Amalgamations under section 44 of the Income Tax Act not necessarily amalgamations under section 113 of the Companies Act
If two companies undertake an amalgamation transaction which qualifies for tax relief under section 44 of the Income Tax Act, it does not mean that section 113 of the Companies Act which deals with amalgamations and mergers necessarily applies. Section 113 of the Companies Act deals with statutory amalgamations and mergers, and certain consequences flow […]
No Reasons Required for Removal of a Director by Ordinary Shareholder Resolution
Under current South African case law, shareholders who remove a director under section 71(1) of the Companies Act 71 of 2008 are not legally required to provide reasons for the removal. Section 71(1) of the Companies Act allows shareholders to remove a director by passing an ordinary resolution at a shareholders’ meeting. Section 71(2) […]
Extended Run-Off Insurance for Directors Recommended (in light of Companies Act Amendments)
The Companies Second Amendment Act 17 of 2024, which came into effect in December 2024, has introduced significant changes to sections 77 and 162 of the Companies Act, 2008. These amendments have far-reaching implications for directors of South African companies, especially concerning their personal liability and the duration of legal exposure after they leave office. […]
Companies Act Amendments and the Amended Effective Date for New MOIs or MOI Amendments
Various amendments to the Companies Act (Act 71 of 2008) came into effect on 27 December 2024. These amendments were contained in the Companies Amendment Act (Act 16 of 2024) and in the Companies Second Amendment Act (Act 17 of 2024). One of these amendments was to section s16(9)(b). This section describes when an amendment […]
Companies Act Amendments To Share Buy Backs, Resulting In Potential MOI Amendments
Various amendments to the Companies Act (Act 71 of 2008) came into effect on 27 December 2024. These amendments were contained in the Companies Amendment Act (Act 16 of 2024) and in the Companies Second Amendment Act (Act 17 of 2024). As a result of the amendments made to section 48(8), which governs share buy […]
Deemed Offer Clauses, and a Change of Control of Shareholders
A deemed offer clause is one of the important clauses that are commonly included in a company’s memorandum of incorporation (“MOI”) or shareholders agreement. It records various trigger events which, once one occurs, automatically deem the shareholder to which it has occurred to have offered all of its shares in the company for sale to […]
Flawed Corporate Cultures Contribution to Corporate Failures or Scandals, the Board’s Role in Creating a Good Culture, and South Africa’s Governing Framework
1 INTRODUCTION There is no doubt that flawed corporate cultures can contribute to corporate failures or scandals. Research has shown that numerous corporate failures or scandals in corporates across the globe can be attributed in part to the relevant corporate having a flawed corporate culture[1]. This paper will explain how a flawed corporate culture […]
Franchise Agreements: Unfair Terms and the Consumer Protection Act
I INTRODUCTION The franchise industry is very important to South Africa’s economy with its economic output as a percentage of GDP at 15.3% in 2017. This percentage contribution to GDP ranks it as one of the top 5 highest franchise industry contributors to a country’s GDP globally[1]. In a survey based on input from […]
Warranties and Indemnities in a Sale of Business or Shares Agreement
Some of the most important clauses in a sale of business agreement or a sale of shares agreement, are the clauses recording the warranties and indemnities that the seller gives to the purchaser about the business, the company that owns the business, or the shares that are being sold. Unless the purchaser knows the company […]
Contract Law and the Constitution
I attended an interesting lecture on Advanced Contract Law as part of my Masters in Commercial Law course, and we discussed how the Constitution of South Africa impacts contracts between private people/companies in South Africa (rather than on contracts with the government). The Constitution indirectly impacts the relationship between private persons because, under section 39(2) […]