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.]