BOARDS AND DIRECTORS
RESPONSIBILITIES AND RISK
THE IMPACT OF THE NEW COMPANIES ACT
AND BUSINESS LEGISLATION
PRESENTED BYDR JOHN W HENDRIKSE
Online solutions to grow your business
BOARDS AND DIRECTORSRESPONSIBILITIES AND RISK
• CORPORATE REFORM TIMELINES• BOARD MISSION• GOVERNANCE FRAMEWORK• BOARD STRUCTURE• BOARD RESPONSIBILITIES• DIRECTORS RESPONSIBILITIES• LIABILITIES OF DIRECTORS• COMPETITION AMENDMENT ACT• CONSUMER PROTECTION ACT• CAVEAT VENDITOR
Online solutions to grow your business
CORPORATE REFORMTIMELINES
• THE COMPANIES ACT (Act 71 of 2008)
Enacted 8 April 2009
Planned Commencement Date: 1 July 2010
Online solutions to grow your business
COMPETITION AMENDMENT ACT
• Approved by Parliament 22 October 2008
Enacted 29 August 2009
Online solutions to grow your business
CONSUMER PROTECTION ACT (Act 68 of 2008)
• Enacted : 29 April 2009
Planned Commencement Date : July 2010
Online solutions to grow your business
KING IIIRelease Date: 1 September 2009
BOARD MISSION
• SURVIVE AND SUCCEED
• BEST INTEREST OF SHAREHOLDERS
• BEST INTEREST OF COMPANY
• CORPORATE STRATEGY
• CORPORATE GOVERNANCE
Online solutions to grow your business
GOVERNANCE FRAMEWORK
SHAREHOLDERS COMPANY
AGENTS TRUSTEES
BOARD OF DIRECTORS
PERFORMANCE CONFORMANCE
Online solutions to grow your business
BOARD STRUCTURE
BOARD OF DIRECTORS
EXECUTIVE NON-EXECUTIVE
INDEPENDENT OTHER
AUDITCOMMITTEE
3 or MORE DIRECTORS
Online solutions to grow your business
BOARD RESPONSIBILITIES• GOING CONCERN
• SOLVENCY AND LIQUIDITY TEST
• SOLVENCY – FINANCIAL POSITION NET ASSET VALUEMARKET VALUES & REALISABLE VALUES
• LIQUIDITY LIQUID ASSETS SHORT TERM OBLIGATIONS
• INSOLVENCY AUDIT LONG TERM SUSTAINABILITY SHORT TERM LIQUIDITY CAPACITY CASH FLOW FROM OPERATIONS
Online solutions to grow your business
CORE DUTIES – SECTION 76 DISCLOSE ANY CONFLICT OF INTEREST
USE POSITION AND INFORMATION FOR COMPANY’S BENEFIT
DISCLOSURE OF MATERIAL INFORMATION
PERFORM DUTIES:
- IN GOOD FAITH
- IN BEST INTEREST OF THE COMPANY
- WITH CARE, SKILL AND DILIGENCE
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
STRATEGY AND CORPORATE STRUCTURE
DUTY TO COMPLY WITH THE ACT IN RELATION TO DIFFERENT TYPES OF COMPANIES (Section 8)
DUTY TO COMPLY WITH THE COMPANY’S MEMORANDUM OF INCORPORATION (Section 13)
DUTY TO MANAGE THE BUSINESS AFFAIRS AT THE COMPANY (Section 66(1))
DUTY TO CARRY ON THE BUSINESS WITHOUT TRADING RECKLESSLY OR UNDER INSOLVENT CONDITIONS (Section 22)
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
BOARD STRUCTURE AND CORPORATE ADMINISTRATION
DUTY TO APPOINT BOARD COMMITTEES (Section 72)
DUTY TO APPOINT AN AUDIT COMMITTEE (Section 94)
DUTY TO APPOINT A COMPANY SECRETARY (Section 84 & 86)
DUTY TO CALL AND CONVENE A SHAREHOLDER’S MEETING (Section 61)
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
ACCOUNTABILITY AND ASSURANCE DUTY TO KEEP COMPANY RECORDS (Section 24)
DUTY TO KEEP ACCOUNTING RECORDS (Section 28)
DUTY TO COMPLY WITH CHAPTER 3 OF THE ACT (Section 34(1) & 94)
DUTY TO PAY DIRECTORS REMUNERATION IN TERMS OF MEMORANDUM OF INCORPORATION AND GET IT APPROVED BY SHAREHOLDERS BY SPECIAL RESOLUTION (Section 66(8) & 66(9))
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
ACCOUNTABILITY AND ASSURANCE CONTINUES…
DUTY TO APPOINT AUDITORS (Section 90 & 92)
DUTY TO OBTAIN AN INDEPENDENT REVIEW OF THE FINANCIAL STATEMENTS (Section 30)
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
DISCLOSURE AND TRANSPARENCY DUTY TO PREPARE ANNUAL FINANCIAL STATEMENTS (Section
29 & 30)
DUTY TO PREPARE A DIRECTORS REPORT (Section 30(3))
DUTY TO ISSUE A PROSPECTUS (Section 100)
DUTY TO DISCLOSE DIRECTOR’S REMUNERATION INFORMATION (Section 30)
DUTY TO FILE AN ANNUAL RETURN (Section 33)
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
SHAREHOLDER TREATMENT DUTY TO ENSURE THAT SHAREHOLDERS CAN EXERCISE
THEIR VOTING POWER AND RIGHTS (Section 2(2) & 58)
DUTY TO FACILITATE A SHAREHOLDERS MEETING (Section 61)
DUTY TO OPERATE WITHIN THE FRAMEWORK OF THE COMPANY’S MEMORANDUM OF INCOPORATION (Section 15(3) & (4) & 36)
DUTY TO OPERATE IN THE BEST INTEREST OF THE SHAREHOLDERS (Section 20(6) & (7) THE COMPANY (Section 76(3))
DIRECTOR RESPONSIBILITIES
Online solutions to grow your business
NEW COMPANIES ACT
BREACH OF DUTIES
BREACH OF ACCOUNTABILITY (Section 213 & Section 214)
RECKLESS TRADING
PROSPECTUS LIABILITY
INSOLVENCY ACT( Section 424)
PERSONAL LIABILITY COMPANY
LIABILITIES OF DIRECTORS
Online solutions to grow your business
PURPOSE OF THE ACT
CRIMINAL LIABILITY
RISK
MITIGATING THE RISK
COMPETITION AMENDMENT ACT
Online solutions to grow your business
CONSUMER PROTECTION ACT
MARKETING ACTIVITIES
DIRECT MARKETING AND COOLING-OFF PERIOD
ADVANCE RESERVATIONS AND BOOKINGS
DISCLOSURE AND INFORMATION
FAIR AND HONEST DEALING
OVER-SELLING
CONSUMER AGREEMENTS
FAIR VALUE, GOOD QUALITY AND SAFETY
DAMAGE CAUSED BY GOODS
Online solutions to grow your business
CONTINUES…
FRANCHISE AGREEMENTS
BUSINESS NAMES
CLASS ACTIONS
Online solutions to grow your business
Compliance Requirements
Public Companies
State Owned Companies
(SOC)
Private Companies (in public interest)
Minimum number of Shareholders
Minimum number of Directors
Memorandum of Incorporation (MIC)
Company Records
Accounting Records
Financial Statements (e.g. Annual Financial Statements)
Audit
1
3
YES
YES
YES
YES
YES
-
1
YES
YES
YES
YES
YES
1
1
YES
YES
YES
YES
YES
TYPES OF COMPANIES AND COMPLIANCE(New Companies Act, Act 73 of 2008)
Online solutions to grow your business
Compliance Requirements
Public Companies
State Owned Companies
(SOC)
Private Companies (in public interest)
Independent Review
Company Secretary
Audit Committee
Registered Address
Annual Return
Annual General Meeting
Deadline for AFS (after financial year end)
N/A
YES
YES
YES
YES
YES
6 months
N/A
YES
YES
YES
YES
YES
6 months
N/A
NO
NO
YES
YES
NO
6 months
TYPES OF COMPANIES AND COMPLIANCE(New Companies Act, Act 73 of 2008)
CONTINUES…
Online solutions to grow your business
Compliance Requirements
Other Private
Companies
Personal Liability
Company
Non-Profit Company
(NPC)
Minimum number of Shareholders
Minimum number of Directors
Memorandum of Incorporation (MIC)
Company Records
Accounting Records
Financial Statements (e.g. Annual Financial Statements)
Audit
1
1
YES
YES
YES
YES
By regulation or voluntary
1
1
YES
YES
YES
YES
NO
3
3
YES
YES
YES
YES
By regulation or voluntary
TYPES OF COMPANIES AND COMPLIANCE(New Companies Act, Act 73 of 2008)
CONTINUES…
Online solutions to grow your business
TYPES OF COMPANIES AND COMPLIANCE(New Companies Act, Act 73 of 2008)
CONTINUES…
Compliance Requirements
Other Private
Companies
Personal Liability
Company
Non-Profit Company
(NPC)
Independent Review
Company Secretary
Audit Committee
Registered Address
Annual Return
Annual General Meeting
Deadline for AFS (after financial year end)
N/A
NO
NO
YES
YES
NO
6 months
YES
NO
NO
YES
YES
NO
6 months
N/A
NO
NO
YES
YES
NO
6 months
Online solutions to grow your business
Online solutions to grow your business
THE END
Online solutions to grow your business