The Department of Trade, Industry and Competition (the dtic) has welcomed the proclamation of the two Companies Amendment Acts of 2024 by President Cyril Ramaphosa, according to a statement from the dtic.
The department said that two Acts which were assented into law by Ramaphosa on July 26, 2024 and were published in the government Gazette on December 27, 2024, have become operational.
"Some sections of the Companies Amendment Act 16 of 2024 and the entire Companies Second Act 17 of 2024 came into operation on December 27, 2024. This is a significant milestone in corporate law South Africa," the dtic said.
"The Companies Amendment Act focuses on the ease of doing business by clarifying, simplifying and strengthening certain sections of the Act. Sections that include 16, 25, 40, 48, 61, 90, 95, 135 and 204 amongst others are now effective and can be implemented by companies in South Africa."
However, not all sections of the Amendment Act are operational. The sections that require regulations will only commence after the regulations have been finalised.
Other sections that will only come into operation on dates that will be determined in 2025, include: - requirements on the duty to prepare and present a remuneration report and remuneration policy
- the related requirements to disclose pay gap ratios, for transparency and addressing inequality of pays between top executives (directors) and low earning workers in state owned companies and public companies
According to the dtic, the Companies Second Amendment Act is operational in its entirety.
"The Act addresses the recommendations from the Zondo Commission into State Capture to extend the time bar of when an application can be brought to court to make an order to declare a Director delinquent or under probation, in terms of section 162 of the Act," the dtic said.
"The time bar was extended from 24 months (two years) to 60 months (five years). The application of the law is retrospective including for acts that took place before this Act or the extension of the time bar."
Plus, the court also has the power to extend the time bar to hold directors liable for costs, losses or damages incurred for acts that breach fiduciary duties. The court can extend the time bar of such damages or losses on good cause shown beyond three years.
Overall, the court can extend the time bar beyond five years on good cause shown should circumstances require, according to the dtic.
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