exercise their duties in the best interests of the company as set out in Clause 76 (3)(b) for he believed the best interests of the company served the employees, the suppliers and the auditors and the economy of the country which were the long term interests of the company. He asked whether such should not be factored in the Bill or whether these were adequately served elsewhere. If directors had fiduciary duties what were the duties of shareholders. The Competition Amendment Bill contained expectations for companies, why did the Companies Bill not do so also? He added that he felt the BRP Supervisor was too close to a moneylender.

Mr Desmond Ramabulana, Deputy Director: Company Law, dti, noted that CIPRO already had working relationships with the Post Office in the Western and Eastern Cape, Limpopo and KZN provinces and although there were currently training programmes, there were also problems with the IT programmes. Although Pretoria would remain the Head Office of CIPRO, the Post Offices were like the Local Municipal Multi Purpose Centres. He added that the funding of the Office of the Ombud was for the long-term benefit of stakeholders and not intended as a source of loans by entrepreneurs.

Mr Sibanda said that the limited access to trade unions during the BRP proceedings was because businesses had a great deal of information regarding the market and their future plans, which ought to remain confidential. Much of this information was not within the province of trade unions which were mainly concerned with wages and other conditions of service. He suggested that perhaps the Companies Commission should establish criteria to what exactly trade unions were entitled.

Mr Netshitenzhe said that it was acceptable for the holding and subordinate companies to utilise the same auditor. The de-criminalization proposals were intend to achieve speedy and cheap resolutions of difficulties but they did not impact upon the director’s duties to administer the affairs of the companies in the best interests of the companies and without indemnification should there be a departure from such standard, even if a decriminalization fine should be levied. If, for example, the directors were defrauding a company, an administrative fine would not be applicable and the directors would still be liable and not be indemnified for their actions.

Mr Sibanda added that shareholders ultimately controlled the directors who controlled the management, senior or otherwise. Clauses 57-65 were designed to promote shareholder activism. There had been mention of changing the voting thresholds but he pointed out that the thresholds were set and the MOIs could increase these, but not decrease the thresholds.
The suggested changes in the threshold for shareholders in favour of summoning a meeting were being considered. For an ordinary resolution to be passed, it was 50% plus 1 and for a special resolution 70% was the required threshold for success. Further, shareholders had rights, but directors had duties. Included in those duties was supervision of Senior Management and directors were jointly and severally liable when there were compromises.

Ms Ntuli agreed that productivity should be considered in the BRP and the business plan and currently there was no provision for its consideration. In an effort to get the Companies Bill “working” everything should be taken into consideration. Regarding the possibility of forum shopping she expressed the opinion that Clause 188, designed to avoid conflict, was the operative one. There was mandatory provision for consultation but that the outcome of such consultation was not mandatory.

Mr Sibanda said that consideration was to be given by the department to expanding Clause 94(5) and also perhaps use another word instead of supervisor.

Ms Khunou returned to her illustration of directors and management having all the trappings of apparent wealth while stating that the company had no funds and she wanted this to be investigated. Further, she wanted to know why there were so few auditing firms and why there were no black names among them and what was being done to rectify this situation.

The Chair interrupted to ask why there were not more black auditors.

Mr Njikelana agreed with Ms Khunou and confirmed that she had put across what he had been trying to put forward, from a different perspective. He went on to ask whether personal liability provisions regarding directors were enough and whether decriminalization was not making things too easy.

The Chair said that he felt the comment by Dr Rabie about asset stripping was important.

Mr Njikelana asked whether all those things out of a director’s salary, bonds car payments etc were the best way to run a business and asked whether this was not in the province of the Company Secretary. Like Ms Khunou he returned to his interest in productivity.

There was then an interchange between the Chair, Ms Khunou and Mr Njikelana over various aspects as a result of which it seemed that the Companies Bill was intended to be applied through all business activity.

Mr Ramabulana said that it was intended that the CIPRO office be expanded so that the regulatory offices within CIPRO were to be proactive rather than reactionary and as such were to replicate the Competition Commission’s approach to perceived transgressors.

Mr Dwinger noted that the prime aim of a business entity was the generation of profit and that without profit there was no reason to be in business. Addressing Ms Khunou concerns he said that if there was a claim to having no money this was an act of insolvency, as defined in the Insolvency Laws, and the consequences could be a liquidation of the company but insolvency was another discipline. He suggested that the dti would be looking at the minimum information required from AFS and also a prescribed manner for their presentation, which might allay certain of Prof Turok’s concerns. The Bill provided certain minimum thresholds for voting but that companies were free to alter such in their MOIs but that there should still be a 10% differential between special and general resolutions. In response to a question from Mr Njikelana, he added that this must be higher not lower.

Ms Ntuli pointed out that the duties of a Company Secretary were set out in Clause 88 and the chief of those was the production of the AFS. She added that the blackness of auditing firms was another question which deserved answering, but elsewhere.

Mr Dwinger added that the Auditing Professions Act laid down basic criteria for auditors and al aspirant auditors had to comply with such. He felt that the Auditing Profession Act was bias free.

Ms Khunou asked about the provisions in the Bill for consultation but she felt that only the big guns had made submissions in the public hearings. She felt that the little guns should be sought out for their views.

After further repetitive discussion, Mr D Oliphant said that he felt that certain of the Members were being directed by the dti to be too restrained or confined and he reminded them that there was provision for whistle blowers and he added that trade unions had a role to play in such.

Ms Ntuli reminded Members that although there was an Access to Information Act there was also the balance of a Protected Disclosures Act and both had to considered.

Meeting adjourned.

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