Hon Chairperson, the passage through Parliament of the Companies Amendment Bill, which is before us today, will mark an important step forward in reforming and modernising our companies legislation to the benefit of the vast majority of corporate citizens, and small businesses in particular.
In 2008 Parliament passed the Companies Act, which was Act No 71 of that year. The 2008 Act was a major piece of reform. It fundamentally overhauled the complex and much amended Companies Act that dated back to 1973 and placed South Africa among world leaders in company legislation.
Among other things, the 2008 Act provided for simplification in registration processes to cut red tape and to make the benefits of limited liability much more available to a broader range of economic actors than ever before; it provided for the codification of directors' duties without replacing common law principles; it enhanced protection for minority shareholders to increase shareholder activism and minimise the scourge of company scandals; it recognised employees' rights to participate in company governance; and it introduced an innovative business rescue provision that allowed for the early detection and effective turnaround of companies that are fundamentally sound but in financial distress, something we are convinced will go a long way towards saving jobs.
This Act was assented to by the President on 9 April 2009, for implementation 12 months thereafter. When we announced the effective date of implementation as 1 October 2010, requests were received from business for more time, and implementation was accordingly further deferred to 1 April 2011, effectively giving a full two years of preparation for both stakeholders and government.
In 2009, as we were developing regulations for this Act, it was discovered that there were a number of technical errors and omissions that could affect the interpretation of various provisions. We therefore commissioned a top team, led by Judge Dennis Davis, to identify these errors and omissions and to draft amendments to rectify these prior to the Act's coming into effect. This was done in the interests of greater certainty.
The result of this work was a Companies Amendment Bill which was approved by Cabinet and introduced in Parliament in November 2010. The Amending Bill, I should stress, did not seek to reopen the policy issues that had been decided on in the 2008 Act, and accordingly the Act remains intact, as it was in 2008, in policy terms.
The Companies Amendment Bill has been thoroughly canvassed in public hearings organised by the Portfolio Committee on Trade and Industry, which has developed a number of further amendments to accommodate legitimate concerns and issues raised by stakeholders. The result is that we are now presenting a significantly improved amending Bill to the House, but a Bill which nevertheless retains the policy balance struck in the 2008 Act. I want to commend both the Portfolio Committee on Trade and Industry and the Department of Trade and Industry, DTI, officials for a job which has been very well done.
The time allocated to me today does not permit a detailed discussion of the provisions of the Bill. These will be dealt with by speakers that follow me.
What I want to say in my remaining time is that, parallel with the process of introducing this amending Bill, the Department of Trade and Industry has been taking the necessary administrative steps to begin the implementation of the new Companies Act on the due date on 1 April 2011. We are ready to launch the new Companies and Intellectual Property Commission and to ensure that its doors are open for business on the due date.
I want to conclude by quoting from a letter I received yesterday from one of the top corporate lawyers in this country, Mr Michael Katz of Edward Nathan Sonnenbergs. I think we all know who Mr Katz is. He wrote of the new Companies Act, and I quote: I respectfully submit that this is an excellent piece of legislation that will put South Africa among the leaders of the world in company legislation.
He then went on to urge that the commencement of the Act should not be further delayed, arguing that for some time we have been living in two worlds with an old Act still in force, but market players knowing that there is a new Act which is coming into operation in due course. He added that in his view there had been more than adequate time for preparation. He concluded, and I quote again:
Whenever significant new legislation comes into operation there will be teething problems in the legislation itself and problems of getting ready for compliance. This is not, however, sufficient reason to justify the deferral of the implementation of the new Companies Act scheduled for 1 April.
I believe that Mr Katz is quite right. As the President so often tells us, the priority now is not further debate, diagnosis or lamentation but, in fact, implementation. By approving this amending Bill today, we will be taking an important further step towards the implementation of a major reform that will be of enormous benefit to the vast majority of our corporate citizens and their employees, and it will facilitate economic growth, development and the creation of decent work. I therefore have pleasure in commending this Bill to the House. Thank you very much. [Applause.]
Chairperson, hon members of this House, colleagues and compatriots, people of South Africa, today before this hon House is a piece of legislation that truly seeks to transform the economic and structural imbalances. The Companies Act, 2008, soon to be joined by its sister, the Companies Amendment Act, is only the third since 1926 and 1971.
Chairperson, we also note that the 2008 Act was not yet implemented, as the government in its wisdom heard the reasonable voices of our countrymen and women in business - small, medium and large, some large enough to be considered conglomerates. We as a committee, and as the ANC, searched for the balance that takes account of small businesses that generate significant jobs and the captains of large companies, including internationally ranking financial houses, among them the four big banks.
For the first time in South Africa companies, whether small, medium or large, will with their employees, their creditors and indeed their shareholders all benefit from a balanced, fair and reasonable approach. This will enable companies that are technically insolvent but commercially solvent to continue trading. That is, companies that are able to pay their day-to-day debts when they become due and payable, will be allowed to continue.
The committee grappled with certain sections here, and I'm happy to say that, in fact, the FF Plus in this case put forward a compromise that actually enabled us to have a clear understanding of the intention in this area. So, what we have here is what we have under section 22 of the new clause 14. We have something that benefits the country in general, employees, shareholders, and even creditors; another win-win situation.
However, we cannot forget that when the new Companies Act comes into effect, with the amendments proposed and put before this House for adoption today, it is only the third such law since 1926. We are looking for a democratic arrangement in our economy, good governance progress and socio- political transformation. Indeed, we cannot delay legislation purely on the principle that there will be no case law. We must not be sidetracked and put the cart before the horse.
One of the key issues, business rescue, finally offers companies in South Africa a constructive option and not simply liquidation, with nobody benefiting out of it, or something different. Companies that are basically sound but only technically insolvent will obtain the support they require. In this way jobs are retained, shareholders are satisfied and, indeed, creditors are met.
However, there is a need to ensure responsible use of this clause and this measure in the legislation. Therefore cancellation of contracts has been subjected to a court process, and suspension depends on analysis by the business rescue practitioner on the basic viability of a company to turn around and rise above its current financial difficulties; once again a win- win situation.
There are so many issues to look at, and so little time to look at them, but the Insolvency Act must, I think, really be tackled again and something be said. Employment contracts truly became quite a big issue in the committee, and they will now have to be subject to sections 35A and 35B under the Insolvency Act if the company has been liquidated. This will protect employees and at the same time ensure market stability and also ensure that, as contracts are subject to netting arrangements, those that are will remain unaffected.
Once again the ANC-led government in this case gives us a win-win victory for all stakeholders concerned. Provisions for this business rescue have also been amended to ensure this. The committee actually grappled with this and came to the position that the enforcement and compliance roles of regulatory authorities remain unhindered during the business rescue process.
Sections 133, 140 and 142 deal with this. What we have here is prudence with progress. Internationally it is now accepted by many countries that minority shareholders must be taken into account. Under existing legislation they won't. Hope must let me grab my cut and the devil take the hindmost. Minority shareholders will no longer be forced to accept transaction terms that are supported by a 75% majority. Instead they will be offered and given a fair cash payout for their shares. This is already operating effectively in Canada and the United States.
Another issue, of course, in a developmental state is that this piece of legislation marks a decisive shift from a monopoly-dominated and driven economy to a broader, more inclusive democratised economy.
As we strive to concretise the spirit and letter of our Constitution, with issues such as fairness, equity, rights and responsibilities - another win- win situation - one issue our country cannot afford is reckless trading. No country can, as the United States learned to its cost. It is still reverberating with the sub prime damage which engulfed the industrialised countries and actually threatened the livelihoods of people in developing countries.
Our eminent commercial law consultant, Ms Kathy Idensohn, put it this way: "Companies should be expressly prohibited from trading recklessly or with gross negligence." She went on to equate this with fraudulent business activities and/or intent.
Let me say that many parties contributed. I remember the DA raising the issue and saying, "Surely we can have copies of this," and so on. This was not necessarily the DA as a party, but people with an interest. We said we didn't have a problem and we should put this in the amending Bill. We should ensure you can get your copy.
Implicit in the Bill before the House today is the need for government-wide economic planning and implementation that will align policies to achieve the objectives set out in the economic transformation resolutions that are needed in our country, led by the ANC government.
I wish through the Chairperson to indicate that all members of the committee certainly contributed here. Indeed, when we look at the directors who have been found guilty of dishonesty, we accept that we cannot have them running around loose. So, that will be only five years after their sentence has been served. If necessary, there can be an action through the court for a further five-year extension, or ten years. In this way we protect society, and also bring them in through a process of rehabilitation.
Chairperson, may I say we wish to thank all members of the committee, the staff and the Department of Trade and Industry for their constructive engagement, and people in the IFP for also working with us. As the ANC we support this legislation, which we believe will contribute to economic transformation. I would like to urge members of this House to put the greater good of society first and remember our country's reputation internationally. Let us not fail them in our hour of need. I thank you. [Applause.]
Chairperson, the DA supported the 2008 Companies Act in this House in that year, because it represented a progressive redrafting of our company law that set out to cut red tape, enhance transparency and help with business failure.
Unfortunately, despite these good intentions, the 2008 Companies Act had several technical and other errors that left it open to legal challenge, and to this day the Act has not commenced. However, the Bill before us today sets out to correct these errors.
Our committee conducted several rounds of public hearings on the Bill last year, when it became clear that there were additional amendments to be made to the underlying Act. Approval to further amend the Act was granted by the House last week. The committee process therefore became our last chance to fix any remaining problems in the legislation and ensure that South Africa would have a world-class legal framework for the business sector. So, with the final draft of the Bill before us, we can assess how we did on that score and, Chairperson, the record is mixed.
On the positive side, the committee was ably chaired by the hon Fubbs, who helped to facilitate many of the progressive amendments to the Bill. She was supported in this by our competent committee staff. In addition, the leadership and the officials of the Department of Trade and Industry, DTI, were technically competent and accommodating on many requests for amendments from stakeholders. Amendments included re-establishing the stand-alone rights to company registers, removing the provision that a convicted fraudster can establish directorships if he or she is the sole shareholder of a company, and expanding the set of contracts protected from suspension by business rescue practitioners.
Furthermore, during final deliberations on the Bill last Wednesday night, neither the department nor the ANC members of the committee objected to two important proposals from the opposition. The first was an important amendment to section 4 of the Act to restrict the application of the solvency and liquidity test to individual companies rather than groups. The second restricted the prohibition of insolvency to technical insolvency in section 22, as the Chairperson has explained.
Unfortunately, despite these important concessions in the final period of the deliberations, the ANC members of the committee argued passionately and at length against the amendments that would protect South Africans from fraudsters, cut red tape, and allow business reasonable time to comply with the legislation.
Their reasoning betrays the ANC's attitude towards the role of business in South African society because, as we approach the elections, we will begin to hear more and more promises from the ANC, especially on jobs. The part where policy rubber hits the legislative road, however, is when the parliamentary committee sits late into the night and debates the clauses of a Bill.
The ruling party can say what they like on the campaign trail, but the way their members argued in favour of something we call "the Yengeni clause"- which limits the disqualification of fraudulent directors to five years, instead of leaving it as a lifetime ban subject to judicial review - raises serious questions about that party's attitude towards fraud and corruption. [Applause.]
It is hard not to reach a conclusion that the ANC is taking such a soft stance against fraudsters serving as directors because of pressure from senior party members who find their business interests inconveniently constrained by the current company law.
However, while the ANC is not afraid to argue in favour of fraudsters serving as directors, they have a curious lack of insight into how businesses actually function daily. Section 45 of the Act introduces an onerous requirement that the approval of intercompany loans requires a special resolution by the shareholders. This provision is designed to prevent round-tripping using loans to companies controlled by directors, but it throws the net too wide by including all intercompany loans. The ANC members in the committee appeared not to appreciate how many businesses use valid intercompany loans on a daily basis, because they voted against an opposition proposal to amend this. In so doing, they effectively threw up another loop of red tape.
They also refused to consider a short extension in the implementation date to allow South African businesses time to understand the amendments that are on the table today. Members of the committee only received the final draft of the Bill at 15:00 yesterday, and it is still subject to review by the National Council of Provinces and the President. Yet, without any extension of the date, business will be expected to comply with the Act in two weeks' time, something business leaders have already objected to in the press. The ANC's refusal to consider even a short extension is irresponsible and exposes the ruling party's lack of understanding of business realities.
Mr Minister, there is a difference between the teething problems referred to by Mr Katz and hundreds of South African companies suddenly being made illegal in two weeks' time by legislation we haven't even finished working on yet.
Beyond compliance, we also have concerns about the department's ability to enforce this law. My colleague, hon Jacques Smalle, met yesterday with the Companies and Intellectual Property Registration Office, Cipro, which is about to become a new companies commission. He reported that there is currently two-thirds of the staff capacity required to enforce the law, and there are still doubts over systems as critical as the controversial electronic content management system and something as fundamental as the office space required to house the commission.
So, in the final analysis the DA strongly supports the broader effort to reform our corporate law. We also commend the Chair of the committee, and we commend the committee members, the staff and the department on a very positive legislative process. We are, however, unable to support the Bill because the ANC members of the committee failed at a critical time to stand up to fraudsters in business, cut red tape when given a logical chance to do so, and allow business time to understand the changes that we are only voting for today. Thank you. [Applause.]
Chairperson, more than 120 amendments are contained in this Bill. Words that should have been defined in the principal Act are now defined and definitions that were not clear have now been made clearer. Instances where a lacuna existed, which would have made it impossible for the Minister to formulate regulations, have now been addressed.
The amendment of section 48(2) of the principal Act now provides for a mechanism to allow shareholders to scrutinise the actions of a company trying to acquire its own shares in terms of section 46 of the principal Act. This amendment enhances protection for minority shareholders and is a welcome development. Shareholders are also protected in another way. In the principal Act a business rescue practitioner was given unfettered discretion in the cancellation of contracts while business rescue proceedings were under way. As a result of the amendment, the business rescue practitioner is now compelled to submit all contracts to court, including security contracts that are intended for cancellation. Subjecting the powers of a business rescue practitioner to judicial scrutiny will prevent arbitrary action.
What is void and what is voidable in the principal Act are not clear. Clause 120 of the Bill seeks to clarify the rules to help distinguish what in the law, a resolution or an agreement is void. In terms of the Bill, a provision, resolution or agreement will be considered void or of no force or effect only after a court of law has declared it as such.
I will now address the question of the banning of directors. While it is acceptable that a five-year ban should exist for run-of-the-mill crimes, provision should have been made for very serious offenders to have a ban imposed on them by a court so that the duration of the ban is in keeping with the offence.
The changes in business law, arising from the principal Act, as well as these amendments, are extensive. Government must not exert pressure on businesses without getting all their ducks in a row. The Minister's insistence on implementation of this legislation on 1 April will not allow time for businesses to digest all the changes. Moreover, the Minister should be engaging the business community so that a seamless change can take place from the old order to the new.
In order for investors to be attracted and for business activity to be encouraged, certainty and clarity has to be obtained.
That the Act will furnish a comprehensive and modernised legal regime is accepted. Businesses move faster than other spheres because of fierce competition. However, regulations in terms of the Act still have to be made and the implementing institutions have yet to be established. Cope would like to see realistic time frames being given so that business and government move in sync on this issue.
While we agree with many of the amendments as being very progressive, we will not support this Bill if the Minister refuses to show any flexibility regarding the date of implementation. I thank you.
Chairperson, first and foremost, I think we owe a word of appreciation to the chairperson of the committee, the hon Fubbs, for having led a very difficult process in an all-inclusive manner and with the excellent input of a constant flow of technical assistance and experts.
Secondly, we as opposition parties have a major problem. We identified action that was not further identified. We heard the voices of the consumers on this corporate entity which we are bringing into reality. Those who use companies told us there were problems. We as a united opposition tried to fix the problems. We all looked at that dispassionately, and we came out with half a page of amendments.
There were six amendments, which were not asked for by us, but by Sica, the accountants, the lawyers and all those Ministers who perhaps cannot afford the services of Michael Katz and Edward Nathan Sonnenbergs, ENS. Those of us who use companies need to adjust the companies to the new requirements for companies.
There was no flexibility whatsoever on the ANC's side in coming to terms with the need for delaying the implementation so that people can actually read the law to be able to comply with it. There was no flexibility or willingness to understand that intercompany loans are a reality. As the hon Harris put it, the net has been cast too wide so that, together with the abuse, we have outlawed the use.
We also have an insolvency provision which will stop companies from doing what companies do, and I do not agree with the reading of the hon Fubbs. There has been so much discussion on what the provision means that, notwithstanding the amendments proposed by the hon Alberts, in South Africa we will not have a company that will go through the process of going up and down the way Apple Computers, Microsoft, General Foods, 3M and many other successful companies in the world have gone. We are outlawing the ordinary corporate processes.
I just want to show you the difficulty. This is the corporate Act on my left with its regulations. This is what we are using. This is the most successful corporate law in the world. These few pages are the Delaware corporate law. We have moved a lot towards modernising the Act, but we have not done what could have been done to bring it to the next stage. For this reason, we cannot support it. Thank you.
Voorsitter, maatskappye is die enjins van enige moderne ekonomie en daarom is dit belangrik dat die wet wat hierdie entiteite reguleer, modern en prakties moet wees. Daar is lank aan hierdie wetsontwerp gewerk en die VF Plus dink dit is inderdaad progressief . (Translation of Afrikaans paragraph follows.)
[Adv A D ALBERTS: Chairperson, companies are the engines of any modern economy and it is therefore important for the Act that regulates entities to be a modern and practical one. A lot of work has gone into this Bill and the FF Plus believes it to be progressive indeed.]
It would be remiss of us not to commend the chairperson, Ms Joan Fubbs, for her meticulous and democratic approach to finalising this Bill. I also would like to thank the other members of the committee for their diligent work and assistance.
Having said this, let me say that it was disheartening that the ANC was not willing to accept four out of the six joint proposals made by the FF Plus, DA and IFP. The FF Plus is proud that it was able to resolve the problem relating to trading under insolvent circumstances, where the compromise proposal by the FF Plus was accepted, which eliminates the uncertainty created by the difference between technical and commercial insolvency. I dare say that the committee could likewise have accepted all proposals by the opposition in this spirit, especially given that our proposals were so few, and especially with regard to the so-called Yengeni clause, as the hon Harris indicated.
'n Kommerwekkende aspek aangaande die implementering van die wetgewing is dat ons glo die sakegemeenskap het meer tyd nodig om die nuwe veranderings te absorbeer. Daarom glo ons 'n uitstel van ses maande op die implementering sou van pas wees. Die Yengeni-klousule is ook hoogs problematies en die voorstel deur die "troika" van die VF Plus, DA en IFP moes aanvaar gewees het.
In die lig daarvan sal ons ongelukkig nie die wetsontwerp kan ondersteun nie. Dankie. (Translation of Afrikaans paragraphs follows.)
[A worrying aspect regarding the implementation of this legislation is that we believe the business community needs more time to absorb the new changes. That is why we believe that a six-month postponement of the implementation would have been appropriate. The Yengeni clause is also highly problematic and the proposal by the "troika" of the FF Plus, DA and IFP should have been adopted.
In light of this we unfortunately won't be able to support the Bill. Thank you.]
Hon Chairperson and members of this august House, it is an honour and privilege to address this House on this important issue of the Companies Amendment Bill.
This Bill comes at a time when South Africa has lost more than 800 000 jobs due to the worldwide recession. During his Budget Speech the Minister of Finance indicated that 42% of young people between the ages of 18 and 29 years were unemployed. South Africa remains a country where the unemployment rate is above 20%, whereas the rates of its trading partners are as follows: the United States 9%, the European Union 8,9% and China 9,6%.
This will demand that South Africa does things differently, by ensuring that it stimulates both foreign and domestic direct investment in the economy. The President of the World Bank, Wolfowitz, noted that China was able to take more than 400 million people out of the poverty bracket through trade and not through grants.
Since South Africa is facing an endemic problem of unemployment, it means that South African companies must do things differently. The South African government must support small, medium and micro enterprises, SMMEs, and industrial giants through a proper regulatory environment.
The implementation of the Companies Act of 2008 on 1 April 2011 will go a long way toward improving the business environment in South Africa. For example, in all the robust economies SMMEs are job drivers. If red tape can be eliminated for SMMEs, they are going to be competitive and this will lead to better job prospects for our country.
The requirement of having audit committees and audited financial statements for smaller companies will be eliminated. Instead, an independent review of financial statements will be done. The process of the amalgamation or merger of companies is simplified so that companies can easily share information, resources and capital. This can lead, of course, to the lowering of costs of doing business and hence these businesses will be able to hire more people.
The business rescue process will no longer be a court-driven process. Instead, businesses will be assessed by independent business rescue practitioners who have qualifications in either the legal or the business management field. These practitioners will be able to determine whether a business is commercially or technically insolvent.
Those businesses which are technically insolvent will be turned around. During the business rescue process employees will have a say as creditors to avoid sagas such as that of Aurora in Springs. Whistle-blowers will be protected by this Act, whether they are in the public sector or a private company. This will reduce the incidence of fraud and corruption; hence resources will be released for investing in the economy.
If the Companies Act of 2008 has all these good attributes, why do we need this amending Bill? The Bill seeks to deal with inconsistencies between the Companies Act and other Acts.
It also seeks to entrench supremacy between the Companies Act and other Acts. For example, if there is inconsistency between the Public Finance Management Act, PFMA, and the Companies Act, the PFMA will take precedence or will prevail.
The amending Bill will also empower the Minister to formulate regulations. For example, one provision will empower the Minister to declare whether certain companies must have social or ethics committees. We know that in this international global environment there are certain companies that do not have any ethics. If we can go back, the Ogoni people of Nigeria lost their leader because the government of the day had no ethics in regard to the companies involved. They murdered that guy so that they could serve the god of capital.
This amending Bill also provides for a restriction on the membership of the board of the company, in particular when a designated member has been found guilty of dishonesty. It provides for minimal restrictions, for example, five years of nonparticipation in any company after serving the sentence. This suspension can be extended or shortened by a court of law.
It is surprising today that the opposition parties are clamouring about this clause, whereas the very spirit of our Constitution provides that we must have correctional facilities instead of jails. That is why we say that we must forgive people instead of being punitive against them. When we go back into the Bible, we can give examples. The person who became the best disciple of Jesus Christ, Paul, was once a murderer who murdered Christians. He was able to take Christianity to the gentiles because of forgiveness. Now we don't understand why, when a person has committed a misdemeanour, he or she must be cut off forever instead of participating in the economy of the country. In that regard ... [Applause.] ... I think the opposition parties have it wrong when it comes to the spirit and the letter of the Constitution. Also, what is critical here is that business rescue practitioners no longer have the power to cancel a contract during the business rescue process. It can only be done through a court of law. This is a good safeguard for the creditors and the employees of the companies concerned.
This Companies Amendment Bill also criminalises reckless business practices and gross negligence on the part of directors. This will curb the excesses of directors, like the bank director excesses that led to the financial meltdown on Wall Street.
This Bill also provides access to information by members of the company and members of the public, for example, names and addresses of the directors and the shareholding of the company; and the minutes of the meetings of the board of the company. This can be done through proper application and payment of the prescribed fee. This will make the economic environment more transparent and more stable.
It is disturbing today that part of the submissions which were made by the opposition parties was that we as the government must condone the reckless practices of businesses. Actually, they confuse this reckless practice with entrepreneurship. We cannot equate the two. Yes, people can take risks. Yes, people must have enterprise dreams, but they cannot be reckless. The last global financial meltdown occurred precisely because the big banks in America were reckless. We cannot subject our own people to such recklessness. [Applause.] That is why we as the ANC can never support such a position.
This cutting edge legislation will lead to a more transparent and competitive trade environment for South African and foreign companies. This will lead to a more stable economic environment, which will stimulate both foreign and domestic investment. The growth of investment will create more job opportunities, which will create social and economic stability for the country and the region. That is why the ANC supports this Bill. [Applause.]
Chairperson, it is a matter of regret that some of the opposition parties have chosen to say that they are going to oppose this piece of legislation. As I understand it from what they've said, there are three issues.
Firstly, there is the length of time of disqualification of people that are convicted of fraud. They have chosen to personalise the issue. I think the reality is that at this time they have chosen to play silly bargains and politics in regard to the issue rather than deal with the substance.
Secondly, they are talking about the issue of intercompany loans. How many companies are going to be involved in this? This is a small matter of interest to a small number of companies. Let me say that if we find anything that leads to unintended consequences, we will be happy to sort it out later on. I think somebody has to make a call, and a call was made in the committee.
The other point they have made relates to time. I think their presumption is that because they have been dealing with this Bill and they've been deeply entrenched in it, nothing else has been happening. As I said in the introductory speech, there have been two full years between the passage of the 2008 Act and the implementation date on 1 April 2011.
It's not that nothing has been happening. We have been doing a lot of preparatory work. I as a Deputy Minister engaged in at least three road shows with companies to explain the provisions of the Companies Act, Act 71 of 2008, and we had a lot of preparatory activities. We have engaged over and above the call of duty, with all of kinds of business practitioners from all sections of society. Eventually the time comes when you have to call a halt to all of this. Eventually the time comes when you start to say, "When, in fact, are we going to implement this? Why are we debating this further and further, ad nauseam?"
Those who were talking about the concerns regarding the 1 April date are overstating the impact that many companies are going to have in regard to that date. In fact, I think many companies are going to benefit significantly from the date. They also are understating the point that Mr Katz made about the fact that we are living in two worlds.
Companies don't know whether to do transactions under the new Act or the old Act. I think there are plenty of people who are sitting around like that. The same is actually quite true of the Companies and Intellectual Property Registration Office, Cipro. It is not as easy as you think for us to solve all the problems in Cipro when it knows it is going to become a Companies Intellectual Property Commission.
In fact, the transitional process is well under way. I believe that many of the problems in Cipro in regard to all the issues that we know about registration will actually become easier rather than more difficult for us to solve when we move into the new legislation. I don't believe that a compelling argument has been put by the opposition for opposing this Bill.
I have no doubt that for the majority of small businesses there is enough time for the registration procedure. The fact that many companies operating in the informal sector will now have access to limited liability, and the fact that there will be removal of all kinds of bureaucratic requirements on reporting and registration and things of that sort, will be an advantage to many small businesses. At the same time we will have sufficient provisions in place and more administrative action to ensure that malpractices are dealt with much more effectively.
I think that, in fact, what we need to do is to move forward. The business rescue matter is urgently needed; it is very important. I think we need to move forward. Rest assured that if we detect problems as we move ahead we will rectify those as well. We are not coming in to be reckless. We've gone through a process of consultation that I think has been very extensive indeed. The matter has been widely canvassed and I believe we now need to go ahead and implement this piece of legislation. Thank you very much. [Applause.]
Debate concluded.
Bill read a second time (Democratic Alliance, Congress of the People, Freedom Front Plus and Inkatha Freedom Party dissenting).