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Permissible Distributions by Companies

The Companies Act, No 71 of 2008 (“Companies Act”) provides a closed list of permissible distributions that can be made by companies. The Companies Act defines “distributions” as the direct or indirect – transfer by a company of money, or other property, other than its own shares, to or for the benefit of one or [...]

Shareholder Approval for Issuing Shares in Certain Cases

The power of a company to issue shares is restricted by the Companies Act of 2008 (“Companies Act”) and is based on both qualitative and quantitative criteria. The qualitative criteria provides that if shares or securities convertible into shares is issued or any options or rights exercisable for securities is granted to a director, future [...]

When Are “Special” Resolutions Of Shareholders Required?

Every resolution of shareholders of a company is either an ordinary resolution or a special resolution. Ordinary resolutions must be supported by more than 50% (fifty percent) of the voting rights exercised on the resolution and special resolutions must be supported by more than 75% (seventy-five) percent of the voting rights exercised on the resolution. [...]

Not All Shares are Created Equal

Not All Shares are Created Equal   R Jooste and J Yeats in the second edition of Contemporary Company Law states that a company has “almost unlimited freedom to create the capital structure it desires and in so doing to structure the rights of each of its various classes of shares in an almost infinite [...]

The Appointment of Audit Committees

Section 94 of the Companies Act 71 of 2008 (“Companies Act”) requires that public companies and state owned companies appoint an audit committee. In addition, any other types of companies (either private company, personal liability company or non-profit company) that provide for the appointment of an audit committee in their Memorandum of Incorporation, must comply [...]

Proposals For Amalgamations Or Mergers

Section 113 of the South African Companies Act No. 71 of 2008 (“Companies Act”) regulates the proposals of amalgamations or mergers of companies in South Africa. The Companies Act provides that amalgamation or merger can be proposed between two or more profit companies including a holding company and its subsidiary companies. The Companies Act provides [...]

The Participation of Institutional Shareholders in Corporate Governance

Shareholders, and more particularly institutional shareholders, can play an important role in ensuring that companies adhere to sound and effective corporate governance standards.  Institutional shareholders are particularly important to the purchasing of shares, as they can afford to buy a larger volume than individual investors.   The board of directors of a company perform certain [...]

South Africa’s Independent Watchdog

The Public Protector, otherwise referred to as a Public Defender or Watchdog, plays an integral part in strengthening the constitutional democracy of South Africa. Not all countries have the office of a Public Protector. The idea of a Public Protector originated in Sweden and was adopted by the Scandinavian countries in the 20th century. The [...]

CONFLICTS RELATING TO THE SHARE CAPITAL OF A COMPANY

The potential for conflict to arise in the dealings of a company are wide. One particular area where such conflicts may arise is where transactions through which share capital flows in or out of a company, more particularly those giving a return on share capital. A Such conflicts are likely to arise between creditors and [...]

THE INTERNATIONAL ARBITRATION BILL

International businesses are naturally attracted to certainty and predictability, especially in the wake of recent market uncertainty brought upon by the Brexit referendum. In light of this it is now an opportune time for South Africa to opt into the international standard for the resolution of commercial disputes. This is where the International Arbitration Bill [...]

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