The Trade and Industry Ministry will soon start a countrywide campaign to prepare businesses for the introduction of the new Companies Act in the third quarter.
Trade and Industry Minister Rob Davies said at a briefing in Cape Town on Thursday that the act was "a major piece of legislation and a major reform".
"We will launch an awareness campaign on the implementation of the new Companies Act in the next few days," Davies said.
"The act has a number of features which will significantly improve the environment for business operations in this country."
One of the changes in the act will be the simplification of the procedure for registering companies.
When the act takes effect only a single registration document will be required, with businesses able to fill in a number, without necessarily having a name, if they wish.
Davies said that a major innovation in the act would be the introduction of the business rescue scheme.
"Instead of companies going into judicial management, which is invariably a route to bankruptcy, a rescue process can be initiated... Creditors can be held at bay while stakeholders work to rescue company."
Existing close corporations would continue to operate under the Close Corporation Act. However, no new close corporations would be registered when new act came into force.
"They will be able to be accommodated much more effectively under the framework of The Companies Act." The act would be clear on corporate governance issues, the duties of directors and would promote shareholder activism.
"This is a piece of legislation which is going to bring about some dramatic changes to business landscape in this country," Davies said.
"It will lower the red tape associated with operation of company law, while at same time maintaining appropriate measures to defend the creditors, shareholders, clients and workers of companies against malpractices by the company's leadership.
Edited by: Sapa
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