The National Assembly of South Africa has been bustling with legislative activity this week, culminating in the passing of several crucial bills on Thursday (30 November). These bills encompass a diverse range of areas that are set to directly influence businesses and reshape reporting frameworks across the country.
Of these bills, three—namely the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, the Taxation Laws Amendment Bill, and the Tax Administration Laws Amendment Bill—bear direct relevance to the national budget and stand as part of the customary annual procedures administered by the National Treasury.
For instance, the Rates Bill proposes adjustments to tax tables and rebates, aiming to accommodate an anticipated inflation rate of 4.9%. This alteration will impact income thresholds and taxation rates, aligning them with the upsurge in the general price index (inflation).
Additionally, the proposal seeks to recalibrate medical tax credits in line with the expected 4.9% inflation rate. These tax credits serve as deductions that taxpayers can leverage to offset medical scheme contributions. Under this adjustment, the monthly tax credit for the initial two members of a medical scheme will ascend from R347 to R364. Subsequently, beyond the first two members, the monthly tax credit will elevate from R234 to R246.
While the Standing Committee on Finance has recommended the passing of these three bills with amendments, it is the other four bills, particularly the Company bills, that draw more attention.
The Companies Amendment Bill endeavors to amend the Companies Act of 2008 (Act No. 71 of 2008) by introducing various modifications. These changes span redefinitions of securities, inclusion of fresh definitions, clarification regarding the Notice of Amendment of a Memorandum of Incorporation’s efficacy, and delineation of constraints on accessing companies’ records.
Furthermore, this bill introduces provisions concerning the formulation, presentation, and voting on a company’s remuneration policy and its remuneration report. It also mandates the submission of an annual financial statement. Moreover, it empowers the court to legitimize irregular share creations or issues and stipulates protocols for dealing with partially paid shares, among other aspects.
Significantly, the bill mandates listed companies to disclose the ratio of top-paid to bottom-paid workers in their reports, addressing South Africa’s prevalent inequality. The nation currently grapples with staggering wealth disparities, evident in the considerable gaps between top earners and those at the lower spectrum.
Notably, South Africa stands among the world’s most unequal countries, amplifying concerns surrounding executive remuneration. In this context, some top executives earn over R500,000 daily, a stark contrast to the average income of R800 per day or the poverty line pegged at R25 per day.
In recent times, shareholder backlash against exorbitant executive pay at Annual General Meetings, particularly in the finance sector, has been on the rise.
The Companies Second Amendment Bill, on the other hand, primarily focuses on revising the time bars for proceedings linked to recoveries, damages, or liabilities in accordance with section 77 of the Companies Act. It also seeks to address time bars concerning applications for declaring a person delinquent or under probation, along with associated matters.
Moving beyond company-related bills, the Independent Municipal Demarcation Authority Bill proposes significant changes to the Municipal Demarcation Act of 1998. This bill aims to tackle various demarcation-related issues and combat non-viable municipal amalgamations through legislative amendments.
The proposed amendments involve replacing the existing Municipal Demarcation Act of 1998 with a revised version that aligns with current demarcation board practices. This transition includes transferring the functions of the current Municipal Demarcation Board from the Municipal Structure Act of 1998 to the new legislation.
Moreover, the bill advocates for the establishment of the Independent Demarcations Appeal Authority (IMDA) to supplant the Municipal Demarcation Board. It suggests that the IMDA Board should reassess municipal boundaries only once every 10 years to ensure stability and minimize disruptions, as the existing timeframe doesn’t allow adequate time for a municipality to establish and function effectively.
The South African Post Office SOC Ltd Amendment Bill seeks to introduce amendments to the South African Post Office SOC Ltd Act of 2011. These proposed changes aim to broaden the mandate of the South African Post Office (SAPO), enabling it to offer an array of expanded services, leverage infrastructure capacity, and establish collaborations with other stakeholders.
Furthermore, the bill recommends a restructuring of the current governance framework and addresses issues identified during the implementation of the SAPO Act. SAPO is set to serve as a logistics and e-commerce provider, collaborating with various players in the e-commerce and logistics realms, including Small, Medium, and Micro Enterprises (SMMEs) and informal traders.
Following thorough consideration of committee reports, the National Assembly adopted these reports. The bills are now slated for transmission to the National Council of Provinces (NCOP) for concurrence.
This legislative development holds profound implications for businesses and governance structures in South Africa, promising to reshape reporting mechanisms, corporate governance, and demarcation frameworks across various sectors within the nation.