The previous Companies Act was amended eight years ago by the Companies Act 71 of 2008, which brought about many significant changes to the operations of any company in South Africa. Amongst these changes, a new founding document, the Memorandum of Incorporation (MOI), was introduced. It serves to combine the previous memorandum of association with the articles of association of a company, and it specifies all the duties, rights and responsibilities of shareholders and directors. It has also been implemented to regulate any other company-related matters, especially those not previously addressed. While all provisions are now alterable, it does not mean that the MOI may be inconsistent with the Act.
At the time of its introduction, the new Act allowed companies to file a notice of amendment to their current founding documents – that is, to bring the documents in line with the Act – by no later than the 30 April 2013. Should there have been a company that failed to submit its amended documents to the Companies and Intellectual Property Commission (CIPC) in time, a set of consequences had to be dealt with. One of the most drastic was that any provisions not compliant with the Act become overridden, meaning that the shareholders agreement became void to the extent of any inconsistency.
A further effect of non-amended founding documents, was that company decisions made before 30 April 2013 were only binding for a period of two years thereafter. After 2015, these provisions will have only be binding to the effect to which they are consistent with the new Act.
The Fuchs Roux team therefore strongly advises clients that, as company owners, a review of their current founding documents must be conducted. It is important to establish to which extent these may be inconsistent with the new Act. Should you fail to bring about changes, your company may be deemed questionable and any party, related or unrelated to the company, may argue that your actions and/or decisions have not been legally implemented. Non-compliance will, unfortunately, lead to a legal dispute that may affect your company’s status.
So, by making an effort to adopt a MOI that is consistent with the new Act, you can preserve most of your company’s internal and administrative procedures by simply adjusting the flexible provisions of the Act. In other words, you are able to adopt certain provisions to suit your company’s particular needs. To change any MOI, a special resolution is required. This means that the shareholders can vote to amend the MOI and the quorum for this resolution must be met. The new MOI must be filed to the CIPC in order for you to receive confirmation COR 15.2 that it has been placed on your company file and is now in full effect.
The Fuchs Roux team thrives on excellent service produced by years of practice and a keen thirst to stay updated on the most recent adjustments and amendments regarding our fields of expertise. Feel free to CONTACT US with any queries you may have regarding conveyancing.
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