Saica welcomes Companies Act postponement

2011-04-01 17:36

Johannesburg - The South African Institute of Chartered Accountants (Saica) has welcomed the department of trade and industry's proposal to the presidency that the new Companies Act be implemented from May 1.

On Friday, Saica said it believed that companies would need at least three months from the publication of the final amendments, regulations and forms to comply with new requirements.

The act was meant to come into effect on April 1 but was delayed as it was still in the process of consultation and President Jacob Zuma had not signed it into law.

But Grant Thornton accounting firm on Friday condemned the delay, saying it would affect South Africa's reputation.

"The poor project management of the entire process will most certainly affect South Africa's reputation in the international financial sectors," said Grant Thornton SA national chairperson Leonard Brehm. He said the delay is disconcerting and frustrating.

"In addition, the impact of this constant delay is detrimental to the professional services, company secretarial and legal sectors of the economy."

The act has been subject of much anticipation and review. It promises to increase business transparency; improve director accountability; provide a simplified administration; allow for greater flexibility for corporate auditing and review; and provide for innovative new business rescue provisions, Saica said.

"However, companies would never have been able to implement an act that is not yet available in consolidated form after substantial amendment; a position exacerbated by the absence of the final regulations that are essential for companies to comply with the act," said Ewald Muller, Saica's senior executive for standards.

"We are pleased that government has been responsive to calls by Saica, the JSE and other market commentators to delay the implementation of the act, but are concerned South African companies will not have enough time to prepare and comply with its provisions.

"This will be the biggest overhaul of a highly complex area of company law in many decades. It will change the ground rules of business - and we must get it right," he said.

Saica, on behalf of SA's more than 30 000 chartered accountants, said it welcomed the opportunity to continue this collaboration.

The provisions of the new act were to be administered by the newly formed Companies and Intellectual Properties Commission, a successor organisation to the Companies and Intellectual Property Registration Office.

Muller cautioned that the expanded remit of the Companies and Intellectual Properties Commission would pose severe challenges.

Saica said it was working with the Companies and Intellectual Property Registration Office to help reduce the backlog in a number of areas.