ATC231122: Report of the Portfolio Committee on Trade, Industry and Competition on the Companies Amendment Bill [B27-2023], dated 22 November 2023

Trade, Industry and Competition

Report of the Portfolio Committee on Trade, Industry and Competition on the Companies Amendment Bill [B27-2023], dated 22 November 2023

 

The Portfolio Committee on Trade, Industry and Competition, having considered the subject of the Companies Amendment Bill [B27-2023] (National Assembly - sec 75 Bill), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the bill with amendments [B27A-2023], as follows:

 

1. Purpose of the Companies Amendment Bill

 

The Bill seeks to amend the Companies Act, 2008 (Act No. 71 of 2008), so as to, inter alia:

• Amend the definition of ‘securities’;
• Insert new definitions;
• Clarify when a Notice of Amendment of a Memorandum of Incorporation takes effect;
• Differentiate where the right to gain access to companies’ records may be limited;
• Provide for the preparation, presentation and voting on a companies’ remuneration policy and its remuneration report;
• Provide for the filing of a copy of the annual financial statement;
• Empower the court to validate the irregular creation, allotment or issue of shares;
• Clarify how shares which are not fully paid are to be dealt with;
• Exclude the subsidiary company from the requirements relating to financial assistance;
• Provide for instances where a special resolution is required for acquisition of shares by the company;
• Extend the definition of an employee share scheme to include situations where there are purchases of shares of a company;
• Provide for the circumstances under which a private company will be a regulated company;
• To deal with the composition of the social and ethics committee;
• Provide for the publication of the application for exemption from the requirement to appoint a social and ethics committee;
• Provide for the presentation of the social and ethics committee report at the annual general meeting or shareholders meeting as the case may be;
• Ensure the differentiation of duties between the chairperson of the Companies Tribunal and the Chief Operating Officer; and
• Provide for matters connected therewith.

 

1. Process followed by the Committee on the Companies Amendment Bill

 

1. The Bill was introduced to Parliament by the Minister of Trade, Industry and Competition and referred to the Committee on 28 August 2023.
2. On 29 August 2023, the Committee was briefed by the Department of Trade, Industry and Competition (DTIC) on the Bill.
3. On 1 September 2023, the Committee released a media statement and called for written submissions, with the statement also being placed on all parliamentary social media platforms.
4. On 4 September 2023, the Committee placed adverts in one national, one provincial and nine regional newspapers inviting stakeholders and interested parties to submit written submissions on the Companies Amendment Bill [B27-2023], by the closing date for submission, namely 2 October 2023. The Committee received 40 substantive submissions in this regard.
5. In terms of the Rules of Parliament, the Committee has the right to approve, reject or amend any legislation before it.
6. On 17, 18 and 20 October 2023, the Committee held public hearings and invited certain stakeholders to provide an oral presentation on their submissions in respect of the Companies Amendment Bill.
7. The Committee thereafter received briefings from the Parliamentary Legal Services and the DTIC in respect of submissions received before deliberating thereon.
8. The Committee agreed to various amendments as depicted in B27A-2023, which are captured in B27B-2023.
9. With regard to the inclusion of the gender pay gap ratio in sub-section 30B(3), the African National Congress was of the view that while the gender pay gap ratio was an important aspect of remuneration inequalities; its inclusion would require in-depth consideration and public participation. Therefore, it proposed that this be considered in the next Parliament.

 

 

 

 

 

1. Minority views were expressed on the following aspects contained in this report:

 

1. Clause 2: The Democratic Alliance (DA) was of the view that the word “filing” was more appropriate to use than “receipt”.
2. Clause 6: The DA, the Freedom Front Plus (FF Plus) and the African Christian Democratic Party were of the view that the gender pay gap, as raised by stakeholders, should have been included in the remuneration report (sub-section 30B(3)).
3. Clause 13: The DA and the FF Plus rejected the clause, as they were of the view that this would create an undue administrative burden on smaller companies.

 

 

1. Recommendation

 

The Portfolio Committee on Trade, Industry and Competition recommends that the House adopts the report and approves the second reading of the Companies Amendment Bill [B27A-2023].

 

The Democratic Alliance, the Freedom Front Plus and the African Christian Democratic Party abstained.

 

Report to be considered.