Corporate Laws Amendment Bill: finalisation

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
20 August 2002
CORPORATE LAWS AMENDMENT BILL: DELIBERATIONS
 

Corporate Laws Amendment Bill [B32-2002] (.pdf file)
Proposed amendments to the Bill (see Appendix)

CIPRO website

SUMMARY
CIPRO met with the Committee to allay concerns relating to the provisions requiring companies to submit annual returns to CIPRO. Thereafter the Committee adopted the Bill with amendments. These amendments mean that if a company fails to complete its annual return to CIPRO, it faces de-registration rather than being found guilty of an offence and facing fines and potential imprisonment.

MINUTES:
Adv Dwinger and Adv Johnson represented CIPRO. Adv Dwinger noted that in the previous meeting there had been a concern about CIPRO moving away from payment by way of revenue stamps to an electronic form of payment. There were also some concerns about the annual returns and the three month imprisonment that may be imposed for not submitting an annual return.

Adv Dwinger (CIPRO) pointed out that annual returns had been abolished in South Africa in 1986. The database had then become unreliable because of this. The annual returns are the only measure to ensure that the information of the companies is up to date and thus they help to ensure the integrity of the database. Information about the companies is impossible to obtain if there are no annual returns. Banks and investors could access the database to get the information about the companies they are dealing with. This would help to eradicate fraud to a larger extent.

Adv Johnson (CIPRO) added that the information they want from companies is the information that companies generally keep. CIPRO will send the information to the company and the company will confirm the correctness of the information and this is not a difficult task.

Mr Lockey (ANC) asked why companies have to pay a prescribed fee when they submit an annual return.

Adv Johnson replied that the fee would not be a huge amount of money. If there were no fee, there would not be any money to cover the operational costs of CIPRO. Any surplus money will go to the government.

The Chairperson asked how CIPRO is going to contact companies to get the information. He also asked about the additional fees that companies have to pay if they submit their annual return late.

Adv Johnson said that CIPRO would use online services, whereby the companies would go to the CIPRO website or they may contract another company to get the information on their behalf. He added that the provision for an additional fee is already in the Company's Act and is not a new provision.

A member asked if the general public would be able to access the database and about the costs that would be involved.

Adv Johnson said that the public would get basic company information free of charge but if the public wants information about company members, they would have to pay R10.

The Committee appeared to be satisfied with these answers and the Chair asked Adv Dwinger to go over the proposed amendments to the Bill that had been prepared in response to the Committee's concerns.

Adv Dwinger noted the following proposed amendments:
- Clause 5 (4) is omitted.
- Clause 7 is removed from the Bill.
- Clause 9 (3) is removed and would be substituted with the words "any corporation which has failed to lodge a return required by subsection (1) within the period prescribed therein, may thereafter, lodge such return subject to the payment to the Registrar of the prescribed additional fee in respect of each such failure".
- Clause 11 was rejected.

The Chairperson asked if there were any objections to the clauses or the proposed amendments. There were no objections and the Committee unanimously passed the Bill with these amendments.

Meeting adjourned.

Appendix:
CORPORATE LAWS AMENDMENT BILL [B32 - 2002]

AMENDMENTS PROPOSED TO PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY
(by CIPRO following informal discussion of Bill)

CLAUSE 5
1. On page 3, from line 47, to omit subsection (4).

CLAUSE 7
1. Clause rejected.

CLAUSE 9
1. On page 4, from line 35, to omit subsection (3) and to substitute:

(3) Any corporation which has failed to lodge a return required by subsection (1) within the period prescribed therein, may thereafter, lodge such return subject to the payment to the Registrar of the prescribed additional fee in respect of each such failure.

CLAUSE 11
1. Clause rejected.