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Reckless trading in terms of the new Companies Act

The Companies Act prohibits a company from reckless trading , which means –A company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose. A director of a company is liable for any loss, damages or costs sustained by the company as a direct or indirect consequence of the director having acquiesced in the carrying on of the company’s business despite knowing that it was being conducted in a manner prohibited by the Act. Continue reading “Reckless trading in terms of the new Companies Act” »

The Memorandum of Incorporation (“MOI”)

What is interesting is that there is constantly more and more awareness on the provisions of the new Companies Act. The MOI is the “new” constitutional document which regulates matters between a company and shareholders, amongst shareholders, and between directors and shareholders and it comprises of all the “tools” necessary to give a proper structure to a company and for the proper governance thereof. We had several enquiries regarding the drafting of a MOI, and we have drafted several simple and complex MOIs notwithstanding the – 2 year window period. In this regard, it is still advisable to deal with confidential arrangements regarding contributions in a shareholders agreement in addition to the MOI. Continue reading “The Memorandum of Incorporation (“MOI”)” »

The new Companies Act: Inter group loans – the saga continues

There has been a lot of debate on the application of the Companies Act on inter company loans. Section 45 is the section which, inter alia, deals with inter company loans. We must admit that the title of section 45 “Loans or other financial assistance to directors” is misleading as no reference is made to inter company loans in the title.   A firm of attorneys approached the Companies and Intellectual Property commission (“CIPC”) for an non binding opinion on the application of Section 45 of the Act on inter company loans (please see the link below). Continue reading “The new Companies Act: Inter group loans – the saga continues” »

Beware!:What information and records must you keep in terms of the new Companies Act

Every Company must keep accurate and complete accounting records as required in terms of the Act. The records must be kept at, or be accessible from the registered office of the Company.   The following types of accounting records are required to be kept by all companies in terms of these regulations: Asset register; Liabilities register; Record of loans to directors, prescribed officers, shareholders, employees, and to any person related to any of them (including details of interest and repayment terms); Continue reading “Beware!:What information and records must you keep in terms of the new Companies Act” »

Offences in terms of the new Companies Act

A person is guilty of an offence if the person— is a party to the falsification of any accounting records of a company; with a fraudulent purpose, knowingly provided false or misleading information in any circumstances in which the Act requires the person to provide information or give notice to another person; was knowingly a party to an act or omission by a company calculated to defraud a creditor or employee of the company, or a holder of the company’s securities, or with another fraudulent purpose; or is a party to the preparation, approval, dissemination or publication of a prospectus or a written statement that contains an “untrue statement”. Continue reading “Offences in terms of the new Companies Act” »

The future of “Shareholders Agreements” in terms of the New Companies Act 2008

Introduction The general effective date of the Companies Act, 2008 (“the New Act”) was 01 May 2011. The introduction of the New Act drastically changes the the company law landscape in South Africa. Scope of Publication The scope of this publication is to consider the effect that New Act will have on an pre-existing private company’s articles and memorandum of association, any rules (which includes any binding provisions relating to the governance of the company) and any shareholders agreement pertaining to such company. Continue reading “The future of “Shareholders Agreements” in terms of the New Companies Act 2008” »

Compliance with the formalities regarding Inter company loans and the Companies Act 2008

With regards to the new Companies Act which came into force on the 1st of May 2011, there is a lot of heated debat and different views on the compliance with the Companies Act regarding inter company loans.   SECTION 45 OF THE COMPANIES ACT, 2008 No. 71 of 2008) (110629).pdf   Please see below a [...]

Random Questions regarding the Consumer Protection Act

When may you be held liable for damages caused by goods? The producer or importer, distributor or retailer of any goods is liable for any harm caused wholly or partly as a consequence of: supplying any unsafe goods; a product failure, defect or hazard in any goods; or inadequate instructions or warnings provided to the consumer pertaining to any hazard arising from or associated with the use of any goods, irrespective of whether the harm resulted from any negligence on the part of the producer, importer, distributor or retailer, as the case may be.  Liability of a particular person in terms of the aforementioned does not arise if: Continue reading “Random Questions regarding the Consumer Protection Act” »

Legal Update July 2011

Directors: Delinquency Declarations (And Other Dangers)   Directors – beware the additional risks and obligations imposed on you by the new Companies Act.     In addition to an increased risk of incurring personal liability to creditors and other stakeholders, directors now also face the danger of being declared “delinquent” or being placed under “probation” – in some cases even if they are merely negligent rather than deliberate in their non-compliance. Continue reading “Legal Update July 2011” »

Business Rescue

 DEFINITION Business rescue (“BR”) means proceedings to facilitate the rehabilitation of a company that is “financially distressed” by providing for certain procedures.   CONCEPT   The concept of business rescue is designed to provide a mechanism to a company that has financial difficulties  but has not reached the stage of insolvency.  That is the “financially distressed” company. Financially distressed in reference to a particular company, at a particular time-means that; Continue reading “Business Rescue” »

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