Recent amendments to the Companies Act—through the Companies Amendment Act 16 of 2024 and Companies Amendment Act 17 of 2024 (collectively referred to as the “Amendment Acts”)—introduce a host of changes that all directors need to be aware of. This article offers an overview of the significant updates to the Act.  

Share buyback transactions
One notable amendment relates to Section 48, which governs share buyback transactions. Before the amendment, a special resolution by the shareholders was required to authorise a share buyback transaction. Thanks to the new amendments, no special resolution is required for two categories of transactions. These are share buybacks made pro rata to all shareholders and transactions on a recognised stock exchange. A company will not have to obtain an expert report in respect of transactions where the company acquires more than 5% of the issued shares of a particular class of its shares. This seeks to simplify these transactions to some extent by reducing administrative requirements.

Social and Ethics Committee
There have also been amendments relating to the appointment of a Social and Ethics Committee (“SEC”). In terms of the amended section 72, the exemptions have been eased and an additional exemption has been added that if the company is a subsidiary of another company that has a social and ethics committee, such committee will perform the functions required by section 72 on behalf of the subsidiary company, then no committee is required for the subsidiary. Furthermore, an SEC report must be presented at the annual general meeting or shareholder’s meeting.

Takeover Regulation Panel
The jurisdiction of the Takeover Regulation Panel (“TRP”) has also been redefined and there are new thresholds that will be triggered when private companies must comply with the Takeover Regulations as well as when the TRP will be able to scrutinise affected transactions. A private company with 10 or more direct or indirect shareholders which meets or exceeds the financial threshold of annual turnover or asset value (which shall be determined by the Minister in consultation with the TRP) will have their deals scrutinised by the TRP. However, these determinations will only be made once the provisions of the Amendment Act are proclaimed. In the meantime, this amendment requires deciphering since it seems to have created some confusion. The aspect of “direct or indirect” could mean that one shareholder could be counted as having direct and indirect shareholding, however, there is no clarity as to whether this would mean that this shareholder will be counted only once or twice.

Director liability
Significant changes have been made regarding director liability. The amended section 77 allows a court to extend, on good cause shown, the existing three-year period of prescription for claiming damages. Importantly, the effect of this amendment applies retrospectively. The amendments now extend the period to declare an individual a delinquent director or under probation. The time bar has been extended from 24 months to 60 months and power has been given to a court to extend the period on good cause shown, with retrospective effect. Directors should therefore take note and ensure that they are discharging their duties to evade unnecessary liability exposure.

Memorandum of incorporation
On a more administrative note, the amendment of a company’s memorandum of incorporation will take effect within at least 10 business days after receipt of the notice of amendment (“NOA”). If the Companies and Intellectual Property Commission (“CIPC”), after the expiry of the 10 business days, has not yet endorsed the NOA or has failed to deliver a rejection of the NOA to the company with reasons, or a later date as set out in the NOA, the amendment will be affected. This practical application is long overdue as it has been the subject of debate. 

Finally, a procedural amendment is brought through the amended section 90. The appointment of an auditor must now take place annually at a shareholders meeting. The cooling off period arising from an auditor’s involvement in aspects of the company is also reduced from five years to two years.

The amendments mentioned in this article are only a few of the many significant amendments to the Act. Directors and shareholders are urged to acquaint themselves with these amendments and reach out to their corporate advisors to ensure that the necessary actions are taken to comply.


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