Are You Taking The New Companies Act Seriously? If Not, here is your To Do List
The New Companies Act came into operation on 1 May 2011. To start getting your company’s affairs in order, we recommend the following:
- The entity through which you conduct business needs to be re-assessed.
- Steps should be taken to obtain shareholder authorisation for directors’ remuneration.
- Each company’s Memorandum of Association and Articles of Association will need to be replaced with a Memorandum of Incorporation. This should be done as soon as possible.
- Your company’s Shareholders Agreement will need to be amended so that it is consistent with the Memorandum of Incorporation.
- Steps should be taken to assess your company’s Public Interest Score, so that you can determine whether your business is still required to be audited.
- Consider whether your business is owner managed, in other words all directors are also shareholders and eligible for an exemption from the requirement that its annual financial statements be audited or reviewed.
- Consider whether your company’s Public Interest Score obliges your company to appoint a social and ethics committee.
- Consider whether it is feasible to re-structure your business to lower your company’s Public Interest Score.
- Consider who to designate in your next annual returns as the person responsible for ensuring your company’s compliance with the accountability requirements in the New Companies Act.
- Consider to what extent the scope of liability of your company’s directors has been increased or decreased under the New Companies Act, as well as the need to obtain additional insurance, or revise the wording of any existing policy dealing with director liability.
- Consider whether any party would be in a position to initiate business rescue proceedings in respect of your business.
- Consider whether any of your company’s bad debtors may be regarded as “financially distressed” in terms of the New Companies Act. Your company may be in a position to institute business rescue proceedings and it may be more efficient.