Company law in transition : from the familiar to the unknown

• Jurisdiction: South Africa
• Author: Milton Seligson
• DOI: 10.10520/EJC174678
• Published date: 01 June 2010
• Date: 01 June 2010
• Pages: 1-12
• Published By: Siber Ink

1

© SIBER IN K

Company Law in Transition:

FROM THE FAMILIAR TO THE UNKNOWN

MILTON SEL IGSON SC

INTRODUCTION

The new Companies Act1 was promulgated in the Government Gazette on 9

April 2009, but is not yet in force. It will come into operation on a date fixed

by the President by proclamation in the Gazette. The commencement date

has not yet been set, but its proclamation is expected soon, probably during

June or July this year.

ABSTRACT

The new Companies Act 71 of 2008, which extensively reforms and ov erhauls

our company law, is not yet in force, but is expected to com e into operation

in the near future. When it does so, it will repeal the existing Companies Act

61 of 1973. Section 2 24(1) of the new Act, however, p rovides that the repeal

of the 1973 Act does not affect the transitional arran gements set out in

Schedule 5 to the new Act.

This article is intended to provide a guide t o the transitional provisions in

Schedule 5. It discusses their scope and effect and assesses their impact on

pre-existing companies incorporated or recognized under the 1973 Act.

The transitional provisions dealt with include the following subjects: the

continuation of pre-existi ng companies under th e new Act; provisions

relating to the Memo randum of Incorp oration and the ru les which respec-

tively replace the tradi tional Memorandum a nd Articles of Association of the

1973 Act; the retention for a 2-year period of a pre-existing company’s

Memorandum and Articles (under their new names, during which their pro-

visions prevail in the event of a conflict with the Act); the continuation of

par-value shares issued by a pre-existing company until such time as the Min-

ister makes regulations providing for their conversion, subject to the rights of

shareho lders; the proposed draft r egulations published for comment per-

taining to the conversion of par-value shares; continuity of the bo ard of

directors and financing of pre-existing companies; the a pplication to pre-

existing companies of the stricter standards of directors’ conduct and duties

and the takeover provi sions in the new Act; the continued application of

the winding-up and liqui dation provisions of the 1973 Act until a dat e deter-

mined by the Minister; the preservation of rights, duties and notices under

a provisio n of the 197 3 Act, where there is a corresponding prov ision und er

the new Act; the transition of regulatory agencies and their officers and

staff from Companies and Intellectual Property Registra tion Office (CIPRO) to

the newly es tablished Companies a nd Intellectual Proper ty Commis sion and

from the SRP to the new Takeover Regulation Panel.

1Ac 71 of 2008, referred to throughout this article as ‘the new Act’.