The draft Companies Bill 2007 is designed to bring about significant changes to the current Companies Act1 and, to a large extent, will change company law as we know it. Among the elements that will change are the types of companies that will exist in South Africa.
Shareholder remedies have remained an elusive concept in company law for many years. This is partly because shareholders have, by and large, been denied the requisite standing to institute legal action where a company has been abused by its directors, officers or in some instances, by its controlling shareholders.
Along with biltong, dolosse and the Kreepy Krawly, the Close Corporation is a beloved and uniquely South African idea. However, it has been widely reported that the Draft Companies Bill, 2007, released for public comment earlier this year, intends to do away with this popular corporate vehicle.
The publication of the Draft Companies Bill, 20071 was preceded by a policy paper in 20042, which promised an “overall review of company law". A specific aim was that company law should be “Encouraging transparency and high standards of corporate governance."3
The impact of the recently published Companies Bill on major State Owned Entities (SOEs) such as Transnet and Eskom was canvassed in without prejudice (May 2007 p18). An assessment was conducted of the extent to which the Bill addresses inconsistencies and duplications between existing legislation governing these major SOEs, namely the Companies Act, 1973 and the Public Finance Management Act, 1999 (PFMA).
The Corporate Laws Amendment Act introduces a number of amendments to the Companies Act, (61of 1973) and Close Corporations Act (69 of 1984), which are necessary prior to the completion of the corporate law reform process currently in progress. The Amendment Act deals mainly with matters such as accounting standards, auditor independence and shareholder diversification.
The Minister of Finance announced on 21 February 2007 the introduction of a Dividend Tax on shareholders, commencing in 2008.
This would be preceded by the reduction of the STC rate to 10% and the broadening of the base for distributions, as from October 1 2007. In this first phase, apart from changes to the base and reduction in rate, nothing dramatic seems to be involved in relation to the technical basis of taxation, that is, it seems that the STC regime will continue albeit under a new name. However, the second phase of reform, as from 2008, will potentially involve quite dramatic changes to the corporate tax landscape. A key question is whether it will involve additional layers of tax for companies and other taxpayers.
An oft quoted proverb, the truth of which is almost certainly universally accepted by modern society, is that, in life, “nothing can be said to be certain but death and taxes" (Benjamin Franklin, Nov 1789).
It is to be noted, however, that, inasmuch as taxes are indeed a certainty in modern society, this was not always the case. Indeed, it has been said that taxes “are not part of the furniture of the natural world, but they are creatures of the institutional imagination of human beings1".
“If we can't trust government to obey the law, why should government arrogantly assume that ordinary citizens must do what it won't do itself." That's what without prejudice's editor, David Gleason, said in his Sept 1, 2003 Torque column Business Day).
On May 2 and 3, leading media organisations including the National Association of Broadcasters and Print Media SA, made representations to the Parliamentary Portfolio Committee on Home Affairs on the unconstitutionality of the Films and Publications Amendment Bill
The Films and Publications Amendment Bill of 2006 is aimed at protecting children from potentially disturbing, harmful and age inappropriate materials in films, interactive computer games, cell phones and on the Internet. The Bill's progress was, however, abruptly stalled last year in the face of the serious concerns it raises about press freedom. It was the subject of deliberation this month by the Home Affairs Portfolio Committee, during which it was agreed that further discussion was needed.
The Barkhuizen v Napier judgement of the Constitutional Court on April 4 2007 wound its way through a trial court, the Supreme Court of Appeal, and finally the Constitutional Court where the insured challenged the enforcement of a time-bar clause in his motor insurance policy, relying on public policy and a breach of the provisions of s34 of the Constitution (the right of access to courts).
During a recent lecture * at the Centre for Human Rights at the University of Pretoria, Professor John Dugard observed out that, over the past 14 years “We have seen the adoption of perhaps the most human rights-friendly constitution in the world and the creation of a Constitutional Court that has become the leading exponent of human rights in the world's domestic jurisdictions."
For years our Income Tax Act has been shielded by the Exchange Control Regulations. Without these Regulations, income earning assets could be expatriated and used to reduce substantially South Africa's tax base. Until our Income Tax Act is revised to empower it to stand alone, divorced from our Exchange Control Regulations, it is almost impossible to relax Exchange Control Regulations significantly.
The media has written recently about so-called software patents. Some commentators are in favour of software being patentable while others are vehemently opposed; a common thread is the assumption that software is not patentable in South Africa. This is largely incorrect, and is based on an uncritical reading of the South African Patents Act.