10/12/2011 October and November 2011 Agenda • Definitions • Categories of companies • Reservation and registration of company names • MOI, rules and shareholders agreements • Transparency, accountability and integrity of companies • • Governance of companies Governance of companies • Shareholders’ rights • Enhanced accountability and transparency • Fundamental transactions • Business rescue 2 Definitions K nowing, knows, Prescribed officer Person knowingly (Reg 38) • Includes a juristic • Exercise or regularly • Had actual knowledge person participates to a • Was in a position to material degree reasonably ought to general executive general executive have had actual have had actual control over, and knowledge, management of the investigated the matter, whole, or a significant taken other measures portion of the business to become informed and activities • Ignorance no longer a • Irrespective of title and defence function 3 1
10/12/2011 Definitions Financial Distribution Beneficial interest statements • Annual financial statements • Transfer of money/property • Right or entitlement i.r.o to holder of share or securities to: • Interim or preliminary reports beneficial interest: • Receive or participate in • Dividend any distribution • Group and consolidated • Payment in lieu of • Exercise any or all of the • Financial information in capitalisation share rights attaching to circular, prospectus or provisional announcement • Consideration for securities that creditor shareholder, acquisition by company • Dispose securities, or any regulatory authority rely on for its shares part of a distribution • Incurrence of • Exclude interest held by debt/obligation for benefit person in unit trust of holders of shares • Forgiveness or waiver of debt/obligation owned to company by holders of shares • Exclude any payment upon final liquidation 4 Related and inter-related persons Individual to juristic Individual to another Juristic to another (includes a foreign individual juristic company and trust) Directly or indirectly Married controls the other or the business of the other Directly or indirectly Directly or indirectly controls the juristic Live together similar to person (majority voting Subsidiary of the other marriage rights or appoint majority directors votes) Person controls each of Separated by 2 degrees them or the business of of consanguinity each of them Two or more persons are inter-related if the 1 st and 2 nd persons are related, the 2 nd and 3 rd persons are related and so forth in an unbroken series Sec 2 5 Categories of companies Companies Gain vs Public Benefit Gain vs Public Benefit Profit Non-profit Not state- State- PFMA definition PFMA definition owned owned owned owned Personal State- Private Public Non-profit MOI MOI liability owned company company company company company Name Name (Pty) Ltd. Inc. Ltd. SOC Ltd. NPC Sec 8 6 2
10/12/2011 Categories of companies State-owned Personal liability Private company Public company company company • Defined by PFMA • Profit company: • Meets the criteria • A profit company Act; or • Not a state-owned for a private that is not: company. • Owned by a company or a personal • State - owned municipality liability company; and • MOI states it is a company; or personal liability • Same provisions • MOI prohibits offering • Private; or company apply as for public of securities to the • Personal liability companies p p public • Directors and past p company company directors are jointly • Restricts transferability • Name ends with of securities and severally liable “Limited” or “Ltd.” • Name ends with • No limit on no. of • Min number of “Incorporated” or shareholders (prev. 50) incorporators “Inc.” reduced from 7 to 1 7 Close corporations Close Notice of Every member Corporations Act conversion to be becomes a is amended to Legal filed (Form CoR shareholder if include CCs in 18.1) qualified company provisions Act and CC Act will run Juristic concurrently No need for persona, 75% written shares to be in assets, consent proportion to liabilities and needed members’ legal interest proceedings CC must continue comply with both Schedule 2 and reg 18 8 Names of companies Prohibited Suffixes Other • Similar to another • Similar to another • If number used: • If number used: • No need to be • No need to be company, business or company, business or descriptive (reflect descriptive (reflect • “(South Africa)” • “(South Africa)” person person nature of business) nature of business) • If MOI contains special • If MOI contains special • Falsely implying • Falsely implying conditions (restrictive conditions (restrictive • Any letters, words and • Any letters, words and associations associations some symbols (* + & # some symbols (* + & # or procedural or procedural @ % = “() @ % = “() • Propaganda of war, • Propaganda of war, conditions): conditions): hate speech, violence, hate speech, violence, • No requirement to • No requirement to • “(RF)” • “(RF)” etc etc etc etc reserve a name (may reserve a name (may reserve a name (may reserve a name (may reserve to protect) reserve to protect) • Commission will issue • Commission will issue notice if another party notice if another party • Name reservation: valid • Name reservation: valid has interest in name has interest in name 6 months, with 60 day 6 months, with 60 day extensions extensions • If name is already in • If name is already in use Commission will use Commission will use registration number use registration number Name and registration number in legible characters on all documentation Sec 11 9 3
10/12/2011 MOI + Rules Consistent with Act Board may make rules (subject to MOI) Void otherwise Publish to shareholders and file copy Sets out rights, duties, responsibilities of shareholders and directors with Commission Filed within 10 business days after being Alter any alterable provision published/ratified/rejected/amended p j Contain restrictive conditions/Prohibit Permanently binding if ratified by amendment of any provision ordinary resolution Amended by special resolution If filed but not ratified Board may not adopted at shareholders meeting make similar rule within 12 months MOI Rules Sec 15 & Reg 16 10 Shareholders agreements • Consistent with Act and • Valid for two years MOI • Agreement prevails over Act • Some issues previously • Ends if agreement is addressed in shareholders amended within two year agreement now included in period MOI (e.g. directors authority to manage) Transitional Prohibited period Sec 15(7) 11 Company records Location Form File notice Another manner setting out that allows Accessible from location if not Written form registered office information to be kept at converted in registered office written form written form Retention period Longer Minimum of period as 7 years per regulations Sec 24 12 4
10/12/2011 Company records For 7 years Notice and minutes of Reports Annual Resolutions Written Accounting shareholders/ presented financial adopted by communication records directors/ at AGM statements shareholders to shareholders committee meetings Indefinitely Register of Securities Any Registration directors (7 register/ Copy of MOI amendments Copy of rules certificate years for past to MOI secretary/auditor director) Sec 24 13 Directors’ register Name and former names ID/passport or date of birth Nationality Occupation Date of most recent appointment Name and registration number of all companies of which the person is a director Professional qualifications and experience of a director who sits on the audit committee Regulations Address for service Sec 25 and Reg 23 14 Access to company records Excluded : Minutes and resolutions of directors and committee meetings Security holder Method Who? access? Direct request, personally or Security holders MOI and rules through attorney in writing Any other person: Only PROATIA PROATIA All registers All registers registers (fee payable) Creditors: F/S within 5 Annual financial statements CIPC business days and all reports at AGM Unions: Access to F/S through All information relating to CIPC to begin business shareholders rescue Members and directors register available for inspection during business hours Sec 26 15 5
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