The Department of Trade and Industry (DTI) on Wednesday announced that President Jacob Zuma has signed the Companies Amendment Act of 2010 into law, with effect from May 1.

Trade and Industry Minister Rob Davies said the new Companies Act has a number of features to it, which would improve the business operating environment in South Africa.

“There is a reduction particularly on the regulatory burden on small-medium-micro enterprises. The requirement for financial reporting for small companies has been reduced considerably in that they do not have to produce audited financial statements, but will need to have financial reporting at an appropriate low level,” he noted.

A significant innovation was the introduction of a business rescue scheme, which would mean that instead of companies going into major judicial management and subsequent bankruptcy, a rescue process would be initiated. Creditors could then be held at bay while stakeholders worked to rescue the company.

Davies pointed out that the new Act does not allow registration of close corporations (CCs), and therefore no new CCs would be registered when the Act comes into legal force. However, CCs that were already in the system would remain active indefinitely, unless they chose to convert into the new corporate regime of the Companies Act of 2008.

“The Act does not apply retrospectively and those registrants who have already applied for CCs before May 2011, would still receive their certificates,” he said.

Meanwhile, the signing of the Companies Amendment Act implies that the Companies and Intellectual Property Commission (CIPC), which was launched earlier this month, would also become operational.

The CIPC would ensure that the regulatory framework for enterprises promote growth, employment, innovation, stability, good governance, confidence and global competitiveness. The Act also gave it powers to investigate companies and to ensure that they complied with the legislation. This includes seizing documents and to tackle the challenge of corporate identity hijacking.

The Companies Amendment Act regulations and all other relevant documents would be published and also come into force on the implementation date.