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 […]

Business Rescue Increases Amongst SMEs and Corporates

            CNA is the latest in a string of high profile brands that have gone, or are considering going into business rescue, following in the footsteps of Ster Kinekor, Edcon, Comair and SAA. Business rescue is also on the increase in the SME sector, as many suffer from financial distress. […]

Covid Puts a New Spin on POPIA Implementation

      Our personal devices, such as mobile phones, laptops and tablets are increasingly used to access movies, download apps, store music or stream content from platforms like Netflix or Showmax. And they are often shared among family members, such as children who regularly use their parents’ devices to enjoy online content. But, with POPIA […]

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 […]

Electronic Signatures: What Is Required Under Law?

While the pandemic and resultant adaption of work-from-home protocols have been a catalyst for the next stage of the digital revolution, electronic signatures and their validity have been under scrutiny for a number of years. Not only do electronic signatures allow for the accommodation of a more virtual working environment, but a renewed paperless approach […]

Which Shareholder Can Elect And Remove Directors in a Private Company?

It is often important for Shareholders of private companies to either be on the board of directors themselves, or to have someone sit on the board who they trust. So let’s look at who gets to choose who the directors are, and who has the power to remove them from their directorship position. Becoming a […]

A Company Can Issue Shares Before It Creates Them

I am surprised how few business people seem to know that a company can issue new shares before those shares are actually created (or ‘authorised’, as this creation of shares is more properly referred to). Being able to do this can sometimes be extremely helpful where deadlines are tight, and the company does not have […]

How Suretyships Differ from Guarantees

It is important that people understand what it means to have a suretyship versus a guarantee document signed, whether as the person signing it to offer security for someone else’s debts, or as the person who is owed a debt by someone else and requires additional security for it. In circumstances where one can negotiate […]