The Companies Act, No 78 of 2008 (the Act) has generally been viewed as one of the good pieces of legislation to come out of Parliament, post democracy. However, as is often the case, the Act is not free from some ambiguity.

Section 16 of the Act deals with the amendment of the company’s Memorandum of Incorporation (MOI) and sub-section (9)(b) thereof provides that the amendment of a MOI will take effect either on the date and time on which the Notice of Amendment is “filed” or on the date set out in the Notice of Amendment – whichever date occurs last. Section 16(9)(a) provides that, in the case of an amendment that changes the name of the company, the amendment will take effect on the date set out in the amended registration certificate.

The date on which the amendment takes effect is important because Section 19(6) of the Act provides that the company’s previous MOI, in the pre-amendment form, will have no force or effect with respect to any right, cause of action or matter occurring or arising after the date on which the amendment took effect. It is therefore conceivable that there may be situations where it will become important to determine when exactly the amendment took effect.

A question has therefore arisen as to which date is exactly the date of “filing”. Most MOIs contain a provision that states that the “MOI takes effect (in terms of section 16(9)(b)(i) of the Act) on the date of filing”.

One view is that the date of “filing” is the date on which the MOI is delivered to the Companies and Intellectual Property Commission (CIPC). The other view is that something more than mere delivery is required before the MOI can be said to have been “filed” with CIPC, within the meaning of Section 16(9) of the Act.

According to the CIPCs non-binding opinion that was issued (in terms of Section 188(2)(b) of the Act) on 2 December 2011 the mere delivery of the MOI does not constitute proper “filing” in terms of Section 16(9) of the Act. According to the non-binding opinion of the CIPC, because the CIPC also has to verify certain information contained in the Notice of Amendment that accompanies the amended MOI, it is also necessary that the Notice of Amendment be “accepted’ by CIPC before the amendment can take effect.

To substantiate its view, the CIPC states that the CIPC is entitled to accept/reject the filing of a document in a number of situations, for example where the prescribed fee has not been paid or where the information on the form is incomplete and/or incorrect. Accordingly, if “filing” was viewed as a mere delivery of the amended MOI, it would mean that even the MOIs with these defects are deemed to be properly “filed”.

What remains unclear though from the non-binding opinion of the CIPC is what exactly is meant by “acceptance” of the amended MOI by the CIPC. Presumably, this means that the MOI amendment will only take effect from the date that the CIPC confirms to the company that the amendment has been effected or that no defects were found on the amended MOI or the document accompanying it. With the well documented delays and backlog at CIPC, this would mean that a company may have to wait for months after delivering the amended MOI to CIPC before it can know that its MOI has been amended.

CONCLUSION

It seems clear that, until such time that the issue has been finally determined by a Court, some uncertainty will remain with regards to the date on which an amendment of a MOI can be said to have taken effect.

Written by Mzo Tshaka, Schoeman Tshaka Attorneys

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