The New Companies Act, 71 of 2008 – Memorandum of Incorporation
As you may be aware, the new Companies Act, 71 of 2008 (“the Act”), as amended, provides that all provisions in the Memorandum and Articles of Association (“the Articles”) of any company which existed prior to 1 May 2011 shall remain applicable and enforceable until 30 April 2013 even if these provisions are in conflict with the New Act. Thereafter, the provisions of the Act shall apply, unless the company has replaced its Articles with a new MOI.
The Act introduced new concepts, requirements and procedures which all have a direct effect on companies. If a company does not replace its Articles with a new Memorandum of Incorporation (“MOI”), its shareholders and directors will not know which of the provisions in its Articles shall apply and whether their actions are in compliance with the Act.
The new Act provides, amongst other things, that private companies do not have to be audited. If a private company has not removed the compulsory audit from its Articles nor has it replaced its Articles with a new MOI, such company’s financial statements for the year ending on 28 February 2013 must still be audited.
Companies with par value shares cannot use CIPC’s short MOI to replace their Articles. They will have to use a unique or company specific MOI to ensure that no audit is required. Such MOI should contain substantial provisions to assist shareholders and directors with the executions of their duties and responsibilities and to ensure compliance with all regulations.
It is in the best interests of all companies which existed prior to 1 May 2011, to replace their Articles with a new MOI.
Should you have any further queries in this regard, please do not hesitate to liaise with me swiftly bearing in mind the deadline of 30 April 2013.
Juan Smuts, Abrahams & Gross Attorneys
T 021 422 1323 E firstname.lastname@example.org