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) […]
Separate Legal Personality and the Challenges Facing Shareholders Who Claim Damages from Directors
I INTRODUCTION The concept of separate legal personality is one of the most pivotal and fundamental concepts in company law, and results in shareholders finding it legally challenging to claim damages directly from the directors of the company (as opposed to the company itself) when they have suffered losses as shareholders as a result of […]
The Property Practitioners Act: Required Content of Property Transaction Agreements
The Property Practitioners Act (“the Act”) was signed into law in 2019 and finally came into force on 1 February 2022. It will have a significant impact on estate agents, property developers and other property practitioners, and contains more obligations than in the Estate Agency Affairs Act that it repeals. It will apply in respect […]
Companies Cannot Own Members’ Interest in Close Corporations
This is nothing new, but many people forget it: companies, such as a (Pty) Ltd company, are prohibited from owning any members’ interest in close corporations (“CCs”). As such, when a company does want to do so, the CC must first be converted into a (Pty) Ltd company to allow for that. Trusts however, are […]
Companies Amendment Bill 2021: Disclosing the “True Owner” of Shares
The draft Companies Amendment Bill 2021 (“the Bill”) was published for public comment during October 2021. It aims to amend the existing Companies Act 2008. This Bill introduces a brand new concept of a “true owner” of securities in a company which is, in summary, the ultimate beneficial owner of such shares that is a […]
Companies Amendment Bill 2021: Access to Information of a Profit Company
The draft Companies Amendment Bill 2021 (“the Bill”) was published for public comment during October 2021, and aims to amend the existing Companies Act 2008 (“the Act”). This Bill proposes certain amendments to section 26 of the Act which records what rights certain people have to access certain information about and records of a company. […]