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. […]
Companies Amendment Bill 2021: Shareholder Approval of Remuneration for Directors
The draft Companies Amendment Bill 2021 (“the Bill”) has been published for public comment during October 2021, and aims to amend the existing Companies Act 2008. This Bill introduces a new section 30A which deals with a company’s remuneration policy and remuneration report. The section only applies to public or state owned companies, and not […]
Having Observer Status on a Board of Directors
When we work on a memorandum of incorporation (“MOI”) or shareholders agreement for a client, depending on the facts of the matter, we often ask whether they or another shareholder wish to have the right to appoint an observer on the board of directors of the relevant company. In brief- an observer is a person […]
Texas Auction or Shotgun Clauses in Shareholders Agreements
Relatively few people know about the option of including what is known as a Texas Auction or Shotgun clause in a shareholders agreement. In this article I discuss a few points about them. They can vary, but in general, how they work is as follows: shareholders with (usually) very similar shareholding percentages in a company […]
The Application of the Consumer Protection Act to Franchise Agreements
The Consumer Protection Act (No. 68 of 2008) (“CPA”) governs franchise agreements, with the purpose of protecting the franchisees. The understanding is that this protection is required because: the franchisor may have extensive control over the operations of a franchisee’s business; the franchisor may have exaggerated the potential returns that the franchisee can earn, may […]
Forcing a Sale of Shares in a Company: The Deemed Offer Clause
Once a person owns shares in a company it is very difficult under law to force them to sell their shares to either the other shareholders or the company. The main way to force someone to sell their shares is by recording the terms for when this would arise in a contract. The most common […]