Amendments in terms of the Companies Amendment Acts, 2024

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Effective 27 December 2024, certain parts of the Companies Amendment Act 16 of 2024, and the full Companies Second Amendment Act 17 of 2024 have come into effect.

Some of the most salient amendments that now apply to all companies are summarised below:

• Annual General Meetings (AGMs): Public companies and state-owned companies must include a presentation of a social and ethics committee report as well as a remuneration report. Furthermore, approval for the appointment of the social and ethics committee must be obtained.
• Memorandum of Incorporation (MOI) Amendments: Amendments to a company’s MOI will now take effect within 10 business days after filing the amendment with the Companies and Intellectual Property Commission (CIPC), unless a later date is elected by the filer or the CIPC rejects or endorses the filing within the 10 business-day period. This means MOI amendments cannot be backdated.
• Share Issuance and Stakeholder Agreements: If shares are issued without immediate payment, they must be transferred to a stakeholder under a stakeholder agreement and later transferred to the subscribing party in accordance with the stakeholder agreement. References to “third party” and “trust” has been replaced with “stakeholder” and “stakeholder agreement” respectively.
• Intra-group Financial Assistance: The provisions of Section 45 no longer apply to a company providing financial assistance to or for the benefit of its subsidiaries. This change reduces the administrative burden related to intra-group financial assistance.
• Share Repurchases: A special resolution is now required if: (a) shares are repurchased from a director, prescribed officer, or a person related to them; or (b) the repurchase of shares is not part of a pro-rata offer made to all shareholders of a class or a transaction effected on a stock exchange by a listed company. The previous requirements for an independent expert report, appraisal rights, and a special resolution for repurchases exceeding 5% of the shareholding of any share class have been removed.

Proposed Amendments – Beneficial Ownership Compliance

The draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024 includes proposed amendments to the Companies Act related to beneficial ownership. Companies that fail to submit their securities register or register of beneficial interest may face compliance notices from CIPC. Non-compliance may result in an administrative fine of up to 10% of the company’s turnover for the period during which the company failed to comply with the compliance notice or R10 million, whichever is greater.

For further inquiries regarding these amendments, please contact pty@asl.co.za.