Reservation and registration of company names

1. Criteria for names of companies
2. Reservation of name for later use

Part B

Incorporation and legal status of companies 10

1. Right to incorporate company
2. Registration of company
3. Memorandum of Incorporation, shareholder agreements and rules of company
4. Amending Memorandum of Incorporation 15
5. Alterations, translations and consolidations of Memorandum of Incorporation
6. Authenticity of versions of Memorandum of Incorporation
7. Legal status of companies
8. Validity of company actions
9. Pre-incorporation contracts 20
10. Reckless trading prohibited

Part C

Transparency, accountability and integrity of companies

1. External companies and registered office
2. Form and standards for company records 25
3. Location of company records
4. Access to company records
5. Financial year of company
6. Accounting records
7. Financial statements 30
8. Annual financial statements
9. Access to financial statements or related information
10. Use of company name and registration number
11. Annual return
12. Additional accountability requirements for certain companies 35

Part D

Capitalisation of profit companies

1. Legal nature of company shares and requirement to have shareholders
2. Authorisation for shares
3. Preferences, rights, limitations and other share terms 40
4. Issuing shares
5. Pre-emptive right to be offered and to subscribe shares
6. Consideration for shares
7. Shareholder approval for issuing shares in certain cases
8. Options for subscription of securities 45
9. Securities other than shares
10. Financial assistance for subscription of securities
11. Loans or other financial assistance to directors
12. Distributions must be authorised by board
13. Capitalisation shares
14. Company or subsidiary acquiring company’s shares

Part E

Securities registration and transfer

1. Securities to be evidenced by certificates or uncertificated
2. Securities register and numbering
3. Registration and transfer of certificated securities
4. Registration of uncertificated securities
5. Transfer of uncertificated securities
6. Substitution of certificated or uncertificated securities
7. Liability relating to uncertificated securities
8. Beneficial interest in securities

Part F

Governance of companies

1. Interpretation and restricted application of Part
2. Shareholder right to be represented by proxy
3. Record date for determining shareholder rights
4. Shareholders acting other than at meeting
5. Shareholders meetings
6. Notice of meetings
7. Conduct of meetings
8. Meeting quorum and adjournment
9. Shareholder resolutions
10. Board, directors and prescribed officers
11. First director or directors
12. Election of directors
13. Ineligibility and disqualification of persons to be director or prescribed officer
14. Vacancies on board
15. Removal of directors
16. Board committees
17. Board meetings
18. Directors acting other than at meeting
19. Director’s personal financial interests
20. Standards of directors’ conduct
21. Liability of directors and prescribed officers
22. Indemnification and directors’ insurance

Part G

Winding-up of solvent companies and deregistering companies

1. Winding-up of solvent companies
2. Voluntary winding-up of solvent company
3. Winding-up of solvent companies by court order
4. Dissolution of companies and removal from register
5. Effect of removal of company from register

CHAPTER 3

ENHANCED ACCOUNTABILITY AND TRANSPARENCY

Part A

Application and general requirements of Chapter

1. Application of Chapter
2. Registration of secretaries and auditors

Part B

Company secretary

1. Mandatory appointment of company secretary
2. Juristic person or partnership may be appointed company secretary
3. Duties of company secretary
4. Resignation or removal of company secretary

Part C

Auditors

1. Appointment of auditor
2. Resignation of auditors and vacancies
3. Rotation of auditors
4. Rights and restricted functions of auditors

Part D

Audit committees

94. Audit committees

CHAPTER 4

PUBLIC OFFERINGS OF COMPANY SECURITIES

1. Application and interpretation of Chapter
2. Offers that are not offers to public
3. Standards for qualifying employee share schemes
4. Advertisements relating to offers
5. General restrictions on offers to public
6. Requirements concerning prospectus
7. Secondary offers to public
8. Consent to use of name in prospectus
9. Variation of agreement mentioned in prospectus
10. Liability for untrue statements in prospectus
11. Liability of experts and others
12. Responsibility for untrue statements in prospectus
13. Time limit as to allotment or acceptance
14. Restrictions on allotment
15. Voidable allotment
16. Minimum interval before allotment or acceptance
17. Conditional allotment if prospectus states securities to be listed

CHAPTER 5 FUNDAMENTAL TRANSACTIONS, TAKEOVERS AND OFFERS

Part A

Approval for certain fundamental transactions

1. Proposals to dispose of all or greater part of assets or undertaking
2. Proposals for amalgamation or merger
3. Proposals for scheme of arrangement
4. Required approval for transactions contemplated in Part
5. Implementation of amalgamation or merger

Part B

Business rescue proceedings

1. Application and definitions applicable only to Chapter
2. Company resolution to begin business rescue proceedings
3. Objections to company resolution
4. Court order to begin business rescue proceedings
5. Duration of business rescue proceedings
6. General moratorium on legal proceedings against company
7. Protection of property interests
8. Post-commencement finance
9. Effect of business rescue on employees and contracts
10. Effect on shareholders and directors

Part B

Practitioner’s functions and terms of appointment

1. Qualifications of practitioners
2. Removal and replacement of practitioner
3. General powers and duties of practitioner
4. Investigation of affairs of company

142. 143.	Directors of company to co-operate with and assist practitioner Remuneration of practitioner
	Part C
	Rights of affected persons during business rescue proceedings
144. 145. 146. 147. 148. 149.	Rights of employees Participation by creditors Participation by holders of company’s securities First meeting of creditors First meeting of employees’ representatives Functions, duties and membership of committees of affected persons	5 10
	Part D
	Development and approval of business rescue plan
150. 151. 152. 153. 154.	Proposal of business rescue plan Meeting to determine future of company Consideration of business rescue plan Failure to adopt business rescue plan Discharge of debts and claims	15
	Part E
	Compromise with creditors
155.	Compromise between company and creditors	20
	CHAPTER 7
	REMEDIES AND ENFORCEMENT
	Part A
	General principles
156. 157. 158. 159.	Alternative procedures for addressing complaints or securing rights Extended standing to apply for remedies Remedies to promote purpose of Act Protection for whistle-blowers	25
	Part B
	Rights to seek specific remedies	30
160. 161. 162. 163. 164. 165.	Disputes concerning reservation or registration of company names Application to protect rights of securities holders Application to declare director delinquent or under probation Relief from oppressive or prejudicial conduct or from abuse of separate juristic personality of company Dissenting shareholders’ appraisal rights Derivative actions	35
	Part C
	Voluntary resolution of disputes
166. 167.	Alternative dispute resolution Dispute resolution may result in consent order	40

Part D

Part C

Takeover Regulation Panel

1. Establishment of Takeover Regulation Panel
2. Composition of Panel
3. Chairperson and deputy chairpersons
4. Meetings of Panel
5. Executive of Panel
6. Functions of Panel
7. Takeover Special Committee

Part D

Offences and penalties

1. Breach of confidence
2. False statements, reckless conduct and non-compliance
3. Hindering administration of Act
4. Penalties
5. Magistrate’s Court jurisdiction to impose penalties

Part B

Regulations, consequential matters and commencement

1. Regulations
2. Consequential amendments, repeal of laws and transitional arrangements
3. Short title and commencement

SCHEDULE 1

PROVISIONS CONCERNING NON-PROFIT COMPANIES

1. Objects and policies
2. Fundamental transactions
3. Incorporators of non-profit company
4. Members
5. Directors

SCHEDULE 2

CONVERSION OF CLOSE CORPORATIONS TO COMPANIES

1. Notice of conversion of close corporation
2. Effect of conversion on legal status

SCHEDULE 3

AMENDMENT OF LAWS

A: Close Corporations Act, 1984

1. Amendments to Close Corporations Act definitions
2. Limitation of period to incorporate close corporations or convert companies
3. Legal status of close corporations
4. Names of corporations
5. Transparency and accountability of close corporations
6. Rescue of financially distressed close corporations
7. Dissolution of corporations
8. Deregistration of corporations

B: Consequential amendments to certain other Acts listed in Schedule 4

SCHEDULE 4

LEGISLATION TO BE ENFORCED BY COMMISSION

SCHEDULE 5

TRANSITIONAL ARRANGEMENTS

1. Interpretation
2. Continuation of pre-existing companies
3. Pending filings
4. Memorandum of Incorporation and rules
5. Pre-incorporation contracts
6. Par value of shares, treasury shares, capital accounts and share certificates
7. Company finance and governance
8. Company names and name reservations
9. Continued application of previous Act to winding-up and liquidation
10. Preservation and continuation of court proceedings and orders
11. General preservation of regulations, rights, duties, notices and other instruments
12. Transition of regulatory agencies
13. Continued investigation and enforcement of previous Act
14. Regulations

but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002); ‘‘board’’ means the board of directors of a company; ‘‘business days’’ has the meaning determined in accordance with section 5(3); ‘‘Cabinet’’ means the body of the national executive described in section 91 of the Constitution; ‘‘central securities depository’’ has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004); ‘‘close corporation’’ means a juristic person incorporated under the Close Corporations Act, 1984 (Act No. 69 of 1984); ‘‘Commission’’ means the Companies and Intellectual Property Commission established by section 185; ‘‘Commissioner’’ means the person appointed to or acting in the office of that name, as contemplated in section 189; ‘‘Companies Tribunal’’ means the Companies Tribunal established in terms of section 193; ‘‘companies register’’ means the register required to be established by the Commission in terms of section 187(4); ‘‘company’’ means a juristic person incorporated in terms of this Act, or a juristic person that, immediately before the effective date—

(a)

was registered in terms of the—

(i)

Companies Act, 1973 (Act No. 61 of 1973), other than as an external company as defined in that Act; or

(ii)

Close Corporations Act, 1984 (Act No. 69 of 1984), if it has subsequently been converted in terms of Schedule 2;

(b)

was in existence and recognised as an ‘existing company’ in terms of the Companies Act, 1973 (Act No. 61 of 1973); or

(c)

was deregistered in terms of the Companies Act, 1973 (Act No. 61 of 1973),

and has subsequently been re-registered in terms of this Act; ‘‘Competition Act’’, means the Competition Act, 1998 (Act No. 89 of 1998); ‘‘consideration’’ means anything of value given and accepted in exchange for any property, service, act, omission or forbearance or any other thing of value, including—

(a)

any money, property, negotiable instrument, securities, investment credit facility, token or ticket;

(b)

any labour, barter or similar exchange of one thing for another; or

(c)

any other thing, undertaking, promise, agreement or assurance, irrespective of

its apparent or intrinsic value, or whether it is transferred directly or indirectly; ‘‘Constitution’’ means the Constitution of the Republic of South Africa, 1996; ‘‘convertible securities’’ means any securities of a company that may, by their terms, be converted into other securities of the company, including—

(a)

any non-voting securities issued by a company and which will become voting securities—

(i)

on the happening of a designated event; or

(ii)

if the holder of those securities so elects at some time after acquiring them; and

(b)

options to acquire securities to be issued by the company, irrespective of whether or not those securities may be voting securities, or non-voting securities contemplated in paragraph (a);

‘‘co-operative’’ means a juristic person as defined in the Co-operatives Act, 2005 (Act No. 14 of 2005); ‘‘Council’’ means the Financial Reporting Standards Council established by section 203;

‘‘director’’ means a member of the board of a company, as contemplated in section 66, or an alternate director of a company and includes any person occupying the position of a director or alternate director, by whatever name designated; ‘‘distribution’’ means a direct or indirect—

(a)

transfer by a company of money or other property of the company, other than its own shares, to or for the benefit of one more holders of any of the shares of that company or of another company within the same group of companies, whether—

(i)

in the form of a dividend;

(ii)

as a payment in lieu of a capitalisation share, as contemplated in section 47;

(iii) is consideration for the acquisition— (aa) by the company of any of its shares, as contemplated in section 48; or (bb) by any company within the same group of companies, of any shares of a company within that group of companies; or (iv) otherwise in respect of any of the shares of that company or of another company within the same group of companies, subject to section 164(19);

(b)

incurrence of a debt or other obligation by a company for the benefit of one or more holders of any of the shares of that company or of another company within the same group of companies; or

(c)

forgiveness or waiver by a company of a debt or other obligation owed to the company by one more holders of any of the shares of that company or of another company within the same group of companies,

but does not include any such action taken upon the final liquidation of the company; ‘‘effective date’’, with reference to any particular provision of this Act, means the date on which that provision came into operation in terms of section 225; ‘‘electronic communication’’ has the meaning set out in section 1 of the Electronic Communications and Transactions Act; ‘‘Electronic Communications and Transactions Act’’ means the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002); ‘‘employee share scheme’’ has the meaning set out in section 95(1)(c); ‘‘exchange’’ when used as a noun, has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004); ‘‘exercise’’, when used in relation to voting rights, includes voting by proxy, nominee, trustee or other person in a similar capacity; ‘‘ex officio director’’ means a person who holds office as a director of a particular company solely as a consequence of that person holding some other office, title, designation or similar status specified in the company’s Memorandum of Incorporation; ‘‘external company’’ means a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23(2); ‘‘file’’, when used as a verb, means to deliver a document to the Commission in the manner and form, if any, prescribed for that document; ‘‘financial reporting standards’’, with respect to any particular company’s financial statements, means the standards applicable to that company, as prescribed in terms of section 29(4) and (5); ‘‘financial statement’’ includes—

(a)

annual financial statements and provisional annual financial statements;

(b)

interim or preliminary reports;

(c)

group and consolidated financial statements in the case of a group of companies; and

(d)

financial information in a circular, prospectus or provisional announcement of results, that an actual or prospective creditor or holder of the company’s securities, or the Commission, Panel or other regulatory authority, may reasonably be expected to rely on;

‘‘foreign company’’ means an entity incorporated outside the Republic, irrespective of whether it is—

(a)

a profit, or non-profit, entity; or

(b)

carrying on business or non-profit activities, as the case may be, within the

Republic; ‘‘general voting rights’’ means voting rights that can be exercised generally at a general meeting of a company; ‘‘group of companies’’ means two or more companies that share a holding company or subsidiary relationship; ‘‘holding company’’, in relation to a subsidiary, means a juristic person or undertaking that controls that subsidiary; ‘‘Human Rights Commission’’ means the South African Human Rights Commission established in terms of Chapter 9 of the Constitution; ‘‘incorporator’’, when used—

(a)

with respect to a company incorporated in terms of this Act, means a person who incorporated that company, as contemplated in section 13; or

(b)

with respect to a pre-existing company, means a person who took the relevant actions comparable to those contemplated in section 13 to bring about the incorporation of that company;

‘‘individual’’ means a natural person; ‘‘inspector’’ means a person appointed as such in terms of section 209; ‘‘investigator’’ means a person appointed as such in terms of section 209; ‘‘inter-related’’, when used in respect of three or more persons, means persons who are related to one another in a series of relationships, as contemplated in section 2(1)(d); ‘‘juristic person’’ includes—

(a)

a foreign company; and

(b)

a trust, irrespective of whether or not it was established within or outside the

Republic; ‘‘knowing’’, ‘‘knowingly’’ or ‘‘knows’’, when used with respect to a person, and in relation to a particular matter, means that the person either—

(a)

had actual knowledge of that matter;

(b)

was in a position in which the person reasonably ought to have—

(i)

had actual knowledge;

(ii)

investigated the matter to an extent that would have provided the person with actual knowledge; or

(iii) taken other measures which, if taken, would reasonably be expected to

have provided the person with actual knowledge of the matter; ‘‘listed securities’’ has the meaning set out in section 1 of the Securities Services Act, 2004 (Act No. 36 of 2004); ‘‘Master’’ means the person holding the office of that name in terms of the Supreme Court Act, 1959 (Act No. 59 of 1959); ‘‘material’’, when used as an adjective, means significant in the circumstances of a particular matter, to a degree that is—

(a)

of consequence in determining the matter; or

(b)

might reasonably affect a person’s judgement or decision-making in the

matter; ‘‘member’’, when used in reference to a non-profit company, means a person who holds membership in, and specified rights in respect of, that non-profit company, as contemplated in item 4 of Schedule 1; ‘‘Memorandum of Incorporation’’ means the document, as amended from time to time—

(a)

that sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15; and

(b)

by which—

(i)

the company was incorporated in terms of this Act, as contemplated in section 13; or

(ii)

a pre-existing company was structured and governed before the later of— (aa) the effective date; or (bb) the date it was converted to a company in terms of Schedule 2;