The civil rights organisation AfriForum today submitted a written submission to the Department of Trade, Industry and Competition after Ebrahim Patel, Minister of the Department, published a call for comments on the Companies Amendment Bill 2021 in the Government Gazette Nr. 45250 of 1 October 2021.
AfriForum wishes to state categorically that it recognises and supports the object of 1) addressing South Africa’s extreme societal inequality and the need for greater transparency in public financial affairs, and 2) combatting corruption in all spheres of financial conduct. AfriForum argues that, although the objectives of the amendments seem to be noble at first glance, it will not achieve these aims, but will lead to a host of other problems that the Department did not consider. AfriForum addresses three major issues with the proposed amendment in its comment:
- The Companies and Intellectual Properties Commission (CIPC) will be allowed to make the company shares register available to anyone “as prescribed”. Moreover, it will also keep a public register of all public shareholders in all registered companies. This opens the door to more government interference in the ownership of companies.
- In terms of the proposed amendments, the Companies Tribunal will have the authority to hear cases on broad-based black economic empowerment (B-BBEE) that are referred from the B-BBEE Commission. The Companies Tribunal will therefore be able to make B-BBEE more binding and obligatory. This is cause for major concern.
- Companies will be required to identify their highest and lowest salary earners, the average salary, as well as the gap between the top and bottom 5%.
AfriForum urges Patel to reconsider the potentially far-reaching effects that the amendments seek to bring about, particularly the above three issues.
“No bill should be adopted if it disregards the separate legal personality of companies by unduly piercing the corporate veil. Furthermore, amendments should be avoided if they exacerbate the growing unease in directors and managers of companies that are keeping the economy of the country afloat, or if they embarrass functional and profitable business models by making inaccurate comparisons, even if it is well intentioned. This will only serve to compel investors to reconsider the viability and sustainability of their financial position in South Africa, and high-skilled workers to reconsider their future employment prospects in the country compared to other countries,” says Ernst van Zyl, Campaigns Officer for strategy and content at AfriForum.
The public is requested to deliver comments on this amendment by no later than 31 October 2021. AfriForum also urges the public to make their voices heard regarding this Bill by visiting https://afriforum.co.za/en/mycompanyismine/.