Staggered Commencement: Why It Matters
The Companies Amendment Act 16 of 2024 and the Companies Second Amendment Act 17 of 2024 are now part of South Africa’s corporate law landscape, but the roll-out has been staggered rather than all at once. The Second Amendment Act came fully into force on 27 December 2024, while the Companies Amendment Act came into force only in part on that date, with specific sections activated by proclamation.
That distinction matters because many directors, shareholders and private companies still assume that the entire 2024 amendment package is already operational. It is not. The proclamation brought into force the amendment to the definition of “securities” and amendments to sections 16, 40, 45, 48, 61, 90, 95, 135, 160, 167, 194 and 204, together with part of section 72. Other amendments were left for a later commencement date.
1. MOI Amendments Now Have Clearer Timing
One of the more practical changes is the amendment to section 16. For most Memorandum of Incorporation amendments, other than a name change, the amendment now takes effect 10 business days after receipt of the Notice of Amendment by the Commission, unless the Commission endorses or rejects it earlier, or a later date is stated in the notice itself.
That gives companies and advisers much clearer timing when planning restructures, governance clean-ups and shareholder arrangements. Before this amendment, the position on exactly when an MOI amendment became effective was less certain and often caused delays in deal execution.
2. Intra-group Financial Assistance Is Now Easier
The amendment to section 45 is significant for group companies. The new subsection 45(2A) provides that section 45 does not apply to the giving by a company of financial assistance to or for the benefit of its subsidiaries.
In practical terms, this reduces a layer of procedural friction for legitimate intra-group funding, guarantees and treasury arrangements. Businesses should still check other legal and fiduciary constraints, but the section 45 hurdle is now materially lighter in the subsidiary context.
Practical impact
Holding companies can now provide loans, guarantees and other financial assistance to their subsidiaries without needing to comply with the full section 45 process. This simplifies treasury management for corporate groups — but remember that directors’ fiduciary duties and the solvency and liquidity test under section 4 still apply.
5. Auditor Appointment Rules Were Adjusted
The amendment to section 90 changed the timing language for companies that become subject to an audit requirement. The amended provision now requires such a company to appoint an auditor at the shareholders meeting at which the requirement first applies, and annually thereafter.
The independence “cooling-off” rule in section 90(2)(b)(v) was also shortened from five financial years to two. That may affect how companies and audit firms evaluate eligibility and rotation planning.
6. Business Rescue Now Gives Landlords More Statutory Protection
The amendment to section 135 is one of the most commercially relevant changes. It provides that certain amounts paid by a landlord during business rescue for items such as rates and taxes, electricity, water, sanitation and sewer charges are treated as post-commencement finance.
The amendment also sets out the ranking of those claims. This is likely to matter significantly in commercial property, retail and other leased-premises business rescue scenarios, where landlords have historically borne significant financial exposure while tenants are under rescue.
Who is affected?
Commercial landlords, property funds, retail centre owners, and any creditor with exposure to tenants that may enter business rescue. The new ranking provisions should be factored into lease agreements and credit risk assessments going forward.
7. Name Disputes and Tribunal Procedures Were Refined
The amendments also strengthen the Companies Tribunal’s role. Under the amended section 160, if a company does not comply with a Tribunal order to change its name, the applicant may approach the Commission to substitute the respondent’s name with its registration number followed by the appropriate company suffix.
Other amendments streamline dispute-resolution mechanisms under sections 166 and 167, although not all of the section 166 changes were part of the first commencement batch.
8. Directors Face a Longer Accountability Window
The Companies Second Amendment Act 17 of 2024, which commenced in full on 27 December 2024, is narrower but important. It extends time bars relating to director accountability under sections 77 and 162 of the Companies Act.
In particular, it extends the look-back period for certain delinquency applications involving former directors and allows courts, on good cause shown, to extend relevant time periods even after expiry. This is a meaningful governance development for boards, shareholders and litigators.
Key takeaway
Former directors can no longer assume that a past breach will fall outside the time bar. Courts now have the discretion to extend these periods on good cause shown, even after expiry. Directors’ and officers’ liability insurance coverage should be reviewed in light of this change.
What Is Still Not in Force?
Some of the most discussed reforms are still pending commencement. The latest consolidated version of the Companies Act available on the Department of Justice site marks several 2024 amendments as provisions that “will be put into operation by proclamation”, including:
- Amendments to section 26 (access to company information)
- Parts of section 30 (annual financial statements)
- The new sections 30A and 30B dealing with remuneration policy and remuneration reports
So, despite the attention these reforms received, they were not part of the first commencement wave. Public companies and state-owned companies should keep a close eye on the eventual commencement of the remuneration provisions, because those are likely to become one of the most visible governance changes in the package.
What Should Companies Do Now?
For now, companies should focus on the amendments that are already operational. That includes:
- Reviewing MOI amendment timing and factoring in the new 10 business day rule when planning corporate actions
- Assessing intra-group financial assistance practices in light of the section 45(2A) subsidiary exemption
- Evaluating share buy-back approval processes to ensure compliance with the clarified section 48 requirements
- Confirming Social and Ethics Committee governance arrangements and vacancy-filling timelines
- Reviewing audit appointment timing and the shortened cooling-off period for auditor independence
- Understanding the new business rescue ranking rules for landlord claims, particularly if your business is a commercial landlord or tenant
- Assessing directors’ and officers’ liability exposure in light of the extended accountability window
4. Social and Ethics Committee Compliance Is Becoming More Structured
The amendments to section 72 are also important. They deal with how Social and Ethics Committees are appointed or elected, how vacancies must be filled, and reporting obligations.
For example, where a vacancy arises on the committee, the board must appoint a replacement within 40 business days. The amendments also introduce a requirement for a Social and Ethics Committee report to be prepared for shareholders, although not every reporting-related amendment in this area commenced in the first batch.