Tag archives: Companies Act

To stand or not to stand – a case of legal standing

This blog was co-authored by Sebenzile Magagula, Candidate Attorney. A claim http://www.saflii.org/za/cases/ZANWHC/2023/102.html was dismissed by the High Court on the grounds that the respondent lacked the requisite legal standing to litigate on behalf of her husband who was the party to the contract sued on. The claimant sued for delictual damages arising from failure by … Continue reading

Companies now have 10 business days to file changes to their corporate information

On 24 May 2023, the Minister of Trade, Industry and Competition published the Companies Amendment Regulations, 2023 (Amendment Regulations). The Amendment Regulations were drafted in consultation with the Companies and Intellectual Property Commission (CIPC) to align the Companies Regulations with the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (General Laws Amendment … Continue reading

The role and independence of alternate directors

This blog was co-authored by Bongubuhle Sibanda, Candidate Attorney During the lifespan of a company, there are occasions when a director is unable to perform their functions as envisaged in the Companies Act, 2008. Despite such occasions, the business operations cannot be halted. It is in these instances that an alternate director may take up … Continue reading

Give the board an alternative

This blog was co-authored by: Zinhle Mdluli, associate designate Section 75 of the Companies Act states that if a director has a personal financial interest in a matter that has been tabled at a board meeting, that director has a duty to disclose their interest and any known material information relating to the matter and … Continue reading

Close Corporations and derivative actions

This Supreme Court of Appeal judgment confirms that the common law derivative action is available to members of close corporations. The common law derivative action was abolished in section 165(1) of the Companies Act and replaced with a statutory derivative action for companies. Sections 49 and 50 of the Close Corporation Act do not exclude … Continue reading

Exclusion of Subsidiary Companies from financial assistance limits

This blog was co-authored by: Tshegofatso Rammutla, Associate; Darragh Meaker, Associate Designate and Devan Falconer, Candidate Attorney. The proposal in the Companies Amendment Bill of 2021 published for public comment on 1 October 2021 for the exclusion of subsidiary companies from the limiting provisions relating to inter-group financial assistance should be enthusiastically supported. Section 45 … Continue reading

Companies Amendment Bill 2021 blog series – Amending the Memorandum of Incorporation

This blog was co-authored by Stacy Smit, candidate attorney The Companies Amendment Bill, 2021 published on 1 October 2021 for public comment proposes amendments to section 16 of the Companies Act of 2008 and provides clarity as to when a change to a company’s Memorandum of Incorporation (MOI) will take effect. Section 16 of the … Continue reading

Companies Amendment Bill Blog Series – Access to more Information

This blog was co-authored by: Preshanta Poonan, candidate attorney The Companies Amendment Bill, 2021 published on 1 October 2021 for public comment proposes amendments to section 26 of the Companies Act of 2008 which outlines the requirements for a company to make documents accessible for inspection to third parties aligned with the provisions of the … Continue reading

Companies Amendment Bill, 2021 – Directors’ Remuneration and Beneficial Ownership

This blog was co-authored by: Hishaam Khan, candidate attorney As we continue to unpack the proposed amendments of the Companies Amendment Bill, 2021 in this series we consider directors’ remuneration and beneficial ownership. Director’s remuneration Remuneration of directors continues to be in focus. The Bill proposes to introduce various disclosure and reporting requirements in respect … Continue reading

Companies Amendment Bill 2021 comments – Appointing a Social and Ethics Committee

This blog was co-authored by: Uzair Bulbulia, candidate attorney On 1 October 2021, the Ministry of Trade, Industry and Competition published the Companies Amendment Bill, 2021 for public comment. The Bill proposes amendments to the requirements for a company to establish a Social and Ethics Committee (SEC) in terms of section 72 of the Companies … Continue reading

Companies Amendment Bill 2021 comments – blog 1 of a series

This blog was co-authored by Uzair Bulbulia, candidate attorney On 1 October 2021, the Ministry of Trade, Industry and Competition published the Companies Amendment Bill, 2021 (2021 Bill) for public comment. The 2021 Bill seeks to amend the Companies Act, 2008 and is a revision of the bill that was published for public comment in … Continue reading

D & O insurance and reflective loss claims

At common law when a wrong is done to a company only the company can sue for the damage caused to it. That does not mean that the shareholders of the company may not consequentially suffer any loss (what is known as a reflective loss). Any negative impact the wrongdoing has on the company is … Continue reading

External companies cannot have prescribed officers

An external company is not a company as defined in the Companies Act, and it cannot therefore have prescribed officers with the obligations and liabilities imposed by the Act. Prescribed officers are employees or other persons who, although they are not directors, exercise executive control over a significant part of a company’s business or participate … Continue reading

Directors’ responsibilities and risk taking

Businesses across the country are facing serious headwinds. South African law requires that directors must exercise their powers in the best interests of the company, and with the degree of care, skill and diligence that may be reasonably expected of a person carrying out those functions. Directors can be held personally liable, and are now … Continue reading

Managing a company and COVID-19: South African directors and their duties

Limiting risk in a pandemic The effects of COVID-19 on the economy has led to many companies facing the possibility of being declared financially distressed. The mounting pressure on directors to appropriately fulfil their duties in response to this crisis will continue into the foreseeable future. Risk advisory: Practical considerations and steps for directors While … Continue reading

Director’s duties, the business judgment rule, and COVID-19

Where a director has taken reasonable steps to become informed of a matter and has made, or supported, a decision in relation to that matter (which they rationally believed was in the best interests of the company), then that director cannot be seen to have breached their fiduciary duties if the decision later turns out … Continue reading

Directors beware: The CIPC has not temporarily softened the solvency and liquidity test

The content of a recent Companies and Intellectual Property Commission (CIPC) practice note in which the CIPC committed not to exercise its powers relating to temporarily insolvent companies must not be confused with the solvency and liquidity test. The board of a company is still obliged to fully apply the solvency and liquidity test wherever … Continue reading

The South African Companies Amendment Bill 2018

The long awaited South African Companies Amendment Bill (Bill) was published on 21 September 2018 for comment. Substantial changes to the South African Companies Act 2008 (Companies Act), which became law in 2011, have been proposed. Comments may be submitted to the SA Department of Trade and Industry by 20 November 2018, and we encourage business to consider … Continue reading

Deregistered corporation comes back to life retrospectively on reinstatement

A corporation which is deregistered under the Companies Act 2008 is automatically and retrospectively re-vested with its rights when it is reinstated (under section 82(4)). In ZNK Investments CC v Luckytso Transport and Construction CC, a sale in execution of a deregistered close corporation had taken place whilst it was deregistered. It was held that the … Continue reading

Economic and social consequences of liquidation relevant to business rescue

The Supreme Court of Appeal has aligned itself with a statement by the high court that where the liquidation of a company will occasion significant collateral damage both economically and socially and destroy wealth and livelihoods, the Companies Act recognises that business rescue is the better option. Adverse socio-economic consequences like job losses should be … Continue reading
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