The new Companies Act, with its less onerous registration and financial reporting requirements for small businesses, would come into effect in the third quarter of the year when the regulations and rectifications had been finalised, Trade and Industry Minister Rob Davies announced yesterday.
The Department of Trade and Industry is planning a comprehensive public education campaign to inform stakeholders about the new requirements that emerged from the complete overhaul of the previous act of 1973. The new act was passed in 2008 but implementation has had to wait for the drafting of regulations which went out for public comment with a deadline on Monday.
The act would introduce a new procedure for “business rescue” for companies in financial difficulties and tough penalties for directors. It would also put an end to new registration of close corporations.
Davies said the act would require significant changes for companies so the department planned to hold seminars and workshops with stakeholders in all provinces in the coming months. It would also disseminate the information through community radio and television programmes and distribute brochures, pamphlets and newspaper articles.
The new act would bring about significant savings for small businesses, which would not have to pay exorbitant auditing fees as their financial statements would only have to be submitted for independent review by accounting professionals who need not necessarily be auditors. Registration requirements would be less onerous and costly.
The minister said a special team of leading experts on company law had been put together to rectify identified drafting errors.
The Association of Chartered and Certified Accountants technical support executive expected the new act would benefit about 700000 companies and close corporations which could save as much as R1bn a year by not having to have their financial statements audited.