1. BOARDS AND DIRECTORS RESPONSIBILITIES AND RISK THE IMPACT OF THE NEW COMPANIES ACT AND BUSINESS LEGISLATION PRESENTED BY DR JOHN W HENDRIKSE Online solutions to grow your business

2. BOARDS AND DIRECTORS RESPONSIBILITIES 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

3. CORPORATE REFORM TIMELINES THE COMPANIES ACT (Act 71 of 2008) Enacted 8 April 2009 Planned Commencement Date: 1 July 2010 Online solutions to grow your business

4. COMPETITION AMENDMENT ACT Approved by Parliament 22 October 2008 Enacted 29 August 2009 Online solutions to grow your business

5. CONSUMER PROTECTION ACT (Act 68 of 2008) Enacted : 29 April 2009 Planned Commencement Date : July 2010 Online solutions to grow your business KING III Release Date: 1 September 2009

6. BOARD MISSION SURVIVE AND SUCCEED BEST INTEREST OF SHAREHOLDERS BEST INTEREST OF COMPANY CORPORATE STRATEGY CORPORATE GOVERNANCE Online solutions to grow your business

7. GOVERNANCE FRAMEWORK SHAREHOLDERSCOMPANY AGENTS TRUSTEES BOARD OF DIRECTORS PERFORMANCECONFORMANCE Online solutions to grow your business

8. BOARD STRUCTURE BOARD OF DIRECTORS EXECUTIVENON-EXECUTIVE INDEPENDENTOTHER AUDIT COMMITTEE 3 or MORE DIRECTORS Online solutions to grow your business

9. BOARD RESPONSIBILITIES GOING CONCERN SOLVENCY AND LIQUIDITY TEST SOLVENCY – FINANCIAL POSITION  NET ASSET VALUE  MARKET 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18.  PURPOSE OF THE ACT  CRIMINAL LIABILITY  RISK  MITIGATING THE RISK COMPETITION AMENDMENT ACT Online solutions to grow your business

19. 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

20. CONTINUES…  FRANCHISE AGREEMENTS  BUSINESS NAMES  CLASS ACTIONS Online solutions to grow your business

21. 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 - 1 YES 1 YES TYPES OF COMPANIES AND COMPLIANCE (New Companies Act, Act 73 of 2008) Online solutions to grow your business

22. 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 6 months N/A YES 6 months N/A NO YES NO 6 months TYPES OF COMPANIES AND COMPLIANCE (New Companies Act, Act 73 of 2008) CONTINUES… Online solutions to grow your business

23. 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 YES By regulation or voluntary 1 YES NO 3 YES By regulation or voluntary TYPES OF COMPANIES AND COMPLIANCE (New Companies Act, Act 73 of 2008) CONTINUES… Online solutions to grow your business

24. 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 YES NO 6 months YES NO YES NO 6 months N/A NO YES NO 6 months Online solutions to grow your business

26. THE END Online solutions to grow your business