24 March 2011
Many companies are under the mistaken impression that they still have two years to comply with the changes to be introduced by the new Companies Act which comes into operation next Friday, 1 April 2011. While pre-existing companies do have two years from then to ensure the compliance of their constitutional documents and shareholders’ agreements with the provisions of the Act, many provisions of the Act will nonetheless apply to companies with immediate effect on 1 April 2011, irrespective of the content of a company's constitution.
This is according to Candice Meyer, partner at Webber Wentzel.
Provisions with immediate application include:
This means that, for example, notices of meetings and agendas must comply with the Act despite that a pre-existing company's constitution and shareholders agreements may contain conflicting provisions.
Directors, prescribed officers and board committee members must ensure that they, and their staff, are up-to-speed with the changes which are due to take effect on 1 April 2011.
Meyer says every company should review its memorandum of association, articles of association, shareholders' agreements, contracts with directors and any other document that relates to the rights, duties and responsibilities of shareholders, directors and others in terms of which that company was structured and governed.
“It is critical to identify the provisions which conflict with the Act and harmonise these documents sooner rather than later, despite the two year grace period. This will provide clarity for companies as to their legal obligations and will help to avoid liability arising during the grace period from non-compliance with the requirements of the Act which are of immediate effect.”
ISSUED BY: FD South Africa
Dani Cohen (021) 487 9000 /082 897 0443/ firstname.lastname@example.org Natasha Smuts (021) 487 9000 / 082 776 2840 / email@example.com
ON BEHALF OF: Webber Wentzel
For further information please contact: Candice Meyer Webber Wentzel Tel: (021) 431 7347
About Webber Wentzel
Webber Wentzel is one of the leading corporate law firms in South Africa with a significant international practice. The firm has developed an enviable reputation as a consistent provider of appropriate and valuable legal assistance, backed by absolute commitment to service excellence. The firm has over 360 professionals (over 145 are partners) in a variety of legal disciplines.
The long-standing reputation is continued by a vast team of highly accomplished attorneys whose unmatched knowledge and extensive experience ensures that Webber Wentzel remains the legal firm of choice in Africa. Webber Wentzel has offices in Cape Tonw, Johannesburg and Rustenburg. Twenty seven of Webber Wentzel's partners have been recognised in Chambers Global 2010 as 'Leaders in their Fields' and 'Up and coming' in a range of areas. We provide a full range of legal services to clients including dispute resolution, mergers & acquisitions, property, public & administrative law, private equity, tax, intellectual property, employment, environmental, insurance, competition and shipping.