Tag archives: Companies Act

The role and independence of alternate directors

By Willem de Villiers on November 11, 2022 Posted in General

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

By Christina Pretorius on June 21, 2022 Posted in General

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

Court review of schemes of arrangement under section 115 of the Companies Act

By NRF Digital Team on April 26, 2022 Posted in General

This blog was drafted by John Bell, Director. The approval of schemes of arrangement in terms of section 115 of the Companies Act, 2008 is becoming more prevalent in the field of mergers and acquisition as well as financial restructurings. They are as such receiving more scrutiny from our courts. In a recent matter the … Continue reading

Close Corporations and derivative actions

By Donald Dinnie on February 25, 2022 Posted in General

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

By NRF Digital Team on October 18, 2021 Posted in General

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

By Stephen Kennedy-Good on October 8, 2021 Posted in General

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

By Stephen Kennedy-Good on October 6, 2021 Posted in General

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

By Stephen Kennedy-Good on October 6, 2021 Posted in General

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

By Stephen Kennedy-Good on October 5, 2021 Posted in General

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

By Stephen Kennedy-Good on October 4, 2021 Posted in General

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

New CIPC recommendation: Disclose your company’s solvency and liquidity tests in your AFS

By Raghemah Hendricks on May 5, 2021 Posted in General

A trend has arisen, which has not gone unnoticed by the CIPC, where companies are failing to conduct the solvency and liquidity test in accordance with section 4 of the Companies Act, 2008, for instance when declaring a dividend. A failure to do so can have personal consequences for directors. The CIPC reviews annual financial … Continue reading

D & O insurance and reflective loss claims

By Donald Dinnie on November 16, 2020 Posted in Insurance

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

By Christina Pretorius and Susan Bisset on June 16, 2020 Posted in General

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

Remember to issue shares when converting a CC to a private company

By Raphael Chitambira on May 5, 2020 Posted in General

Since the passing of the Companies Act 2008 in May 2011 it is no longer possible to register a close corporation (CC). However, the Companies Act allows a CC that existed prior to 1 May 2011 to continue to exist or to convert to a private company. Business owners often opt to convert their CCs … Continue reading

Directors’ responsibilities and risk taking

By Stephen Kennedy-Good and Akhona Boloko on April 15, 2020 Posted in General

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

By Stephen Kennedy-Good and Ally Chalwin-Milton on April 15, 2020 Posted in General

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

By Stephen Kennedy-Good and Ally Chalwin-Milton on April 15, 2020 Posted in General

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

By Alan Bryson and Shawn Barnett (ZA) on April 9, 2020 Posted in General

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

By Stephen Kennedy-Good on September 27, 2018 Posted in Banking, General

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

By Patrick Bracher (ZA) on March 28, 2017 Posted in General

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

By Haroon Laher on December 1, 2016 Posted in General

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

Prove liquidation claims in three months

By Riccardo Petersen (ZA) on November 21, 2016 Posted in General

If a company goes into liquidation claims must be lodged and proved within three months as from the conclusion of the second meeting of creditors of the insolvent company. The case of Wishart v Billiton is a reminder that although the Companies Act 1973 was largely repealed, the provisions relating to winding-up of companies remain … Continue reading

Is anti-competitive behaviour insurable?

By Patrick Bracher (ZA) on August 23, 2016 Posted in Insurance

The August 2016 first-of-its-kind judgment against South African Airways in favour of Nationwide Airlines, for damages arising from conduct that was held to be an anti-competitive exclusionary act preventing Nationwide from entering into or expanding within the travel market, raises the interesting question whether the loss is insurable by the company and the directors. SAA … Continue reading

Shareholders beware! You may have already lost your rights

By Emma Forbes (UK) on July 24, 2015 Posted in General

The Companies Act 2008 introduced the key concept that a provision in a shareholders agreement that is inconsistent with the Companies Act and the company’s memorandum of incorporation (MOI) is void to the extent of the inconsistency. This was an about turn from the position under the previous Companies Act and the previous practice of … Continue reading