Linda Ensor
21 August 2008
Cape Town — The trade and industry department has agreed to reduce the cooling-off period for auditors in the proposed Companies Bill from five years to two years, though they will still be required to rotate after a five-year auditing period.
The department has also agreed to incorporate the provisions on access to corporate information in the existing Companies Act into the new legislation following public comments that the proposed access was too restrictive.
However, the department has not agreed to the transfer of the business rescue section of the bill to forthcoming new insolvency law, and has not agreed to limit the powers of the supervisor of the business rescue with regard to the suspension of contracts, including leases, as urged by the South African Property Owners' Association .
The views of the department were expressed in a document presented yesterday to Parliament's trade and industry committee.
However, further changes to the bill could be made following a late submission by the Congress of South African Trade Unions (Cosatu).
Trade and industry department deputy director-general Zodwa Ntuli said the department had agreed to allow wholly owned subsidiaries; disagreed with the proposal that all companies be required to prepare annual financial statements, and with a suggestion that auditors be allowed limited liability; and affirmed that shareholders should appoint corporate audit committees.
The department also believed that the proposed Financial Reporting Standards Council should develop, establish and consult on standards which would be issued by the finance minister.
Cosatu parliamentary office co-ordinator Prakashnee Govender said that company legislation had serious implications for workers and it should therefore "respond to broader and more progressive objectives as opposed to being limited merely to profit motives".
Cosatu called for the ultimate introduction of a co-determination principle to structuring company boards of directors, which would give workers and other stakeholders representation. As a transitional measure, boards should have advisory social and ethics committees consisting of stakeholders.
Govender said the federation wanted a greater trade union role in the business rescue process envisaged to save financially distressed companies from liquidation. It was vital that unions be given early notification of the process and have the right to access all relevant information about a company.
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