Companies Amendment Act 3 of 2011
Please note that most Acts are published in English and another South African official language. Currently we only have capacity to publish the English versions.
This means that this document will only contain even numbered pages as the other language is printed on uneven numbered pages.
Government Gazette
REPUBLIC OF SOUTH AFRICA
Vol. 550 Cape Town 26 April 2011 No. 34243
THE PRESIDENCY
No.370 26 April 2011
It is hereby notified that the President has assented to the following Act, which is hereby published for general information:-
No. 3 of 2011: Companies Amendment Act, 2011
R.
2 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
GENERAL EXPLANATORY NOTE:
Words in bold type in square brackets indicate omissions from existing enactments.
Words underlined wlth a solid line indicate insertions in existing enactments.
(English text signed by the President.) (Assented to 19 April 2011.)
ACT To amend the Companies Act, 2008, so as to effect certain legal-technical and grammatical amendments in order to ensure the proper application and adminis- tration of the principal Act subsequent to its commencement; to correct certain errors resulting in inconsistency and ambiguity in the principal Act; to establish a proper foundation for certain necessary regulations; to continue the mechanisms established under section 335 of the Companies Act, 1973, which allow for the transfer of registration of foreign companies to the jurisdiction of the Republic; to further provide for companies trading under insolvent circumstances; to extend the grounds for disqualification as a director; to provide for the terms of office of members of the Companies Tribunal; and to provide for matters connected therewith.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:- Arrangement of Sections
Sections
Part 1
General Provisions, Interpretation and Amendments affecting Chapter 1 of principal Act
l. Amendment of section I of Act 71 of 2008 2. Amendment of section 4 of Act 71 of 2008 3. Amendment of section 5 of Act 71 of 2008 4. Amendment of section 6 of Act 71 of 2008 5. Amendment of section 10 of Act 71 of 2008
Part 2
Amendments affecting Chapter 2 of principal Act
6. Amendment of section II of Act 71 of 2008 7. Amendment of section 12 of Act 71 of 2008 8. Amendment of section 13 of Act 71 of 2008 9. Amendment of section 14 of Act 71 of 2008 10. Amendment of section 15 of Act 71 of 2008 II. Amendment of section 16 of Act 71 of 2008
5
10
15
20
4 No. 34243 GOVERNMENT GAZEHE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
12. Amendment of section 19 of Act 71 of 2008 13. Amendment of section 20 of Act 71 of 2008 14. Amendment of section 22 of Act 71 of 2008 15. Amendment of section 23 of Act 71 of 2008 16. Amendment of section 24 of Act 71 of 2008 5 17. Amendment of section 26 of Act 71 of 2008 18. Amendment of section 27 of Act 71 of 2008 19. Amendment of section 29 of Act 71 of 2008 20. Amendment of section 30 of Act 71 of 2008 21. Amendment of section 31 of Act 71 of 2008 10 22. Amendment of section 32 of Act 71 of 2008 23. Amendment of section 33 of Act 71 of 2008 24. Amendment of section 34 of Act 71 of 2008 25. Amendment of section 37 of Act 71 of 2008 26. Amendment of section 38 of Act 71 of 2008 15 27. Amendment of section 39 of Act 71 of 2008 28. Amendment of section 40 of Act 71 of 2008 29. Amendment of section 43 of Act 71 of 2008 30. Amendment of section 44 of Act 71 of 2008 31. Amendment of section 45 of Act 71 of 2008 20 32. Amendment of section 48 of Act 71 of 2008 33. Amendment of section 49 of Act 71 of 2008 34. Amendment of section 50 of Act 71 of 2008 35. Amendment of section 53 of Act 71 of 2008 36. Amendment of section 56 of Act 71 of 2008 25 37. Amendment of section 57 of Act 71 of 2008 38. Amendment of section 58 of Act 71 of 2008 39. Amendment of section 61 of Act 71 of 2008 40. Amendment of section 62 of Act 71 of 2008 41. Amendment of section 63 of Act 71 of 2008 30 42. Amendment of section 64 of Act 71 of 2008 43. Amendment of section 65 of Act 71 of 2008 44. Amendment of section 66 of Act 71 of 2008 45. Amendment of section 68 of Act 71 of 2008 46. Amendment of section 69 of Act 71 of 2008 35 47. Amendment of section 72 of Act 71 of 2008 48. Amendment of section 75 of Act 71 of 2008 49. Amendment of section 77 of Act 71 of 2008 50. Amendment of section 78 of Act 71 of 2008 51. Amendment of section 82 of Act 71 of 2008 40 52. Amendment of section 83 of Act 71 of 2008
Part 3
Amendments affecting Chapter 3 of principal Act
53. Amendment of section 84 of Act 71 of 2008 54. Substitution of section 86 of Act 71 of 2008 45 55. Amendment of section 90 of Act 71 of 2008 56. Amendment of section 91 of Act 71 of 2008 57. Amendment of section 94 of Act 71 of 2008
Part 4
Amendments affecting Chapter 4 of principal Act 50
58. Amendment of section 95 of Act 71 of 2008 59. Amendment of section 97 of Act 71 of 2008 60. Amendment of section 98 of Act 71 of 2008 61. Amendment of section 99 of Act 71 of 2008 62. Amendment of section 100 of Act 71 of 2008 55 63. Amendment of section I 0 I of Act 71 of 2008 64. Amendment of section 102 of Act 71 of 2008 65. Amendment of section I 04 of Act 71 of 2008 66. Amendment of section 105 of Act 71 of 2008 67. Amendment of section 108 of Act 71 of 2008 60 68. Amendment of section 109 of Act 71 of 2008
6 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
Part 5
Amendments affecting Chapter 5 of principal Act
69. Amendment of section 112 of Act 71 of 2008 70. Amendment of section 114 of Act 71 of 2008 71. Amendment of section 115 of Act 71 of 2008 5 72. Amendment of section 116 of Act 71 of 2008 73. Amendment of section II 8 of Act 71 of 2008 74. Amendment of section 119 of Act 71 of 2008 75. Amendment of section 121 of Act 71 of 2008 76. Amendment of section 122 of Act 71 of 2008 10 77. Amendment of section 123 of Act 71 of 2008 78. Amendment of section 124 of Act 71 of 2008 79. Amendment of section 125 of Act 71 of 2008
Part 6
Amendments affecting Chapter 6 of principal Act 15
80. Amendment of Title of Part A of Chapter 6 of Act 71 of 2008 81. Amendment of section 128 of Act 71 of 2008 82. Amendment of section 129 of Act 71 of 2008 83. Amendment of section 132 of Act 71 of 2008 84. Amendment of section 133 of Act 71 of 2008 20 85. Amendment of section 134 of Act 71 of 2008 86. Amendment of section 135 of Act 71 of 2008 87. Amendment of section 136 of Act 71 of 2008 88. Substitution for section 138 of Act 71 of 2008 89. Amendment of section 139 of Act 71 of 2008 25 90. Amendment of section 140 of Act 71 of 2008 91. Amendment of section 141 of Act 71 of 2008 92. Amendment of section 142 of Act 71 of 2008 93. Amendment of section 143 of Act71 of2008 94. Amendment of section 144 of Act 71 of 2008 30 95. Amendment of section 151 of Act 71 of 2008 96. Amendment of section 152 of Act 71 of 2008 97. Amendment of section I 53 of Act 71 of 2008
Part 7
Amendments affecting Chapter 7 of principal Act 35
98. Amendment of section 159 of Act 71 of 2008 99. Amendment of section 160 of Act 71 of 2008 100. Amendment of section 161 of Act 71 of 2008 101. Amendment of section 162 of Act 71 of 2008 102. Amendment of section 163 of Act 71 of 2008 40 103. Amendment of section 164 of Act 71 of 2008 104. Amendment of section 165 of Act 71 of 2008 105. Amendment of section 166 of Act 71 of 2008 106. Amendment of section 168 of Act 71 of 2008 107. Amendment of section 169 of Act 71 of 2008 45 108. Amendment of section 171 of Act 71 of 2008 109. Amendment of section 172 of Act 71 of 2008 110. Amendment of section 175 of Act 71 of 2008
Part 8
Amendments affecting Chapter 8 of principal Act 50
Ill. Amendment of section 191 of Act 71 of 2008 112. Amendment of section 194 of Act 71 of 2008 113. Amendment of section 195 of Act 71 of 2008
8 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
114. Amendment of section 200 of Act 71 of 2008 115. Amendment of section 202 of Act 71 of 2008 116. Amendment of section 203 of Act 71 of 2008 117. Amendment of section 206 of Act 71 of 2008
Part 9 5
Amendments affecting Chapter 9 of principal Act
118. Amendment of section 212 of Act 71 of 2008 119. Amendment of section 214 of Act 71 of 2008 120. Amendment of section 218 of Act 71 of 2008 121. Amendment of section 225 of Act 71 of 2008 10
Part 10
Amendments affecting Schedules of principal Act
122. Amendment of Schedule I of Act 71 of 2008 123. Amendment of Schedule 2 of Act 71 of 2008 124. Amendment of Schedule 3 of Act 71 of 2008 15 125. Amendment of Schedule 4 of Act 71 of 2008 126. Amendment of Schedule 5 of Act 71 of 2008 127. Short title and commencement
PaM 1
General Provisions, Interpretation and Amendments affecting Chapter 1 20
Amendment of section 1 of Act 71 of 2008
1. (I) Section I of the Companies Act. 2008 (hereinafter referred to as the principal Act), is hereby amended-
( a) by the insertion before the definition of "advertisement" of the following definitions: 25
"'accounting records' means information in written or electronic form concerning the financial affairs of a company as required in terms of this Act, including but not limited to, purchase and sales records, general and subsidiary ledgers and other documents and books used in the preparation of financial statements; 30 'acquiring party', when used in respect of a transaction or proposed transaction, means a person who, as a result of the transaction, would directly or indirectly acquire or establish direct or indirect control or increased control over all or the greater part of a company, or all or the greater part of the assets or undertaking of a company;"; 35
(b) by the insertion before the definition of "alterable provision"' of the following definition:
"'all or the greater part of the assets or undertaking', when used in respect of a company, means- ( a) in the case of the company's assets, more than 50% of its gross 40
assets fairly valued, irrespective of its liabilities; or (b) in the case of the company's undertaking, more than 50% of the
value of its entire undertaking. fairly valued;"; (c) by the substitution in the definition of "amalgamation or merger" for
paragraph (b) of the following paragraph: 45 "(b) the survival of at least one of the amalgamating or merging
companies, with or without the formation of one [ore] or more new companies, and the vesting in the surviving company or companies, together with any such new company or companies, of all of the assets and liabilities that were held by any of the amalgamating or 50 merging companies immediately before the implementation of the agreement;'';
(d) by the substitution for the definition of "audit"' of the following definition: "'audit' has the meaning set out in the Auditing Profession Act, but does not include an 'independent review' of annual financial statements, as 55 contemplated in section 30(2)( b )(ii)( bb );";
10 No. 34243 GOVERNMENT GAZE'ITE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
(e) by the substitution for the definition of "auditor" of following definition: "'auditor' has the meaning set out in the Auditing [Professions] Profession Act;";
(f) by the substitution for the definition of "Banks Act" of the following definition: 5
"'Banks Act' means the Banks Act, [1993 (Act No. 124 of 1993)) 1990 (Act No. 94 of 1990):":
(g) by the substitution in the definition of "company" of the words preceding paragraph (a) of the following words:
"'company' means a juristic person incorporated in terms of this Act,!!: 10 domesticated company, or a juristic person that, immediately before the effective date-";
(h) by the substitution for the definition of "convertible securities" of the following definition:
"'convertible [securities]', when used in relation to any securities of a 15 company, 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) the company and which will
become voting securities- (i) on the happening of a designated event: or 20
(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 25 (a);";
(i) in the definition of "distribution"- (i) by the substitution in paragraph (a) for the words preceding subpara-
graph (i) of the following words: "transfer by a company of money or other property of the company, 30 other than its own shares, to or for the benefit of one or more holders of any of the shares, or to the holder of a beneficial interest in any such shares, of that company or of another company within the same group of companies, whether-";
(ii) by the substitution in paragraph (a)(iii) for the words preceding 35 subparagraph (aa) of the following words:
"[is] as consideration for the acquisition-"; (iii) by the substitution for paragraph(
Amendment of section 11 of Act 71 of 2008
6. Section II of the principal Act is hereby amended- ( a) by the substitution in paragraph (a) of subsection (I) for the words preceding
subparagraph (i) of the following words: 50 "may comprise one or more words in any language, irrespective of whether [or not] the word or words are commonly used or contrived for the purpose, together with-";
20 No. 34243 GOVERNMENT GAZETfE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) by the substitution in subsection (I) for subparagraph (ii) of the following subparagraph:
"(ii) any of the following symbols: +, &, #, ~ %, =;"; (c) by the substitution in subsection (2) for paragraph (a) of the following
paragraph: 5 "(a) not be the same as[, or confusingly similar to]-
(i) the name of another company, domesticated company, regis- tered external company, close corporation or co-operative [unless the company forms part of a group of companies using similar names]; 10
(ii) a name registered for the use of a person, other than the company itself or a person controlling the company, as a defensive name in terms of section 12(9), or as a business name in terms of the Business Names Act, 1960 (Act No. 27 of 1960), unless the registered user of that defensive name or 15 business name has executed the necessa!1 documents to transfer the registration in favour of the company;
(iii) a registered trade mark belonging to a person other than the company, or a mark in respect of which an application has been filed in the Republic for registration as a trade mark or a 20 we11-known trademark as contemplated in section 35 of the Trade Marks Act, 1993 (Act No. 194 of 1993 ), unless the registered owner of that mark has consented in writing to the use of the mark as the name of the com~any; or
(iv) a mark, word or expression the use of which is restricted or 25 protected in terms of the Merchandise Marks Act, 1941 (Act No. 17 of 194 I), except to the extent permitted by or in terms of that Act;";
(d) by the insertion of the following paragraph after paragraph (a) in subsection (2), the existing paragraphs (b) and (c) becoming paragraphs (c) and (d), 30 respectively:
"(b) not be confusingly similar to a name, trade mark, mark, word or expression contemplated in paragraph (a) unless-
(i) in the case of names referred to in paragraph (a)(i), each company bearing any such similar name is a member of the 35 same group of companies:
(ii) in the case of a company name similar to a defensive name or to a business name referred to in paragraph (a)(ii), the company, or a person who controls the company, is the registered owner of that defensive name or business name; 40
(iii) in the case of a name similar to a trade mark or mark referred to in paragraph (a)(iii), the company is the registered owner of the business name, trade mark or mark, or is authorised by the registered owner to use it; or
(iv) in the case of a name similar to a mark, word or expression 45 referred to in paragraph (a)(iv), the usc of that mark, word or expression by the company is permitted by or in terms of the Merchandise Marks Act, 1941;";
(e) by the substitution in subsection (3) for paragraph (b) of the following paragraph: 50
"(b) if the company's Memorandum of Incorporation includes any provision contemplated in section 15(2)(b) or (c) restricting or E:rohibiting the amendment of any ~articular ~rovision of the Memorandum, the name must be immediately followed by the expression "(RF)": and"; and 55
(f) by the substitution for subsection (4) of the following subsection: "(4) The Minister may prescribe=
iEl additional commonly recognised symbols for use Ill company names as contemplated in subsection (l)(a)(iii); and
22 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No.3 of 2011 COMPANIES AMENDMENT ACT, 201 I
( b J alternative expressions, in any official language, which may be used in substitution for any expression required to follow a company's name in terms of subsection (3).".
Amendment of section 12 of Act 71 of 2008
7. Section 12 of the principal Act is hereby amended- 5 (a) by the substitution for subsection (2) of the following subsection:
"(2) The Commission must reserve each name as applied for in the name of the applicant, unless [the name as applied for is]- ( a) [the registered name of another company, close corporation or
co-operative] the applicant is prohibited, in terms of section 10 ll(2)(a). from using the name as applied for; or
(b) [the name of a registered external company; or] the name as applied for is already reserved in terms of this section.
[(c) already registered in terms of this section.]''; (b) by the substitution in paragraph (a) of subsection (3) for the words preceding 15
subparagraph (i) of the following words:·· "(a) section 11(2)[(aJ or] (h) or (c)-";
(c) by the substitution in paragraph (b) of subsection (3) for the words preceding subparagraph (i) of the following words:
"(b) section 11(2)[(cJ]l!!J.-"; 20 (d) by the substitution in subsection (8) for the words preceding paragraph (a) of
the following words: "In considering whether a person has abused, or may be attempting to abuse, the name reservation system as contemplated in subsection (6) or (7), the Commission, Tribunal or a court may consider any 25 relevant conduct by that person or any related or inter-related person, including-"; and
(e) by the insertion after subsection (9) of the following subsection: "(10) The registration of a defensive name may be transferred to
another person by notice in the prescribed manner and form and upon 30 payment of the prescribed fee.".
Amendment of section 13 of Act 71 of 2008
8. Section 13 of the principal Act is hereby amended- ( a) by the substitution for the section heading of the following heading:
"Right to incorporate company or transfer registration of foreign 35 company";
(b) by the substitution in subsection (I) for the words preceding paragraph (a) of Jhe following words:
"One or more persons, or an organ of state, may incorporate a profit company, and an organ of state, a juristic person, or three or more persons 40 acting in concert, may incorporate a non-profit company, by-";
(c) by the substitution in subsection (2) for paragraph (a) of the following paragraph:
"(a) filed in the prescribed manner and form, together with the prescribed fcc; and"; and 45
(d) by the insertion after subsection (4) of the following subsections: "(5) Subject to subsections (6) and (7), a foreign company may apply
in the prescribed manner and form, accompanied by the prescribed application fcc, to transfer its registration to the Republic from the foreign jurisdiction in which it is registered, and thereafter exists as a 50 company in terms of this Act as if it had been originally so incorporated and registered.
(6) A foreign company may transfer its registration as contemplated in subsection (5) if-
24 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE. 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
(a) the law of the jurisdiction in which the company is registered permits such a transfer, and the company has complied with the requirements of that law in relation to the transfer;
(b) the transfer has been approved by the company's shareholders- (i) in accordance with the law of the jurisdiction in which the 5
company is registered, if that law imposes such a requirement; or
(ii) by the equivalent of a special resolution in tenns of this Act, if the law of the jurisdiction in which the company is registered does not require such shareholder approval; I 0
(c) the whole or greater part of its assets and undertaking are within the Republic, other than the assets and undertaking of any subsidiary that is incorporated outside the Republic;
(d} the majority of its shareholders are resident in the Republic; (e) the majority of its directors are or will be South African citizens; 15
and (fj immediately following the transfer of registration, the company-
(i) will satisfy the solvency and liquidity test; and (ii) will no longer be registered in another jurisdiction.
(7) Despite satisfying the requirements of subsection (6), a foreign 20 company may not transfer its registration to the Republic as contem- plated in subsection (5) if- ( a} the foreign company-
(i) is permitted, in terms of any law or its Articles or Memoran- dum of Incorporation, to issue bearer shares; or 25
(ii) has issued any bearer shares that remain issued; (b) the foreign company is in liquidation; (c) a receiver or manager has been appointed, whether by a court or
otherwise, in relation to the property of the foreign company; (d) the foreign company- 30
(i) is engaged in proceedings comparable to business rescue proceedings in terms of this Act; or
(ii) is subject to an approved plan, or a court order, comparable to an approved business rescue plan in terms of this Act; or
(iii) has entered into a compromise or arrangement with a creditor, 35 and the compromise or arrangement is in force; or
(e) an application has been made to a court in any jurisdiction, and not fully disposed of-
(i) to put the foreign company into liquidation, to wind it up or to have it declared insolvent; 40
(ii) for the approval of a compromise or arrangement between the foreign company and a creditor; or
(iii) for the appointment of a receiver or administrator in relation to any property of the foreign company.
(8) The Minister may make regulations- 45 (a) prescribing forms and procedures for the consideration of applica-
tions contemplated in subsection (5); (b) for the registration of domesticated companies as contemplated in
subsections (5) to (7) and for the issuing of registration certificates to such companies; and 50
(c) establishing requirements for each domesticated company to harmonise its Memorandum of Incorporation with this Act.
(9) Subsections (3) and (4) and section 14, each read with the changes required by the context, apply to an application in terms of subsections ~)M(7). 55
(10) Upon compliance of the requirements for registration of a domesticated company as contemplated in terms of this section, the Commissioner must issue to such company a registration certificate to the effect that such registration has taken place and that il deemed that the company has been incorporated under this Act. 60
( 11) The registration of a domesticated company in terms of subsections (5) to (9) does not-
26 No. 34243
Al-1 No. 3 of 2011
GOVERNMENT GAZETrE, 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
(a) establish a new juristic person; (b) prejudice or affect the identity of the juristic person constituted by
that domesticated company, or its continuity as a juristic person; (c) prejudice the rights of any person or affect the property, rights,
liabilities or obligations of that juristic person; or 5 (d) render ineffective any legal proceedings by or against that juristic
person.".
Amendment of section 14 of Act 71 of 2008
9. Section 14 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of I 0
the following words: "As soon as practicable after accepting a Notice of Incorporation in terms of section 13ill, or an application for the domestication of a foreign company in terms of section 13(5), the Commission must-";
(b) by the substitution in subsection (2)(b) for the words preceding subparagraph 15 (i) of the following words:
"is [the same as the name of another company, close corporation or co-operative,] a name that the company is prohibited, in terms of section 11(2)(a), from using, or is reserved in terms of section 12 for a person other than one of the incorporators, the Commission-"; 20
(c) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words:
"If, upon registering a company in terms of subsection [(2)) (I), there are reasonable grounds for considering that the company's name may be inconsistent with the requirements of-"; 25
(d) by the substitution in paragraph (a) of subsection (3) for the words preceding subparagraph (i) of the following words:"
"(a) section !1(2)[(a) or) (b) or (c)-"; and (e) by the substitution in paragraph (b) of subsection (3) for the words preceding
subparagraph (i) of the following words: 30 "(b) section 11(2)[(c)) {!!1-".
Amendment of section 15 of Act 71 of 2008
10. Section 15 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for paragraph (b) of the following
paragraph: 35 "(b) is void to the extent that it contravenes, or is inconsistent with, this
Act, subject to section 6(15)."; (b) by the substitution in subsection (2)(a) for subparagraphs (i) and (ii) of the
following subparagraphs respectively: "(i) dealing with a matter that this Act docs not address; [or] 40 (ii) altering the e!Tect of any alterable provision of this Act; or";
(c) by the insertion in paragraph (a) of subsection (2) of the following subparagraph after subparagraph (ii):
"(iii) imposing on the company a higher standard, greater restriction, longer period of time or any similarly more onerous requirement, 45 than would otherwise apply to the company in terms of an unalterable provision of this Act;";
(d) by the substitution in subsection (2) for paragraph (b) of the following paragraph:
(b) contain any [special] restrictive conditions applicable to the 50 company, and any requirement for the amendment of any such condition in addition to the requirements set out in section 16; [or]";
(e) by the substitution in subsection (2) for paragraph (c) of the following paragraph: 55
(c) prohibit the amendment of any particular provision of the Memo- randum of Incorporation[.); or";
28 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(f) by the insertion in subsection (2) of the following paragraph after paragraph (c):
(d) not include any provision thai negates, restricts, limits, qualifies, extends or otherwise alters the substance or effect of an unalterable provision of this Act, except to the extent contemplated in 5 paragraph (a)(iii).".
(g) by the substitution in subsection (4)(b) for subparagraph (i) of the following subparagraph:
"(i) [20] 10 business days after the rule [is published in terms of subsection (3)(aJ] is filed in terms of subsection (3)(b); or"; 10
(h) by the substitution for subsection (5) of the following subsection: "(5) If a rule that has been [published] filed in terms of subsection (3)
is [not] subsequently- -- !.!!1 ratified as contemplated in subsection (4)(cJ, the company must file
a notice of ratification within five business days in t c prescribed 15 manner and form; or
(b) not ratified when put to a vote- (i) the company must file a notice of non-ratification within five
business days after the vote. in the prescribed manner and form; and 20
@ the company's board may not make a substantially similar rule within the ensuing 12 months, unless it has been approved in advance by ordinary resolution [at a] of the shareholders [meeting]."; --
(i) by the insertion after subsection (5) of the following subsection: 25 "(SA) Any failure to ratify the rules of a company does not affect the
validity of anything done in terms of those rules during the period that they had an interim effect as provided in subsection (4)(cJ(i)."; and
(j) by the substitution in subsection (6)(c) for subparagraph (ii) of the following subparagraph: 30
"(ii) any other person serving the company [as a member of the audit committee or] as a member of a committee of the board,".
Amendment of section 16 of Act 71 of 2008
11. Section 16 of the principal Act is hereby amended- ( a) by the substitution for subsection (9) of the following subsection: 35
"(9) An amendment to a Company's Memorandum of Incorporation takes effect [from the later of]- ( a) [the date on, and time at, which the Commission accepts the
filing of the Notice of Amendment] in the case of an amendment that changes the name of the company, on the date set out in the 40 amended registration certificate issued by the Commission in terms of subsection (8 ), read with section 14( I)( b )(iii); or
(b) in any other case, on the later of- (i) the date on, and time at, which the Notice of Amendment is
filed; or 45 @ the date, if any, set out in the Notice of Amendment."; and
(b) by the insertion after subsection (9) of the following subsections: "'(10) If an amendment to the Memorandum of Incorporation of a
personal liability company has the e ect o transforming that company into any other category of company, the company must give at least 10 50 business days advance notice of the filing of the notice of amendment to- ( a) any professional or industry regulatory authority that has jurisdic-
tion over the business activities carried on by the company; and (b) any person who- 55
(i) in its dealings with the company, may reasonably be consid- ered to have acted in reliance upon the joint and several liability of any of the directors for the debts and liabilities of the company; or
30 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETrE. 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
(ii) may be adversely affected if the joint and several liability of any of the directors for the debts and liabilities of the company is terminated as a consequence of the amendment to the Memorandum of Incorporation.
(11) A person who receives. or is entitled to receive, a notice in terms 5 of subsection (I 0) may apply to a court in the prescribed manner and form for an order sufficient to protect the interests of that person.".
Amendment of section 19 of Act 71 of 2008
12. Section 19 of the principal Act is hereby amended by the substitution for subsection (5) of the following subsection: I 0
"(5) A person must be regarded as having [received] notice and knowledge of- (a) any provision of a company's Memorandum of Incorporation contemplated in
section 15(2)(b) or (c) if the company's name includes the element "RF" as contemplated in section 11(3)(b), and the company's Notice oflncorporation or a subsequent Notice of Amendment has drawn attention to the relevant 15 provision, as contemplated in section 13(3); [or] and
(b) the effect of subsection (3) on a personal liability company.".
Amendment of section 20 of Act 71 of 2008
13. Section 20 of the principal Act is hereby amended- ( a) by the substitution for subsection (4) of the following subsection: 20
"( 4) One or more shareholders, directors or prescribed officers of a company, or a trade union representing employees of the company, may [take proceedings] apply to the High Court for an appropriate order to restrain the company from doing anything inconsistent with this Act.";
(h) by the substitution in subsection (5) for the words preceding paragraph (a) of 25 the following words:
"One or more shareholders, directors or prescribed officers of a company may [take proceedings] apply to the High Court for an appropriate order to restrain the company or the directors from doing anything inconsistent with any limitation, restriction or qualification contemplated in subsec- 30 lion (2), but any such proceedings are without prejudice to any rights to damages of a third party who-";
(c) by the substitution in subsection (6) for the words preceding paragraph (a) of the following words:
"Each shareholder of a company has a claim for damages against any 35 person who intentionally, fraudulently or due to gross negligence causes the company to do anything inconsistent with-"; and
(d) by the insertion after subsection (8) of the following subsection: "(9) If, on application by an interested person or in any proceedings in
which a company is involved, a court finds that the incorporation of the 40 company, any use of the company, or any act by or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a separate entity, the court may- ( a) declare that the company is to be deemed not to be a juristic person
in respect of any right, obligation or liability of the company or of 45 a shareholder of the company or, in the case of a non-profit company, a member of the company, or of another person specified in the declaration; and
(b) make any further order the court considers appropriate to give effect to a declaration contemplated in paragraph (a).". 50
32 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
Amendment of section 22 of Act 71 of 2008
14. Section 22 of the principal Act is hereby amended by the substitution for subsections (1), (2) and (3) of the following subsections respectively:
"(I) A company must not[- (a)] carry on its business recklessly, with gross negligence, with intent to defraud 5
any person or for any fraudulent purpose [; or (b) trade under insolvent circumstances].
(2) If the Commission has reasonable grounds to believe that a company is engaging in conduct prohibited by subsection (I), or is unable to pay its debts as they become due and payable in the normal course of business, the Commission I 0 may issue a notice to the company to show cause why the company should be permitted to continue carrying on its business, or to trade, as the case may be.
(3) If a company to whom a notice has been issued in terms of subsection (2) fails within 20 business days to satisfy the Commission that it is not engaging in conduct prohibited by subsection (I), or that it is able to pay its debts as they become due 15 and payable in the normal course of business, the Commission may issue a compliance notice to the company requiring it to cease carrying on its business or trading, as the case may be.".
Amendment of section 23 of Act 71 of 2008
15. Section 23 of the principal Act is hereby amended- 20 (a) by the substitution in subsection (I) for paragraph (b) of the following
paragraph: "(b) as an external profit company [if, within the jurisdiction in which
it was incorporated, it meets legislative or definitional require- ments that are comparable to the legislative or definitional 25 reqnirements of a profit company incorporated under this Act], in any other case."; -
(b) by the substitution for subsection (2) of the following subsections: "(2) For the purposes of subsection (1), and the definition of "external
company" as set out in section I, a foreign company [is not to] must be 30 regarded as "conducting business. or non-profit activities, as the case may be, within the Republic"[, unless] if that foreign company- [is engaged in, or has engaged in, one or mOre of the following activities within the Republic:] (a) is a party to one or more employment contracts within the Republic; 35
or (b) subject to subsection (2A), is engaging in a course of conduct, or
has engaged in a course or pattern of activities within the Republic over a period of at least six months, such as would lead a person to reasonably conclude that the company intended to continually 40 engage in business or non-profit activities within the Republic.
(2A) When applying subsection (2)(b). a foreign company must not be regarded as "conducting business activities, or non-profit activities, as the case may be, within the Republic" solely on the ground that the foreign company is or has engaged in one or more of the following 45 activities: (a) Holding a meeting or meetings within the Republic of the
shareholders or board of the foreign company, or otherwise conducting any of the company's internal affairs [of the company] within the Republic; 50
(b) establishing or maintaining any bank or other financial accounts within the Republic;
(c) establishing or maintaining offices or agencies within the Republic for the transfer, exchange, or registration of the foreign company's own securities; 55
34 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
(d) creating or acquiring any debts within the Republic, or any mortgages or security interests in any property within the Republic;
(e) securing or collecting any debt, or enforcing any mortgage or security interest within the Republic; _2!:
(f) acquiring any interest in any property within the Republic[; and 5 (g) entering into contracts of employment],";
(c) by the substitution in subsection (4) for the words preceding paragraph (a) of the following words:
"A change contemplated in subsection [(2)] ill(b)(ii) takes eiTect as from the later of-"; and 10
(d) by the substitution in subsection (6) for the words preceding paragraph (a) of the following words:
"If an external company has failed to register in terms of subsection ( 1) within [12] three months after commencing its activities within the Republic, the Commission may issue a compliance notice to that external 15 company requiring it to-".
Amendment of section 24 of Act 71 of 2008
16. Section 24 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraph (b) of the following
paragraph: 20 "(b) a record of its directors, including-
(i) [details of any person who has served as a director of the company, for a period of seven years after the person ceases to serve as a director] all the infonnation required in terms of subsection (5) in respect of each current director at 25 any particular time; and
(ii) with respect to each past director. the information required [by or in terms of subsection (5)] in terms of subparagraph (i), which must be retained for seven years after the past director retired from the company;"; 30
(b) by the substitution in subsection (3) for paragraph (d) of the following paragraph:
"(d) notice and minutes of all shareholders meetings, including- (i) all resolutions adopted by them [, for seven years after the
date each such resolution was adopted]; and 35 (ii) any document that was made available by the company to the
holders of securities in relation to each such resolution [;1.: for seven years after the date each such resolution was adopted;"; and
(c) by the substitution for subsection ( 4) of the following subsection: 40 "(4) In addition to the requirements of subsection (3), every [profit]
company must maintain- ( a) a securities register or its equivalent, as required by section 50.:.1!!
the case of a profit company, or a member's register in the case of a non-profit company that has members; and 45
(b) the records required in terms of section 85, if that section applies to the company.".
Amendment of section 26 of Act 71 of 2008
17. Section 26 of the principal Act is hereby amended- ( a) by the substitution for subsections (I) and (2) of the following subsections, 50
respectively: "(I) A person who ho1ds or has a beneficial interest in any securities
issued by a profit company [-], or who is a member of a non-profit company, [(a)] has a right to inspect and copy, without any charge for any
31i No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE. 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
such inspection or upon payment of no more than the prescribed maximum charge for any such copy, the information contained in the following records of the company[-): (a) The company's Memorandum of Incorporation and any amend-
ments to it, and any rules made by the company, as [(i)] mentioned 5 in section 24(3)(a)[, (b), (c)(i) and (ii), (d) and (e); or);
(h) the records in respect of the company's directors, as mentioned in section 24(3)(b);
(d the reports to annual meetings, and annual financial statements, as mentioned in section 24(3)(c)(i) and (ii); 10
(d) the notices and minutes of annual meetings, and communications mentioned in section 24(3)(d) and (e), but the reference in section 24(3)(d) to shareholders meetings, and the reference in section 24(3)(e) to communications sent to holders of a company's securities, must be regarded in the case of a non-profit company as 15 referring to a meeting of members, or communication to members, respectively; and
(e) the securities register of a profit company, or the members register of a non-profit company that has members, as [(ii) contemplated] mentioned in section 24(4)[(a) or (b); 20
(b) has a right to any other information to the extent granted by the Memorandum of Incorporation, as contemplated in subsection (2); and
(c) may exercise the rights set out in paragraph (a) or (b)- (i) by direct request made to the company in the prescribed 25
manner, either in person or through an attorney or other personal representative designated in writing; or
(ii) in accordance with the Promotion of Access to Information Act, 2000 (Act No, 2 of 2000)).
(2) A person not contemplated in subsection (I) has a right to inspect 30 or copy the securities register of a profit company, or the members register of a non-profit company that has members, or the register of directors of a company, upon payment of an amount not exceeding the prescribed maximum fee for any such inspection.
[(2)) Q2 In addition to the information rights set out in [snbsection 35 (l)(a)) subsections (I) and (2), the Memorandum of Incorporation of a company may establish additional information rights of any person, with respect to any information pertaining to the company, but no such right may negate or diminish any mandatory protection of any record[, as set out in) required by or in terms of Part 3 of the Promotion of Access to 40 Information Act, 2000 (Act No. 2 of 2000).
(4) A person may exercise the rights set out in subsection (l) or (2), or contemplated in subsection (3)-- (a) for a reasonable period during business hours; (b) by direct request made to a company in the prescribed manner, 45
either in person or through an attorney or other personal represen- tative designated in writing; or
(c) in accordance with the Promotion of Access to Information Act, 2000 (Act No.2 of 2000).
(5) Where a company receives a request in terms of subsection (4)(b) 50 it must within 14 business days comply with the request by providing the opportunity to inspect or copy the register concerned to the person making such request.";
(b) by the re-numbering of subsections (3), (4), (5) and (6) as subsections (6), (7), (8) and (9) respectively: and 55
(c) by the substitution in subsection (6) for paragraphs (a) and (b) of the following paragraphs, respectively:
"(a) fail to accommodate any reasonable request for access, or to unreasonably refuse access, to any record that a person has a right to inspect or copy in terms of this section or section 31; or 60
38 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No.3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) to otherwise impede, interfere with, or attempt to frustrate, the reasonable exercise by any person of the rights set out in this section or section 31.".
Amendment of section 27 of Act 71 of 2008
18. Section 27 of the principal Act is hereby amended by the deletion of subsection 5 (6).
Amendment of section 29 of Act 71 of 2008
19. Section 29 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for paragraph (d) of the following
paragraph: I 0 "(d) set out the date on which the statements were [produced]
published, and the accounting period to which the statements apply; and";
(b) by the substitution in subsection (5) for paragraph (b) of the following paragraph: 15
"(b) in the case of financial reporting standards for public companies, must be [consistent] in accordance with the International Financial Reporting Standards of the International Accounting Standards Board or its successor body; and"; and
(c) by the substitution in subsection (6)(a) for subparagraph (i) of the following 20 subparagraph:
"(i) [do not] fail in a material way to comply with the requirements of subsection (I); or".
Amendment of section 30 of Act 71 of 2008
20. Section 30 of the principal Act is hereby amended- 25 (a) by the substitution in subsection (2)(b) for the words preceding subparagraph
(i) of the following words: "in the case of any other profit or non-profit company-";
(b) by the substitution in subsection (2)(b} for subparagraph (i) of the following subparagraph: 30
"(i) be audited, if so required by the regulations made in terms of subsection (7) taking into account whether it is desirable in the public interest, having regard to the economic or social significance of the company, as indicated by any relevant factors, including-";
(c) by the substitution in subsection (2)(b)(ii) for subitems (aa) and (bb) of the 35 following subitcms:
"(aa) audited voluntarily [at the option of the company] if the company's Memorandum of Incorporation, or a shareholders resolution, so requires or if the Company's board has so determined; or 40
(bb) independently reviewed in a manner that satisfies the regulations made in terms of subsection (7), subject to subsection (2A) [unless exempted if it is a private company and- (AAJ one person holds, or has all the beneficial interest in, all
of the securities issued by the company; or 45 (BB) every person who is the holder of, or has a beneficial
interest in, any securities issued by the company is also a director of the company unless the company has only one director, and that director is a person contemplated in section 69(12)]."; 50
(d) by the insertion after subsection (2) of the following subsection: (2A) If, with respect to a particular company, every person who
is a holder of, or has a beneficial interest in, any securities issued by that I
40 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
company is also a director of the company, that company is exempt from the requirements in this section to have its annual financial statements audited or independently reviewed, but this exemption- ( a) does not apply to the company if it falls into a class of company that
is required to have its annual financial statement audited in terms of 5 the regulations contemplated in subsection (7)( a); and
(b) does not relieve the company of any requirement to have its financial statements audited or reviewed in terms of another law, or in terms of any agreement to which the company is a party."
(e) by the substitution in subsection (6) for paragraph (f) of the following 10 paragraph:
"([) financial assistance to a director, past director or future director, or person related to any of them, for the subscription of [shares] options or securities, or the purchase of securities, as contemplated in section 44; and"; 15
(f) by the substitution in subsection (7) for paragraph (a) of the following paragraph:
"(a) the categories of any [private] profit or non-profit companies that are required to have their respective annual financial statements audited, as contemplated in subsection (2)(b)(i); and"; and 20
(g) by the substitution for paragraph (b) of subsection (7) of the following paragraph:
"(b) the manner, form and procedures for the conduct of an independent review [other than an audit, as contemplated in] under subsec- tion (2)(b)(ii)(bb), as well as the professional qualifications, if any, 25 and duties of persons who may conduct such reviews and the accreditation of professions whose members may conduct such reviews.".
(h) by the insertion after subsection (7) of the following subsection: "(8) Despite section 1 of the Auditing Profession Act, an independent 30
review of a company's annual financial statements required by this section does not constitute an audit within the meaning of that Act.".
Amendment of section 31 of Act 71 of 2008
21. Section 31 of the principal Act is hereby amended by the insertion, after subsection (3) of the following subsection: 35
"(4) It is an offence for a company to- (a) ml to accommo ate any reasonab e request for access, or to unreasonab y
refuse access, to any record that a person has a right to inspect or copy in terms of this section; or
(b) otherwise impede, interfere with, or attempt to frustrate the reasonable 40 exercise by any person of the rights set out in this section.".
Amendment of section 32 of Act 71 of 2008
22, Section 32 of the principal Act is hereby amended by the deletion of subsections (6) and (7).
Amendment of section 33 of Act 71 of 2008 45
23. Section 33 of the principal Act is hereby amended by the substitution in subsection (I) for paragraph (a) of the following paragraph:
"(a) a copy of its annual financial statements, if it is required to have such statements audited in terms of section 30(2)[(a)l or the regulations contem- plated in section 30(7); and". 50
Amendment of section 34 of Act 71 of 2008
24, Section 34 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection:
"(2) A private company, personal liability company, or non-profit company is not required to comply with the extended accountability requirements set out in 55 Chapter 3, except to the extent [that the] contemplated in section 84(1)(c), or as
42 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
required by the company's Memorandum of Incorporation [provides other- wise).".
Amendment of section 37 of Act 71 of 2008
25. Section 37 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection: 5
"(I) All of the shares of any particular class authorised by a company have preferences, rights, limitations and other terms that are identical to those of other shares of the same class [, except to the extent that the company's Memorandum of Incorporation provides otherwise]."; and 10
(b) by the insertion after subsection (8) of the following subsection: "(9) A person-
(a) acquires the rights associated with any particular securities of a company-
(i) when that person's name is entered in the company's certifi- 15 cated securities register; or
(ii) as determined in accordance with the rules of the Central Securities Depository, in the case of uncertificated securities; and
(b) ceases to have the rights associated with any particular securities of 20 acompany-
(i) when the transfer to another person, re-acquisition by the company, or surrender to the company has been entered in the company's certificated securities register; or
(ii) as determined in accordance with the ruJcs of the Central 25 SecuriLies Depository, in the case of uncertificated securities., ..
Amendment of section 38 of Act 71 of 2008
26. Section 38 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection:
"(2) If a company issues shares- 30 (a) that have not been authorised in accordance with section 36; or (h) in excess of the number of authorised shares of any particular class, the issuance of those shares may be retroactively authorised in accordance with section 36 within 60 business days after the date on which the shares were issued.''.
Amendment of section 39 of Act 71 of 2008 35
27. Section 39 of the principal Act is hereby amended by the substitution for subsection (4) of the foiJowing subsection:
"(4) Except to the extent that a private or personal liability company's Memorandum of Incorporation provides otherwise- ( a) in exercising a right in terms of subsection (2), a shareholder may subscribe 40
for fewer shares than the shareholder would be entitled to subscribe for under -- -- that subsection; and
(b) shares not subscribed for by a shareholder within the reasonable time contemplated in subsection (2). may be offered to other persons to the extent permitted by the Memorandum of Incorporation.". 45
Amendment of section 40 of Act 71 of 2008
28. Section 40 of the principal Act is hereby amended- ( a) by the substitution in subsection (5) for the words preceding paragraph (a) of
the following words: "If the consideration for any shares that are issued or to be issued is in the 50 form of an instrument such that [is not negotiable) the value of the consideration cannot be realised by the company until a date after [at) the time the shares are to be issued, or is in the form of an agreement for
44 No. 34243
Act No.3 of 2011
GOVERNMENT GAZETTE. 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
future services. future benefits or future payment by the subscribing party-"; and
(b) by the substitution in subsection (5)(a) for subparagraph (i) of the following subparagraph:
"(i) that the [instrument is negotiable] value of the consideration for 5 any of those shares has been realised by the company; or".
Amendment of section 43 of Act 71 of 2008
29. Section 43 of the principal Act is hereby amended by the substitution in subsection (2) for paragraph (a) of the following paragraph:
''(a) may authorise the company to issue a secured or unsecured debt instrument at 10 any time. except to the extent provided otherwise by [that] the company's Memorandum of Incorporation; and".
Amendment of section 44 of Act 71 of 2008
30. Section 44 of the principal Act is hereby amended- ( a) by the substitution in subsection (2) tor the following subsection: 15
"(2) [To] Except to the extent that the Memorandum of Incorporation of a company provides otherwise, the board may authorise the company to provide financial assistance by way of a loan, guarantee, the provision of security or otherwise to any person for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be 20 issued by the company or a related or inter·rclated company, or for the purchase of any securities of the company or a related or inter-related company, subject to subsections (3) and (4).'"; and
(h) by the substitution in subsection (6) for the words preceding paragraph (a) of the following words: 25
"If a resolution or an agreement [has been declared] is void in terms of subsection (5) [read with section 218(1),] a director of the company is liable to the extent set out in section 77(3)(e)(iv) if the director-".
Amendment of section 45 of Act 71 of 2008
31. Section 45 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) tor paragraph (h) of the following
paragraph: "(b) the board is satisfied that-
30
(i) immediately after providing the financial assistance. the - company would satisfy the solvency and liquidity test; and 35 (ii) the terms under which the financial assistance is proposed to
be given are fair and rea.."ionable to the company."; and (b) by the substitution in subsection (7) for the words preceding paragraph (a) of
the following words: "If a resolution or agreement [has been declared] is void in terms of 40 subsection (6) [read with section 218(1),] a directorof the company is liable to the extent set out in section 77(3)(e)(v) if the director-".
Amendment of section 48 of Act 71 of 2008
32. Section 48 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection: 45
"( 1) [The] This section does not apply to- (a) the making of a demand, tendering of shares and payment by a
company to a shareholder in terms of a shareholder's appraisal rights set out in section 164 [do not constitute an acquisition of its shares by the company within the meaning of this section]; or 50
46 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE. 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
(b) the redemption by the company of any redeemable securities in accordance with the tenns and conditions of those securities.";
(b) by the substitution in subsection (2) for the words preceding paragraph (a) of the following words:
"Subject to [subsection) subsections (3) and (8), and if the decision to do 5 so satisfies the requirement~ of section 46-";
(c) by the substitution in subsection (2) for paragraphs (a) and (h) of the following paragraphs respectively:
"(a) [a) the board of a company may determine that the company [may) will acquire a number of its own shares, [if the decision to do so 10 satisfies the requirements of section 46); and
(b) [any) the board of a subsidiary [of a] company may determine that it will acquire shares of [that) its holding company, but-";
(d) by the substitution in subsection (6) for the words preceding paragraph (a) of the following words: 15
"If a company acquires any shares contrary to section 46. or this section, the company [may] must, not more than two years after the acquisition, apply to a court for an order reversing the acquisition, and the court may order-"; and
(e) by the insertion after subsection (7) of the following subsection: 20 "(8) A decision by the board of a company contemplated in subsection
(2)(a)- (a) must be approved by a special resolution of the shareholders of the
company if any shares are to be acquired by the company from a director or prescribed officer of the company, or a person related to 25 a director or prescribed officer of the company; and
(b) is subject to the requirements of sections 114 and 115 if, considered aJonc, or together with other transactions in an integrated series of transactions, it involves the acquisition by the company of more than 5% of the issued shares of any particular class of the 30 company's shares.".
Amendment of section 49 of Act 71 of 2008
33. Section 49 ofthe principal Act is hereby amended by the substitution in subsection (6) for paragraph (b) of the following paragraph:
"(b) for greater certainty, transfer of ownership in those securities cannot be 35 effected by a participant or central securities depository while they remain in certificated form, unless they are held in certificated form in collective custody by the participant or central securities depository.".
Amendment of section 50 of Act 71 of 2008
34. Section 50 of the principal Act is hereby amended by the substitution in subsection 40 (2)(b)(iv) for subitem (aa) of the following subitem:
"'(aa) the number of those securities issued and outstanding; [or] and''.
Amendment of section 53 of Act 71 of 2008
35, Section 53 of the principal Act is hereby amended by the substitution in subsection (5) for the following subsection: 45
"(5) A court may not order the name of a transferee contemplated in this section to be removed from [a] an uncertificated securities register, unles.s that person was a party to or had knowledge of a fraud or illegality as contemplated in subsection (4).".
48 Nn. 34243 GOVERNMENT GAZETrE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
Amendment of section 56 of Act 71 of 2008
36. Section 56 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraph (b) of the following
paragraph: "(b) the identity of each person with a beneficial interest in the securities 5
so held, the number and class of securities held for each such person with a beneficial interest, and the extent of each such beneficial interest.";
(b) by the substitution in subsection (4) for paragraph (a) of the following paragraph: I 0
"(a) be disclosed in writing to the company within five business days after the end of every month during which a change has occurred in the infonnation contemplated in subsection (3), or more promptly or frequently to the extent so provided by the requirements of a central securities depository; and"; and 15
(c) by the insertion after subsection (7) of the following subsections: "(8) Subsections (9) to ( 11) do not apply in respect of securities that
are subject to the rules of a central securities depository. (9) A person who holds a beneficial interest in any securities may vote
in a matter at a meeting of shareholders, only to the extent that- 20 (a) the beneficial interest includes the right to vote on the matter; and (b) the person's name is on the company's register of disclosures as the
holder of a beneficial interest, or the person holds a proxy appointment in respect of that matter from the registered holder of those securities. 25
(I 0) The registered holder of any securities in which any person has a beneficial interest must deliver to each such person- ( a) a notice of any meeting of a company at which those securities may
be voted on within two business days after receiving such a notice from the company; and 30
(b) a proxy appointment to the extent of that person's beneficial interest, if the person so demands in terms of subsection (ll ).
(11) A person who has a beneficial interest in any securities that are entitled to be voted on at a meeting of a company's shareholders, may demand a proxy appointment from the registered holder of those 35 securities, to the extent of that person's beneficial interest, by delivering such a demand to the registered holder, in writing, or as required by the applicable requirements of a central securities depository.".
Amendment of section 57 of Act 71 of 2008
37. Section 57 of the principal Act is hereby amended- 40 ( a) by the substitution for the heading of the following heading:
"Interpretation and [restricted] application of Part"; (b) by the substitution for subsection (1) of the following subsection:
"(I) In this Part, 'shareholder' [means] has the meaning set out in section l, but also includes a person who is entitled to exercise any 45 voting rights in relation to a company, irrespective of the form, title or nature of the securities to whkh those voting rights are attached."; and
(c) by the insertion after subsection (6) of the following subsection: "(7) For greater certainty, this section applies to the exercise of
authority within a company in respect of any matter arising in tenns of 50 this Act or a company's Memorandum of Incorporation, irrespective of whether any such particular matter is expressly addressed in this Part.".
50 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 201 I
Act No. 3 or 2011 COMPANIES AMENDMENT ACT. 2011
Amendment of section 58 of Act 71 of 2008
38. Section 58 of the principal Act is hereby amended- ( a) by the substitution for subsection(!) of the following subsection:
"(I) At any time, a shareholder of a company may appoint any individual, including an individual who is not a shareholder of that 5 company, as a proxy to- (a) participate in, and speak and vote at, a shareholders meeting on
behalf of the shareholder; or (b) give or withhold written consent on behalf of the shareholder to a
decision contemplated in section 60[, I 0 provided that the shareholder may appoint more than one proxy to exercise voting rights attached to different shares held by the shareholder]."; and
(b) by the substitution in subsection (3) for paragraph (a) of the following paragraph: 15
"(a) a shareholder of that company may appoint two or more persons concurrently as proxies, and may appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder;".
Amendment of section 61 of Act 71 of 2008 20
39. Section 61 of the principal Act is hereby amended by the substitution in subsection (3) for paragraph (b) of the following paragraph:
"(b) in aggregate, demands for substantially the same purpose are made and signed by the holders, as of the earliest time specified in any of those demands, of at least I 0% of the voting rights cntitkd to be exercised in relation to the matter 25 proposed to be considered at the meeting.".
Amendment of section 62 of Act 71 of 2008
40. Section 62 of the principal Act is hereby amended- ( a) by the substitution for subsection (2) of the following subsection:
"(2) A company's Memorandum of Incorporation may provide for 30 longer or shorter minimum notice periods than required by subsection (!).";
(b) by the insertion after subsection (2) of the following subsection: "(2A) A company may call a meeting with less notice than required by
subsection (l) or by its Memorandum of Incorporation, but such a 35 meeting may proceed only if every person who is entitled to exercise voting rights in respect of any item on the meeting agenda- ( a) is present at the meeting~ and (b) votes to waive the required minimum notice of the meeting.";
(c) by the substitution in subsection (3)(d) for subparagraph (i) of the following 40 subparagraph:
"(i) [a summarised form of] the financial statements to be presented or a summarised form thereof; and"; -
(d) by the substitution for subsection (4) of the following subsection: "(4) If [a company fails to give the required notice of a 45
shareholders meeting, or if] there was a material defect in the giving of the notice of a shareholders meeting, the meeting may proceed, subject to subsection (5), only if[all of the persons who are] every person who is entitled to exercise voting rights in respect of [each] ~item on the meeting agenda [of the meeting-] is present at the meeting and votes to 50 approve the ratification of the defective notice [(a) acknowledge actual receipt of the notice; (b) are present at the meeting; (c) waive notice of the meeting; or
52 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZEITE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
(d) in the case of a material defect in the manner and form of giving notice, ratify the defective notice],"; and
(e) by the substitution for subsection (7) of the following subsection; "(7) A shareholder who is present at a meeting, either in person or by
proxy- 5 (a) is regarded [to have] as having received or waived notice of the
meeting, if at least the required minimum notice was given; and (h) has a right to--
(i) allege a material defect in the form of notice for a particular item on the agenda for the meeting; and I 0
(ii) participate in the determination whether to waive the require- ments for notice if less than the required minimum notice was given, or!£ ratify a defective notice; and
(c) except to the extent set out in paragraph (b), is regarded as having waived any right based on an actual or alleged defect in the notice 15 of the meeting
[is regarded to have waived any right based on an actual or alleged material defect in the notice of the meeting],",
Amendment of section 63 of Act 71 of 2008
41. Section 63 of the principal Act is hereby amended- 20 (a) by the substitution for subsection (2) of the following subsection;
"(2) Unless prohibited by its Memorandum of Incorporation, a company may provide for- (a) a shareholders meeting to be conducted entirely by electronic
communication; or 25 (b) one or more shareholders, or proxies for shareholders, to participate
by electronic communication in all or part of a shareholders meeting that is being held in person, [so long as the electronic communi- cation employed ordinarily enables all persons participating in that meeting to communicate concurrently with each other 30 withont an intermediary, and to participate reasonably effec- tively in the meeting]
as long as the electronic communication employed ordinarily enables all per~ons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate reasonably 35 effectively in the meeting.";
(b) by the substitution for subsections (4) and (5) of the following subsections, respectively:
''(4) [Any person present and entitled to exercise voting rights most on a show of hands have only one vote, irrespective of the 40 number of shares he or she holds or represents] At a meeting of shareholders, voting may either be by show of hands, or by polling,
(5) [On a poll at any meeting of a company, any member including his or her proxy, must be entitled to exercise all the voting rights attached to the shares held or represented by that person] If voting is 45 by show of hands, any person who is present at the meeting. whether as a shareholder or as proxy for a shareholder and entitled to exercise voting rights has one vote, irrespective of the number of voting rights that person would otherwise be entitled to exercise."; and
(c) by the insertion after subsection (5) of the following subsections: 50 "(6) If voting on a particular matter is by polling, any person who is
present at the meeting, whet er as a s areholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the securities held by that shareholder.
54 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZEHE, 20 APRIL 20I I
COMPANIES AMENDMENT ACT, 201 I
(7) Despite any provision of a company's Memorandum of Incorpo- ration or agreement to the contrary, a polled vote must be held on any particular matter to be voted on at a meeting if a demand for such a vote is made by- ( a) at least five persons having the right to vote on that matter, either as 5
a shareholder or a proxy representing a shareholder: or (b) a person who is, or persons who together are, entitled, as a
shareholder or proxy representing a shareholder, to exercise at least 10% of the voting rights entitled to be voted on that matter.".
Amendment of section 64 of Act 71 of 2008 I 0
42. Section 64 of the principal Act is hereby amended- ( a) by the substitution for subsection (8) of the following subsection:
"(8) If, at the time appointed in terms of this section for a postponed meeting to begin, or for an adjourned meeting to resume, the requirements of subsection (1), or (3) if applicable, have not been 15 satisfied, the [members of the company] shareholders, or in the case of a non-profit company, the members of the company present in person or by proxy will be deemed to constitute a quorum.": and
(b) by the substitution in paragraph (a) of subsection (II) for subparagraph (ii) of the following subparagraph: 20
"(ii) until further notice, [as agreed at the meeting; and] as agreed at the meeting; and".
Amendment of section 65 of Act 71 of 2008
43. Section 65 of the principal Act is hereby amended- ( a) by the substitution for subsection (4) of the following subsection: 25
"( 4) A proposed resolution is not subject to the requirements of section 6(4). but must be- ( a) expressed with sufficient clarity and specificity; and (b) accompanied by sufficient information or explanatory material [to
enable a shareholder who is entitled to vote on the resolution to 30 determine whether to participate in the meeting and to seek to influence the outcome of the vote on the resolution]
to enable a shareholder who is entitled to vote on the resolution to determine whether to participate in the meeting and to seek to influence the outcome of the vote on the resolution."; 35
(b) by the substitution in subsection (10) for paragraphs (a) and (b) of the following paragraphs, respectively:
"(a) a [lower] different percentage of voting rights to approve any special resolution; or
(h) one or more [lower] different percentages of voting rights to 40 approve special resolutions concerning one or more particular matters, respectively,'';
(c) by the substitution in subsections (8) and (10) for the closing phrase of the following:
"provided that there must at all times be a margin of at least 10 45 percentage points between the [requirements] highest established requirement for approval of an ordinary resolution on any matter, and the lowest established requirement for approval of a special resolution[,) on any matter."; and
56 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No.3 of 2011 COMPANIES AMENDMENT ACT, 2011
(d) by the substitution for subsection (II) of the following subsection: "(II) A special resolution is required to-
(a) amend the company's Memorandum of Incorporation to the extent required by section 16(1)(c) and section 36(2)(a):
(b) [approve the voluntary winding-up of the company, as contem· 5 plated in section 80(1); or) ratify a consolidated revision of a company's Memorandum of Incorporation, as contemplated in section 18(l)(b);
(c) [approve any proposed fundamental transaction, to the extent required by Part A of Chapter 5) ratify actions by the company or I 0 directors in excess of their authority, as contemplated in section 20(2);
(d) approve an issue of shares or grant of rights in the circumstances contemplated in section 41(1);
(e) approve an issue of shares or securities as contemplated in section 15 41(3);
(f) authorise the board to grant financial assistance in the circum- stances contemplated in section 44(3)(a)(ii) or 45(3)(a)(ii);
(g) approve a decision of the board for re-acquisition of shares in the circumstances contemplated in section 48(8); 20
(h) authorise the basis for compensation to directors of a profit company, as required by section 66(9);
(i) approve the voluntary winding up of the company, as contemplated in section 80( I);
(j) approve the winding up of a company in the circumstances 25 contemplated in section 81(1);
(k) approve an application to transfer the registration of the company to a foreign jurisdiction as contemplated in section 82(5);
({) approve any proposed fundamental transaction, to the extent required by Part A of Chapter 5; or 30
(m) revoke a resolution contemplated in section 164(9)(c).".
Amendment of section 66 of Act 71 of 2008
44. Section 66 of the principal Act is hereby amended- ( a) by the substitution in subsection (2) for paragraph (b) of the following
paragraph: 35 "(b) in the case of a public company. or a non-profit company, at least
three directors, in addition to the rrlinimum number of directors that the company must have to satisfy any requirement, whether in terms of this Act or its Memorandum of Incorporation, to appoint an audit committee, or a 40 social and ethics committee as contemplated in section 72(4).";
(b) by the substitution in subsection (7) for the words preceding paragraph (a) of the following words:
"A person becomes entitled to serve as a director of a company when that person-"; and 45
(c) by the insertion after subsection (II) of the following subsection: "( 12) Save as otherwise provided elsewhere in this Act or in the
company's Memoran urn of ncorporation, any partrcular director may be appointed to more than one committee of the company, and when calculating the minimum number of directors required for a company in 50 terms of subsections (2) and (3), any such director who has been appointed to more than one committee must be counted only once.''.
Amendment of section 68 of Act 71 of 2008
45. Section 68 of the principal Act is hereby amended- ( a) by the substitution for the heading of the following heading: 55
"Election of directors of profit companies"'; (b) by the substitution for subsection (I) of the following subsection:
"(I) Subject to subsection (3), each director of a profit company, other than the first director or a director contemplated in section 66(4)(a)(i) or
5~ No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 20 II
COMPANIES AMENDMENT ACT, 2011
(ii), must be elected by the persons entitled to exercise voting rights in such an election, to serve for an indefinite term, or for a term as set out in the Memorandum of Incorporation.";
(c) by the substitution in subsection (2) for the words preceding paragraph (a) of the following words; 5
"Unless [the) a profit company's Memorandum of Incorporation provides otherwise, in any election of directors-"; and
(d) by the substitution for subsection (3) of the following subsection; "(3) Unless the Memorandum of Incorporation of a profit company
provides otherwise, the board may appoint a person who satisfies the I 0 requirements for election as a director to fill any vacancy and serve as a director of the company on a temporary basis until the vacancy has been filled by election in terms of subsection (2), and during that period any person so appointed has all of the powers, functions and duties, and is subject to all of the liabilities, of any other director of the company.". 15
Amendment of section 69 of Act 71 of 2008
46. Section 69 of the principal Act is hereby amended- ( a) by the substitution for subsection (4) of the following subsection;
"(4) A person who becomes ineligible or disqualified while serving as a director of a company ceases to be entitled to continue to act as a 20 director immediately, subject to section 70(2).";
(b) by the insertion after subsection (II) of the following subsections: (II A) The Registrar of the Court must, upon-
(a) the 1ssuc of a sequestration order; (b) the issue of an order for the removal of a person from any office of 25
trust on the grounds of misconduct involving dishonesty; or (c) a conviction for an offence referred in subsection (8)(b)(iv), send a copy of the relevant order or particulars of the conviction, as the case may be, to the Commission.
(II B) The Commission must notify each company which has as a 30 director to whom the order or conviction relates, of the order or conviction."; and
(c) by the deletion of subsection 12.
Amendment of section 72 of Act 71 of 2008
47. Section 72 of the principal Act is hereby amended- 35 (a) by the substitution for subsection (4) of the following subsection:
"(4) The Minister [may), by regulation, may prescribe= l!!,1 [that a company or) a category of companies that must each have
a social and ethics committee, if it is desirable in the public interest, having regard to- 40 [(a)] ill [its] annual turnover; [(b)) ill.). [the size of its] workforce size; or [(c)) @i2 the nature and extent of [its) the activities of such
companies; (b) the functions to be performed by social and ethics committees 45
required by this subsection; and (c) rules governing the composition and conduct of social and ethics
committees."; and (b) by the insertion after subsection (4) of the following subsections:
"(5) A company that falls within a category of companies that are 50 required in terms of this section and the regulations to appoint a social and ethics committee may apply to the Tribunal in the prescribed manner and form for an exemption from that requirement, and the Tribunal may grant such an exemption if it is satisfied that- (a) the company is required in terms of other legislation to have, and 55
does have, some form of formal mechanism within its structures
60 No. 34243
Act No. 3 or 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 2011
that substantially performs the function that would otherwise be performed by the social and ethics committee in terms of this section and the regulations; or
(b) it is not reasonably necessary in the public interest to require the company to have a social and ethics committee, having regard to the 5 nature and extent of the activities of the company.
(6) An exemption granted in terms of subsection (5) is valid for five years, or such shorter period as the Tribunal may determine at the time of granting the exemption, unless set aside by the Tribunal in terms of subsection (7). 10
(7) The Commission, on its own initiative or on request by a shareholder, or a person who was granted standing by the Tribunal at the hearing of the exemption application. may apply to the Tribunal to set aside an exemption only on the grounds that the basis on which the exemption was granted no longer applies. 15
(8) A social and ethics committee of a company is entitled to- (a) require from any director or prescribed officer of the company any
information or explanation necessarY for the performance of the committee's functions;
(b) request from any employee of the company any information or 20 explanation necessary for the performance of the committee's functions~
(c) attend any general shareholders meeting; (d) receive all notices of and other communications relating to any
general shareholders meeting; and 25 (e) be heard at any general shareholders meeting contemplated in this
paragraph on any part of the business of the meeting that concerns the committee's functions.
(9) A company must pay all the expenses reasonably incurred by its social and ethics committee, including, if the social and ethics committee 30 considers it appropriate, the costs or the fees of any consultant or specialist engaged by the social and ethics committee in the performance of its functions.
(10) Section 84(6) and (7), read with the changes required by the context, apply with respect to a company that fails to appoint a social and 35 ethics committee, as required by this section and the regulations.".
Amendment of section 75 of Act 71 of 2008
48. Section 75 of the principal Act is hereby amended- { a) by the substitution for subsection (I) of the following subsection:
"(l) In this section [, "director" includes an alternate director 40 and]- (a) "director"" includes-
(i) an alternate director; [(a)]@ a prescribed officer; [or] and [(b)](iii) a person who is a member of a committee of the board of 45
a company, [or of the audit committee of a company] irrespective of whether [or not] the person is also a member of the company's board; and
(b) "related person"", when used in reference to a director. has the meaning set out in section l, but also includes a second company of 50 which the director or a related person is also a director, or a close corporation of which the director or a related person is a member."; and
(b) by the substitution for subsections (7) and (8) of the following subsections: "(7) A decision by the board, or a transaction or agreement approved 55
by the board, or by a company as contemplated in subsection (3), is valid despite any personal financial interest of a director or person related to the director, only if [it]-
62 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No.3 of 2011 COMPANIES AMENDMENT ACT, 2011
(a) i! was approved following disclosure of that interest in the manner contemplated in this section; or
(b) despite having been approved without disclosure of that interest, it- ill has subsequently been ratified by an ordinary resolution of the 5
shareholders following disclosure of that interest; or (ii) has been declared to be valid by a court in terms of subsection
ru. (S) A court, on application by any interested person, may declare valid
a transaction or agreement that had been approved by the board, or J 0 shareholders, as the case may be, despite the failure of the director to satisfy the disclosure requirements of this section.".
Amendment of section 77 of Act 71 of 2008
49. Section 77 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraph (d)(ii)lbb) of the following 15
sub-item: "(bb) a statement to the effect that a person had consented to be a director
of the company, when no such consent had been given, [despite knowing that the statement was false, misleading or untrue, as the case may be, but the provisions of section 104 (3), read with the 20 changes required by the context, apply to limit the liability of a director in terms of this paragraph; or]
despite knowing that the statement was false, misleading or untrue, as the case may be, but the provisions of section 104 (3), read with the changes required by the context, apply to limit the liability of a director in terms of 25 this paragraph; or"; and
(b) by the substitution in subsection (3)(e)- (i) for subparagraphs (iv) and (v) of the following subparagraphs:
"(iv) the provision of financial assistance to any person contem- plated in section 44 for the acquisition of securities of the 30 company, despite knowing that the provision of financial assistance was inconsistent with section 44 or the compa- ny's Memorandum of Incorporation[, to the extent that the resolution or agreement has been declared void in terms of section 44(5), read with section 218(1)]: 35
(v) the provision of financial assistance to a director for a purpose contemplated in section 45, despite knowing that the provision of financial assistance was inconsistent with that section or the company's Memorandum of Incorpora- tion [, to the extent that the resolution or agreement has 40 been declared void in terms of section 45(6), read with section 218(1)];"; and
(ii) for subparagraph (viii) of the following subparagraph: "(viii) an allotment by the company, despite knowing that the
a11otment was contrary to any provision of Chapter 4[, to 45 the extent that the allotment or an acceptance is declared void under section 109(1) read with section 218(1)].".
Amendment of section 78 of Act 71 of 2008
50. Section 78 of the principal Act is hereby amended- 50 (a) by the substitution for subsection (3) of the following subsection:
"(3) [A] Subject to subsection (3A), a company may not directly or indirectly pay any fine that may be imposed on a director of the company, or on a director of a related company, [who has been] as a consequence
64 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 201!
of that director having been convicted of an offence [in terms of any national legislation], unless the conviction was based on strict liability.";
(b) by the insertion after subsection (3) of the following subsection: "(3A) Subsection (3) does not apply to a private or personal liability 5
company if- (a) a single individual is the sole shareholder and sole director of that
company; or (b) two or more related individuals arc the only shareholders of that
company, and there are no directors of the company other than one I 0 or more of those individuals.";
(c) by the substitution in subsection (6) for subparagraph (ii) of the following subparagraph:
"(ii) from [willfnl] wilful misconduct or [willful] wilful breach of trust on the part of the director; or"; and -- 15
(d) by the substitution in paragraph (b) of subsection (7) for the words preceding subparagraph (i) of the following words:
"the company against any contingency including, but not limited to-".
Amendment of section 82 of Act 71 of 2008
51. Section 82 of the principal Act is hereby amended- 20 (a) by the substitution for subsection (I) of the following subsection:
"(I) [When] The Master must file a certificate of winding up of a company in the prescribed form when the affairs of [a] the company have been completely wound up [,and a court order of final liquidation has been made, the Master must promptly file a certificate to that effect, 25 together with a copy of the court order].";
(b) by the substitution in paragraph (a) of subsection (3) for the words preceding subparagraph (i) of the following words:
"the company has transferred its registration to a foreign jurisdiction in terms of subsection (5), or-"; 30
(c) by the substitution in subsection (3)(b) for subparagraph (i) of the following subparagraph:
(i) has determined in the prescribed manner that the company appears to have been inactive for at least seven years, and no person has demonstrated a reasonable interest in, or reason for, [it's] its 35 continued existence; or"; and
(d) by the insertion after subsection (4) of the following subsections: "(5) A company may apply to be deregistered upon the transfer of its
registration to a foreign jurisdiction, if (a) the shareholders have adopted a special resolution approving such 40
an application and transfer of registration; and (b) the company has satisfied the prescribed requirements for doing so.
(6) The Minister may prescribe criteria and procedural requirements that must be satisfied by a company before it may be de-registered in terms of subsection (5).". 45
Amendment of section 83 of Act 71 of 2008
52. Section 83 of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:
"(I) A company is dissolved as of the date its name is removed from the companies register unless the reason for the removal is that the company's 50 registration has been transferred to a foreign jurisdiction, as contemplated in section 82(5).".
Amendment of section 84 of Act 71 of 2008
53. Section 84 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) tor paragraph (a) of the following 55
paragraph:
66 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE. 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
"(a) every public company, subject to [subsection (2) and section] sections 5(6) and 94(1);";
(h) by the substitution in subsection (I) for paragraph (c) of the following paragraph:
"(c) a private company, a personal liability company or a non-profit 5 company [,only to the extent contemplated in section 34(2) or as otherwise required by this Act to have its financial statements audited]-
(i) if th"'e=-=c-=o=m::p::a"n"y~i"'s-:r::e-=q:-:u"'ir"ed:n:b"'y'""'th"i"'s'A"c"·t-=o::r-:t"'h=c-=r::e-=g"u"Ia"l!"=·o-=n"'s-:t=o' have its annual financial statements audited every year: 10 Provided that the provisions of Parts B and D of this Chapter will not apply to any such company; or
(ii) otherwise, only to the extent that the company's Memorandum of Incorporation so requires, as contemplated in section 34(2).": 15
(c) by the deletion of subsection (2); and (d) by the substitution in subsection (6) for the words preceding paragraph (a) of
the following words: "If the board of a [public company or state-owned] company fails to
make an appointment [contemplated in subsection (4) in accordance 20 with] as required by this Part-".
Amendment of section 86 of Act 71 of 2008
54. Section 86 of the principal Act is hereby amended- ( a) by the substitution for subsections (I) and (2) of the following subsections:
"(I) A public company or state-owned company must appoint [a 25 person knowledgeable or experienced in relevant laws as] a company secretary.
(2) Every company secretary [must be a permanent resident of the Republic, and must remain so while serving in that capacity], irrespective of whether the appointment is made as required by 30 subsection (I) [, or voluntarily] or in terms of a requirement in a company's Memorandum of Incorporation, as contemplated in [section] sections 34(2) and 84( I )(c )(ii), must- ( a) have the requisite knowledge of, or experience in, relevant laws;
and 35 (b) bea permanent resident of the Republic, and remain so while
serving in that capacity."; and (b) by the insertion after subsection (3) of the following subsection:
"(3A) The first company secretary of a company that is required only in terms of its Memorandum of Incorporation to appoint a company 40 secretary as contemplated in sections 34(2) and 84(l)(c)(ii), must be appointcd- (a) in accordance with subsection (3), if the requirement to appoint a
company secretary applies to that company when it is incorporated; or 45
(b) within 40 business days after the date on which the requirement first applies to the company, by either-
(i) the directors of the company; or (ii) an ordinary resolution of the holders of the company's
securities.". 50
Amendment of section 90 of Act 71 of 2008
55. Section 90 of the principal Act is hereby amended by the insertion after subsection (I) of the following subsection:
"(I A) A company referred to in section 84(1 )(cJ(i), or a company that is required only in terms of its Memorandum of Incorporation to have its annual financial 55 statements audited as contemplated in sections 34(2) and 84(1 )(c)(ii). must appoint an auditor- fa) in accordance with subsection (l), if the requirement to have its annual
financial statements audited applies to that company when it is incorporated; or 60
68 No. 34243 GOVERNMENT GAZElTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) at the annual general meeting al which the requirement first applies to the I company, and each annual general meeting thereafter.".
Amendment of section 91 of Act 71 of 2008
56. Section 91 of the principal Act is hereby amended by the insertion after subsection (5) of the following subsection: 5
"(6) Section 89, read with the changes required by the context, applies with respect to an auditor of a company, hut a reference in that section to ''company secretary" must be regarded a~ referring to the company's auditor.".
Amendment of section 94 of Act 71 of 2008
57. Section 94 of the principal Act is hereby amended- 10 (a) by the substitution in subsection (2) for the words preceding paragraph (a) of
the following words: "At each annual general meeting. a public company [or], state-owned
company [,] or other company that [bas voluntarily determined to have an audit committee] is reguired only by its Memorandum of Incorpo- 15 ration to have an audit committee as contemplated in [section] sections 34(2) and 84(1 )(c)(ii). must elect an audit committee comprising at least three members, unless-·•;
(h) by the substitution in subsection (7) for paragraph (i) of the following paragraph: 20
"(i) to perform such other oversight functions as may be determined by the board [including the development and implementation of a policy and plan for a systematic, disciplined approach to evaluate and improve the eft'ectiveness of risk management, control, and governance processes within the company]."; 25
(c) by the substitution in subsection (8)(a) for subparagraph (ii) of the following subparagraph:
"(ii) for rendering other services to the company. to the extent permitted in terms of subsection ((6)]Q2(d);"; and
(d) by the substitution for subsection (9) of the following subsection: 30 "(9) Nothing in this section precludes the appointment by a [public]
company at its annua1 genera] meeting of an auditor other than one nominated by the audit committee, but if such an auditor is appointed, the appointment is valid only if the audit committee is satisfied that the proposed auditor is independent of the company.". 35
Amendment of section 95 of Act 71 of 2008
58. Section 95 of the principal Act is hereby amended- ( a) by the substitution in paragraph I c) of subsection (I) for the words preceding
subparagraph (i) of the following words: " 'employee share scheme' means a scheme established by a company, 40 whether by means of a trust or otherwise, for the purpose of offering participation therein solely to employees, [and] officers and other persons closely involved in the business of the company or a subsidiary of the company, either-";
(b) by the substitution in subsection (I) for paragraph (i) of the following 45 paragraph:
"(i) 'primary oft'ering' means an offer to the public, made by or on behalf of a company, of securities to be issued by that company, or £):: another company- [(aa)] ill within a group of companies of which the first company is 50
a member; or ((bb)](ii) with [whom] which the first company proposes to be
amalgamated orto'iilcrge[; or) - ((cc) into which the first company proposes to be amalgam-
ated]."; and 55
70 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
(c) by the insertion after subsection (6) of the following subsection: "(7) The Minister may make regulations-
(a) establishing general or specific requirements respecting the form and content of rights offers, letters of allocation and prospectuses;
(b) prescribing the manner and form to be followed in filing and 5 publishing of rights offers, letters of allocation and prospectuses; and
(c) in respect of related or anciJiary matters concerning the offering of company securities.".
Amendment of section 97 of Act 71 of 2008
59. Section 97 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the following words:
10
"An employee share scheme qualifies for exemptions contemplated in sections 41(2)(d), 44[(2)(c)(i)) (3)(a)(i) or 45[(2)(c)(i)] (3)(a)(i) [of) or 15 otherwise contemplated in this Chapter, if~"; and
(b) by the substitution in subsection (2) for paragraphs (c) and (d) of the following paragraphs:
"(c) must ensure that copies of the documents containing the informa- tion referred to in paragraph (b) are filed within 20 business days 20 after the employee share scheme has been established; and
(d) must file a certificate within 60 business days after the end of each financial year, certifying that the compliance officer has complied with the obligations in terms of this section during the past financial year.". 25
Amendment of section 98 of Act 71 of 2008
60. Section 98 of the principal Act is hereby amended by the substitution in subsection (3) for paragraph (a) and (b) of the following paragraphs:
"(a) that satisfies the requirements of subsection (2)(a) and (h) is not required to be filed, or registered with an exchange; [and] or 30
(b) that does not satisfy all of the requirements set out in subsection (2)( a) and (b) will, despite any statement to the contrary contained in the advertisement, be regarded as having been intended to be a prospectus [,] issued by the person responsible for publishing or disseminating the advertisement, [if it does not include the statements required by subsection (2)(a), despite any 35 statement to the contrary contained in the advertisement] and is subject to every provision of this Act relating to such a prospectus.".
Amendment of section 99 of Act 71 of 2008
61. Section 99 of the principal Act is hereby amended by the substitution in subsection ( l) for paragraph (b) of the following paragraph: 40
"(b) in the case of a foreign company, a copy of its Memorandum of Incorporation or comparable governing document, and a Jist of the names and addresses of its directors, has been filed within 90 business days before the offer to the public is made.".
Amendment of section 100 of Act 71 of 2008 45
62. Section 100 of the principal Act is hereby amended- ( a) by the substitution in subsection (2) for the words preceding paragraph (a) of
the following words: "[Subject) Every prospectus is subject to the requirements and provisions of sections 102 to Ill [, a prospectus] and, in addition, 50 must-''; and
72 No. 34243 GOVERNMENT GAZEITE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
(b) by the substitution in paragraph (c) of subsection ( 13) for the words preceding subparagraph (i) of the following words:
"(c) the court, on an application in terms of paragraph (b)(ii), may make any order that is just and equitable in the circumstances r,l including, but not limited to, an order-". 5
Amendment of section 101 of Act 71 of 2008
63. Section I 0 I of the principal Act is hereby amended by the substitution in subsection (6)(d) for subparagraph (vii) of the following subparagraph:
"(vii) whether or not the securities are listed on an exchange, or permission to deal in those securities has been granted by an exchange, other than that referred to I 0 in subsection (I), and [,]- (aa) if so, [which] a statement naming that exchange[, and]: or ( bb) if not, a statement that they are not so listed and that no such permission
has been granted;".
Amendment of section 102 of Act 71 of 2008
64. Section 102 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the following words: "In any prospectus relating to securities of a company: a person must
15
not-"; 20 (b) by the substitution in subsection (l)(a) for subparagraph (ii) of the following
subparagraph: "(ii) the prescribed return reflecting the relevant particulars in regard to
that second person[,] has been filed; or"; and (c) by the substitution in subsection (2) for paragraph (b) of the following 25
paragraph: "(b) [to]the use of that person's name in the prospectus.".
Amendment of section 104 of Act 71 of 2008
65. Section I 04 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection: 30
"(I) If securities are offered to the public for subscription or sale [,] pursuant to a prospectus, every- ( a) person who becomes a director between the issuing of the
prospectus and the holding of the first general shareholders meeting at which directors are elected or appointed; 35
(b) person who has consented to be named in the prospectus as a director, or as having agreed to become a director either immedi- ately or after an interval of time;
(c) promoter of the company: or (d) person who- 40
(i) authorised the issue of the prospectus [,] or, under this Act. is regarded as having authorised the issue of [that]the prospec- tus; or
(ii) made that offer to the public, [is liable to compensate any person who acquired securities on 45 the faith of the prospectus for any loss or damage the person may have sustained as a result of any untrue statement in the prospectus, or in any report or memorandum appearing on the face of, issued with, or incorporated by reference in, the prospectus.] SO
is liable to compensate any person who acquired securities on the faith o the prospectus or any oss or amage the person may have sustamed as a result of any untrue statement in the prospectus, or in any report or memorandum appearing on the face of, issued with, or incorporated by reference in, the prospectus."; and 55
74 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 20 II
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) by the substitution in subsection (3) for paragraph (d) of the following paragraph:
"(d) that person consented to become a director of the company, but subsequently withdrew that consent before the issue of the prospectus. and [that] it was issued without that person's consent;". 5
Amendment of section 105 of Act 71 of 2008
66. Section I 05 of the principal Act is hereby amended by the substitution for subsection (!) of the following subsection:
"(I) If a person has consented to the use of their name, or the inclusion of any material in a prospectus, as contemplated in this Chapter[- (a)], that consent does I 0 not make the person liable as one who has authorised the issue- of the prospectus under section I04(1)(d), either-
[(i)) ~ to compensate persons purchasing on the faith of the prospectus, except in respect of any untrue statement purporting to be made by that person as an expert; or 15
[(ii)) @ to indemnify any person against liability under section 104(6).".
Amendment of section 108 of Act 71 of 2008
67, Section 108 of the principal Act is hereby amended by the substitution for subsection (7) of the following subsection:
"(7) If any money required to be repaid to an applicant in terms of subsection (6) 20 has not been repaid within 55 business days after the issue of the prospectus, each director or prescribed officer of the company is jointly and severally liable, with all other such directors and prescribed officers of the company, to repay that money with interest [at 6% per year), in accordance with the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), from the expiration of the 55th business day, unless 25 the default in payment wa"i not due to any misconduct or negligence on the part of that director or prescribed officer.".
Amendment of section 109 of Act 71 of 2008
68, Section 109 of the principal Act is hereby amended by the substitution in subsection (I) for paragraphs (a) and (b) of the following paragraphs: 30
"(a) that allotment is voidable at the instance of the applicant concerned, irrespective of whether the company concerned may be in the course of being wound up; and
(b) every director of the company concerned and, if the offeror is a company, every director of that company, is liable to the extent set out in section 35 77(3)(e)(vii), if the allotment or acceptance is declared void under paragraph (a).".
Amendment of section 112 of Act 71 of 2008
69, Section 112 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraph (a) of the following 40
paragraph: "(a) be delivered within the prescribed time, and in the prescribed
manner, to each shareholder of the company, subject to section 62 read with any changes required by the context;"; and
(b) by the substitution for subsections (4) and (5) of the following subsections: 45 "( 4) Any part of the undertaking or assets of a company to be disposed
of, as contemplated in this section, must be [given its fair market value] fairly valued, as calculated in the prescribed manner, as at the date of the proposal, [in accordance with the financial reporting standards) which date must be determined in the prescribed manner. 50
(5) A resolution contemplated in subsection (2)~ is effective only to the extent that it authorises for ratifies] a specific transaction.".
76 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
Amendment of section 114 of Act 71 of 2008
70. Section 114 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the following words: "Unless it is in liquidation [,] or in the course of business rescue 5
proceedings in terms of Chapter 6, the board of a company [,) may propose and, subject to subsection (4) and approval in terms of this Part, implement any arrangement between the company and holders of any class of its securities [, including a reorganisation of the share capital ofthe company) by way of, among other things-"; 10
(b) by the substitution in subsection (2) for the words preceding paragraph (a) of the following words:
"The company [, or the olferor contemplated in subsection (1), if any,) must retain an independent expert, who meets the following requirements, to compile a report as required by subsection (3):"; 15
(c) by the substitution in subsection (3) for paragraph (e) of the following paragraph:
''(e) state any material interest of any director of the company or trustee for security holders [, and state the elfect of the arrangement on those interests and persons];"; and 20
(d) by the insertion after subsection (3) of the following subsection: "(4) Section 48 applies to a proposed arrangement contemplated in
this section to the extent that the arrangement would result in any re-acquisition by a company of any of its previously issued securities.".
Amendment of section 115 of Act 71 of 2008 25
71. Section 115 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for paragraph (b) of the following
paragraph: "(b) to the extent that Parts B and C of this Chapter, and the Takeover
Regulations, apply to a company that proposes io- 30 (i) dispose of all or the greater part of [the) its assets or
undertaking; (ii) amalgamate or merge with another company; or
(iii) implement a scheme of arrangement, [the Panel has issued a compliance notice in respect of the transaction in terms of 35 section 119( 4)(b ), or exempted the transaction in terms of section 119(6)]
the Panel has issued a compliance certificate in respect of the transaction, in terms of section 119(4)(b), or exempted the transaction in terms of section 119(6 ). "; 40
(b) by the substitution in subsection (2) for paragraph (a) of the following paragraph:
"(a) by a special resolution adopted by persons entitled to exercise voting rights on such a matter, at a meeting called for that purpose and at which sufficient persons are present to exercise, in aggregate, 45 at least 25% of all of the voting rights that arc entitled to be exercised on that matter, or any higher percentage as may be required by the company's Memorandum of Incorporation, as contemplated in section 64 (2); and";
(c) by the substitution in subsection (2)(b) for subparagraph (iii) of the following 50 subparagraph:
"(iii) having regard to the consolidated financial statements of the holding company, the disposal by the subsidiary [substan· tially I constitutes a disposal of all or the greater part of the assets or undertaking of the holding company; and"; 55
(d) by the substitution in subsection (3) for paragraphs (a) and {b) of the following paragraphs:
"(a) the resolution was opposed by at least 15% of the voting rights that were exercised on that resolution [,] and, within five business days
78 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 20II
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 20ll
after the vote, any person who voted against the resolution requires the company to seek court approval; or
(b) the court, on an application within I 0 business days after the vote by any person who voted against the resolution, grants that person leave, in terms of subsection (6), to apply to a court for a review of 5 the transaction in accordance with subsection (7).";
(e) by the substitution for subsection (4) of the following subsection: "(4) For the purposes of subsections (2) and (3), any voting rights
controlled by an acquiring party, a person related to an acquiring party, or a person acting in concert with either of them, must not be included in 10 calculating the percentage of voting rights- ( a) reguired to be present [in satisfaction of the], or actually present, in
determining whether the applicable quorum [requirement) require- ments are satisfied; or
(h) required to be voted in support of a resolution, or actually voted in 15 support of the resolution.";
(f) by the insertion after subsection ( 4) of the following subsection: "(4A) In subsection (4), 'act in concert' has the meaning set out in
section 117(1)(b)."; and (g) by the substitution in subsection (5) for paragraph (a) of the following 20
paragraph: "(a) within 10 business days after the vote, apply to the court for
approval, and bear the costs of that application; or".
Amendment of section 116 of Act 71 of 2008
72. Section 116 of the principal Act is hereby amended- 25 (a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the following words: "Subject to subsection (2), after a resolution approving an amalgam-
ation or merger has been adopted by each company that is a party to the agreement [, and the transaction has satisfied all of the applicable 30 requirements set out in section 115)-";
(b) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words:
"A notice of amalgamation or merger must he filed after the transaction has satisfied all the applicable requirements set out in section 35 115, and-";
(c) by the substitution in subsection (6)(b) for subparagraphs (ii) and (iii) of the following paragraphs:
"(ii) civil, criminal or administrative action or proceeding pending by or against an amalgamating or merging company, and any such 40 proceeding may continue to be prosecuted by or against any [of the I amalgamated or merged company; or
(iii) conviction against, or ruling, order or judgment in favour of or against, an amalgamating or merging company, and any such ruling, order or Uudgement) judgment may be enforced by or against any 45 [of the) amalgamated or merged [,) company."; and
(d) by the substitution for subsection (7) of the following subsection: "(7) When an amalgamation or merger agreement has been imple-
mented- (a) the property of each amalgamating or merging company becomes 50
the property of the newly amalgamated, or surviving merged, company or companies; and
(b) each newly amalgamated, or surviving merged[,) company is liable for all of the obligations of every amalgamating or merging company, [subject to subsection (8), the requirements of section 55 113(1), and any provision of the merger agreement, or any other agreement)
in accordance with the provisions of the amalgamation or merger agreement, or any other relevant agreement, but in any case subject to the requirement that each amalgamated or merged company must satisfy the 60
80 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRJL 2011
COMPANIES AMENDMENT ACT. 201!
solvency and liguidity test, and subject to subsection (8), if it is I applicable.".
Amendment of section 118 of Act 7l of 2008
73. Section 118 of the principal Act is hereby amended by the substitution in subsection (l)(c) for subparagraph (i) of the following subparagraph: 5
"(i) the percentage of the issued securities of that company that have been transferred, other than by transfer between or among related or [interrelated] inter-related persons, within the period of 24 months immediately before the date of a particular affected transaction or offer exceeds the percentage prescribed in terms of subsection (2); or". 10
Amendment of section 119 of Act 7l of 2008
74. Section 119 of the principal Act is hereby amended- ( a) by the substitution in subsection (4) for paragraph (b) of the following
paragraph: "(b) issue [clearance notices) compliance certificates, if the Panel is 15
satisfied that the offer or transaction satisfies the requirements of this Part, Part C and the Takeover Regulations: and"; and
(b) by the substitution in subsection (5) for the words preceding paragraph (a) of the following words:
"To the extent necessary to ensure compliance with this Part, Part C 20 and the Takeover Regulations, and to fulfil the purposes contemplated in subsection (I), a compliance [order] notice contemplated in subsection (4)[(b)](s1 may, among other things-··.
Amendment of section 121 of Act 71 of 2008
75. Section 121 of the principal Act is hereby amended by the substitution in 25 paragraph (b) for subparagraph (i) of the following subparagraph:
"(i) issued a [clearance notice) compliance certificate with respect to the transaction; or".
Amendment of section 122 of Act 71 of 2008
76. Section 122 of the principal Act is hereby amended- 30 (a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the following words: "(I) A person must notify a regulated company in the prescribed
manner and form within three business days after that person-"; and (b) by the substitution in subsection (2) for the words preceding paragraph (a) of 35
the following words: "The requirements set out in subsection ( 1) apply to a person
irrespective of whether-".
Amendment of section 123 of Act 7l of 2008
77. Section 123 of the principal Act is hereby amended- ( a) by the substitution in subsection (2)(a) for subparagraphs (i) and (ii) of the
following subparagraphs: "(i) a regulated company reacquires any of its voting securities as
contemplated in section 48 or in terms of a scheme of arrangement
40
contemplated in section 114; or 45 (ii) a person acting alone has, or two or more related or inter-related
persons, or two or more persons acting in concert, have, acquired a beneficial interest in voting rights attached to any [voting) securities issued by a regulated company;"; and
82 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) by the substitution in subsection (3) for the words preceding paragraph (a) of the following words:
"Within one business day after the date of [a completed] an acquisition contemplated in subsection (2), the person or persons in whom the prescribed percentage, or more, of the voting [securities] 5 rights beneficia11y vests must give notice in the prescribed manner to the holders of the remaining securities, including in that notice-".
Amendment of section 124 of Act 71 of 2008
78, Section 124 of the principal Act is hereby amended by the substitution for subsection (6) of the following subsection: 10
"(6) An instrument of transfer contemplated in subsection (5) is not required for any securities for which a [securities] share warrant is for the time being outstanding.".
Amendment of section 125 of Act 71 of 2008
79, Section 125 of the principal Act is hereby amended- 15 (a) by the substitution for subsection (2) of the following subsection:
"(2) If [a person makes an offer]= (a) [for any securities of] a regulated company that has more than one
class of [securities] issued securities re-acquires any of its voting securities of a particular class or one or more particular classes, as 20 contemplated in section 48 or in terms of a scheme of arrangement contemplated in section 114 and, as a result, a person or a number of related persons hold securities of the company entitling the person or persons to exercise more than the prescribed percentage of the general voting rights associated with all the issued securities of the 25 company; [and] or
(b) [that] a person acting alone, or two or more persons acting in concert, make an offer for any securities of a regulated company that has more than one class of issued securities, which, if accepted, could result in [the] a person, [together with any] or a number of 30 related or inter-relate-d [person or person acting in concert with any of them,] persons holding securities of the company entitling the person or persons to exercise more than the prescribed percentage of the general voting rights [of] associated with all issued securities of the company, 35
that person or those persons acting in concert must make a comparable offer [must be made for] to acquire securities of each class of issued securities of that company.";
(b) by the substitution in subsection (3)(b) for subparagraph (ii) of the following subparagraph: 40
"(ii) the offer being approved by the independent holders of [more than SO% of the general voting rights of all] issued securities of [the company I that class, if all such independent holders, in aggregate, control more than 50% of the general voting rights of all issued securities of that class;"; and 45
(c) by the substitution in subsection (3) for paragraph (d) of the following paragraph:
"(d) if the offer could result in the person, together with any related or inter-related person or person acting in concert with any of them, holding securities of the company entitling the [persons] person or 50 persons to exercise more than [50% I the prescribed percentage of the general voting rights of all issued securities of the company, include a specific and prominent notice that the offer could result in such circumstances[-
(i) include a specific and prominent notice that the offer could 55 result in circumstances contemplated above; and
(ii) include a specific statement setting out the extent to which the person or persons referred to above will be free to acquire further securities in the company without making
84 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZE1TE. 20 APRIL 2011
COMPANIES AMENDMENT ACT. 20I I
a general offer, if the offer succeeds to the extent contem- plated above]." .
Amendment of Title of Part A of Chapter 6 of Act 71 of 2008
80. Chapter 6 of the principal Act is hereby amended by the substitution after the Title of the Chapter. for the Part heading, of the following heading: 5
"Part A".
Amendment of section 128 of Act 71 of 2008
81. Section 128 of the principal Act is hereby amended- ( a) by the substitution in subsection (l)(f) for subparagraph (i) of the following
subparagraph: 10 "(i) it appears to be reasonably unlikely that the company will be able to
pay all of its debts as they [fall] become due and payable within the immediately ensuing six months; or"; and
(b) by the substitution for subsection (2) of the following subsection: "(2) For the purpose of subsection (1)[(/)]lKJ., an employee of a IS
company is not related to that company solely as a result of being a member of a trade union that holds [shares] securities of that company.".
Amendment of section 129 of Act 71 of 2008
82. Section 129 of the principal Act is hereby amended by the substitution for subsection (7) of the following subsection: 20
"(7) If the board of a company has reasonable grounds to believe that the company is financia11y distressed, but the board has not adopted a resolution contemplated in this section, the board must deliver a written notice to each affected person, setting out the criteria referred to in section 128(l)[(eJ]l1J. that are applicable to the company, and its reasons for not adopting a resolution 25 contemplated in this section.".
Amendment of section 132 of Act 71 of 2008
83. Section 132 of the principal Act is hereby amended- ( a) by the substitution in subsection (l)(b) for paragraph (b) of the following
paragraph: 30 "(b) [a] an aiTected person applies to the court for an order placing the
company under supervision in terms of section 131 (I); or"; and (b) by the substitution in subsection (I) for paragraph (c) of the following
paragraph: "(c) a court makes an order placing a company under supervision during 35
the course of liquidation proceedings, or proceedings to enforce a security interest, as contemplated in section 131 (7) [a court makes an order placing a company under supervision].".
Amendment of section 133 of Act 71 of 2008
84. Section 133 of the principal Act is hereby amended- 40 (a) by the substitution in subsection (I) for paragraph (c) of the following
paragraph: "(c) as a set-off against any claim made by the company in any legal
proceedings, irrespective of whether those proceedings commenced before or after the business rescue proceedings began;". 45
(h) by the substitution in subsection (]) for paragraphs (d) and (e) of the following paragraphs respectively:
"(d) criminal proceedings against the company or any of its directors or officers; [or]
(e) proceedings concerning any property or right over which the 50 company exercises the powers of a trustee; or"; and
86 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
(c) by the insertion in subsection (I) of the following paragraph after paragraph (e):
"(0 proceedings by a regulatory authority in the execution of its duties after written notification to the business rescue practitioner.".
Amendment of section 134 of Act 71 of 2008
85. Section 134 of the principal Act is hereby amended- ( a) by the insertion after the section number of the following number:
"(!)";and (b) by the substitution of paragraph (c) of the following paragraph:
5
"(c) despite any provision of an agreement to the contrary. no person 10 may exercise any right in respect of any property in the lawful possession of the company, irrespective of whether the property is owned by the company, except to the extent that the practitioner consents in writing.".
Amendment of section 135 of Act 71 of 2008
86. Section 135 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for the words preceding paragraph (a) of
the following words:
15
"After payment of the practitioner's remuneration and [costs] expenses referred to in section 143, and other claims arising out of the 20 costs of the business rescue proceedings, all claims contemplated-"; and
(b) by the substitution in subsection (3)(a) for subparagraph (i) of the following subparagraph:
"(i) all claims contemplated in subsection (2), irrespective of whether or 25 not they are secured; and". -
Amendment of section 136 of Act 71 of 2008
87. Section 136 of the principal Act is hereby amended- ( a) by the insertion in paragraph (a) of subsection (I) after the word "proceed·
ings" where it first appears, of a ","; 30 (b) by the substitution for subsection (2) of the following subsection:
"(2) Subject to [sections 35A and 35B of the Insolvency Act, 1936 (Act No. 24 of 1936)] subsection (2A), and despite any provision of an agreement to the contrary, during business rescue proceedings, the practitioner may [cancel or 1= 35 (a) entirely, partially or conditionally suspend, for the duration of the
business rescue proceedings, [entirely, partialJy or conditionally any provision of] any obligation of the company that- (i) arises under an agreement to which the company [is] was a
party at the commencement of the business rescue [period, 40 other than an agreement of employment] proceedings; and
(ii) would otherwise become due during those proceedings; or (b) apply urgently to a court to entirely, partially or conditionally
cancel, on any terms that are just and reasonable in the circum- sta~.c~s, any obligation of the r.:ompany ~,;ontemplated in paragraph 45 f!!L.. ; and
(c) by the insertion after subsection (2) of the following subsection: "(2A) When acting in terms of subsection (2)-
(a) a business rescue practitioner must not suspend any provision of (i) an employment contract; or 50
(ii) an agreement to which section 35A or 35B of the Insolvency Act, 1936 (Act No. 24 or 1936), would have applied had the company been liquidated;
R8 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 201 I
Act No.3 of2011 COMPANIES AMENDMENT ACT, 2011
(b) a court may not cancel any provision of- (i) an employment contract, except as contemplated in subsection
(I); (ii) an agreement to which section 35A or 35B of the Insolvency
Act, (Act No. 24 of 1936), would have applied had the 5 company been liquidated; and
(c) if a business practitioner suspends a provision of an agreement relating to security granted by the company, that provision nevertheless continues to apply for the purpose of section 134, with respect to any proposed disposal of property by the company.". I 0
Substitution for section 138 of Act 71 of 2008
88. The principal Act is hereby amended by the substitution for section 138 of the following section:
"Qualifications of practitioners
138. (I) A person may be appointed as Ihe business rescue practitioner of 15 a company only if the person- ( a) is a member in good standing of a legal, accounting or business
management profession accredited by the Commission [subject to regulation by a regulatory authority li
(b) has been [prescribed) licensed as such by the [Minister] Commission 20 in terms of subsection (2);
[(b)] (c) is not subject to an order of probation in terms of section 162(7): [(c))(!!). would not be disqualified from acting as a director of the
company in terms of section 69(8); [(d)) 1.£1 does not have any other relationship with the company such as 25
would lead a reasonable and informed third party to conclude that the integrity, impartiality or objectivity of that person is compromised by that relationship; and
[(e))lfl is not related to a person who has a relationship contemplated in paragraph (d). 30
(2) [The Minister] For the purposes of subsection (l)(a)(ii), the Commission may [designate one) license any qualified person [or association within the Republic to regulate the practice of persons as) to practice [practitioners) in terms of this [Act] Chapter and may suspend or withdraw any such licence in the prescribed manner, [if tbat person or 35 association- ( a) is committed to achieving the purposes of this Chapter; (b) functions predominantly to promote sound principles and good
practice of business turnaround or rescue; and (c) has sufficient human, financial and operational resources, and 40
adequate administrative procedures and safeguards, to enable it to function efficiently and to effectively carry out its functions in terms of this Chapter, or presents to the Minister a credible plan to acquire or develop tbose resources).
(3) The Minister may make regulations prescribing- 45 (a) [impose reasonable conditions upon a person or association
designated by the Minister in terms of subsection (2), with respect to the carrying out of its functions and powers in terms of this Chapter; and) standards and procedures to be followed by the Commission in carrying out its 1icencing functions and powers in 50 terms of this section; and
(b) [make regulations prescribing-] minimum qualifications for a person to practice as a business rescue practitioner, including different minimum qualifications for different categories of companies
90 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
[(i) minimum qualifications for admission of a person to the practice of a business rescue practitioner; and
[(ii) procedures to be followed by a person or association designated by the Minister in terms of subsection (2) in carrying out its functions and powers in terms of this 5 Chapter].".
Amendment of section 139 of Act 7l of 2008
89. Section 139 of the principal Act is hereby amended by the substitution in subsection (2) for paragraph (a) of the following paragraph:
''(a) Incompetence or failure to perform the duties of a business rescue practitioner 10 of the particular company;".
Amendment of section 140 of Act 7l of 2008
90. Section 140 of the principal Act is hereby amended by the insertion atier subsection (I) of the following subsection:
"(lA) The practitioner must, as soon as practicable after appointment, inform all 15 relevant regulatory authorities having authority in respect of the activities of the company. of the fact that the company has been placed under business rescue proceedings and of his or her appointment.".
Amendment of section 141 of Act 7l of 2008
91. Section 141 of the principal Act is hereby amended by the substitution in 20 subsection (2)1cJ for subparagraph (i) of the following subparagraph:
"(i) voidable transactions, or the failure by the company or any director to perform any material obligation relating to the company, the practitioner must [direct the management to] take any necessary steps to rectify the matter and may direct the management to take appropriate steps.". 25
Amendment of section 142 of Act 7l of 2008
92. Section 142 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraphs (u) and (b) of the following
paragraphs: "(a) Any material transactions [involved] involving the company or the 30
assets of the company. and occurring within 12 months immediately before the business rescue proceedings began;
(b) any court, arbitration or administrative proceedings, including pending enforcement proceedings, involving the company;"; and
(b) by the substitution for subsection (4) of the following subsection: 35 "(4) No person is entitled, as against the practitioner of a company, to
retain possession of any books or records of the company, or to claim or enforce a lien over any such books or records, unless such books or records are in the lawful possession of such person and he or she has made copies available to the practitioner or has afforded the practitioner 40 a reasonable opportunity to inspect the books or records concerned.".
92 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
Amendment of section 143 of Act 71 of 2008
93. Section 143 of the principal Act is hereby amended by the substitution in subsection ( 4) for paragraph (b) of the following paragraph:
"(b) [that] the remuneration provided for in the agreement is [egregiously] unreasonable having regard to the financial circumstances of the company.". 5
Amendment of section 144 of Act 71 of 2008
94. Section 144 of the principal Act is hereby amended- ( a) by the substitution in subsection (3) for paragraph (a) of the following
paragraph: "(a) notice, which must be given in the prescribed manner and form to 10
employees at their workplace, and served at the head office of the relevant trade union, of each court proceeding, decision, meeting or other relevant event concerning the business rescue proceedings [and such notice must be given to employees at their workplace and served at the head office of the relevant trade union];"; and 15
(b) by the substitution in subsection (3) for paragraph (/) of the following paragraph:
"(/) vote with creditors on a motion to approve a proposed business plan, to the extent that the employee is a creditor, as contemplated in subsection [(I)]@; and". 20
Amendment of section 151 of Act 71 of 2008
95. Section 151 of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:
"(I) [The] Within 10 business days after publishing a business rescue plan in terms of section 150, the practitioner must convene and preside over a meeting of 25 creditors and any other holders of a voting interest, called for the purpose of considering the [proposed rescue] plan [within 10 business days after the publication of that plan in terms of section 150].".
Amendment of section 152 of Act 71 of 2008
96. Section 152 of the principal Act is hereby amended- 30 (a) by the substitution in subsection (I) for paragraph (a) of the following
paragraph: "(a) introduce the proposed business plan for consideration by the
creditors[,] and, if applicable. by the shareholders;"; and (b) by the substitution in subsection (6) for paragraph (b) of the following 35
subsection: "(b) if the business rescue plan was approved by the shareholders of the
company, as contemplated in subsection (3)(c). the practitioner may amend the company's Memorandum of Incorporation to authorise, and determine the preferences, rights, limitations and other terms 40 of, any securities that arc not otherwise authorised, but arc contemplated to be issued in terms of the business rescue plan, despite any provision of section 16, 36or 37 to the contrary.",
Amendment of section 153 of Act 71 of 2008
97. Section 153 of the principal Act is hereby amended by the insertion after 45 subsection (6) of the following subsection:
"(7) On an application contemplated in subsection (l)(a)(ii), or (l)(b)(i)(bb), a court may order that the vote on a business rescue plan be set aside if the court is satisfied that it is reasonable and just to do so, having regard to- ( a) the interests represented by the person or persons who voted against the 50
proposed business rescue plan;
94 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(b) the provision, if any, made in the proposed business rescue plan with respect to the interests of that person or those persons; and
(c) a fair and reasonable estimate of the return to that person, or those persons, if the company were to be liquidated.".
Amendment of section 159 of Act 71 of 2008
98. Section I 59 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for paragraph (b) of the following
paragraph:
s
"(b) that Act applies to a disclosure contemplated in this section by an employee, as defined in that Act, irrespective of whether that Act I 0 would otherwise apply to that disclosure.";
(b) by the substitution in subsection (3) for paragraph (a) of the following paragraph:
(a) it is made in good faith to the Commission, the Companies Tribunal, the Panel, a regulatory authority, an exchange, a legal adviser, a IS director, prescribed officer, company secretary, auditor, a person performing the function of internal audit, board or committee of the company concerned; and";
(c) by the substitution in subsection (3)(b) for the words preceding paragraph (i) of the following words: 20
"the person making the disclosure reasonably believed at the time of the disclosure that the information showed or tended to show that a company or external company, or a director or prescribed officer of a company acting in that capacity, [has] had-";
(d) by the substitution in subsection (3)(b) for subparagraphs (ii) and (iii) of the 25 following subparagraphs:
"(ii) failed or [is] was failing to comply with any statutory obligation to which the company [is] was subject;
(iii) engaged in conduct that [has] had endangered, or [is] was likely to endanger, the health or safety of any individual, or had harmed or 30 was likely to harm [damage] the environment;";
(e) by the substitution in subsection (5) for paragraph (b) of the following paragraph:
"(b) directly or indirectly makes an express or implied threat, whether conditional or unconditional, to cause any detriment to the first 35 person or to another person, and-
(i) intends the first person to fear that the threat will be carried out; or
(ii) is reckless as to causing the first person to fear that the threat will be carried out, [irrespective of whether the first person 40 actually feared that the threat would be carried out.]
irrespective of whether the first person actually fears or feared that the threat will or would be carried out."; and
(f) by the substitution in subsection (7) for the words preceding paragraph (a) of the following words: 45
"A public company [and] or a state-owned company must directly or indirectly-"'. -
Amendment of section 160 of Act 71 of 2008
99. Section 160 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection: SO
"(I) A person to whom a notice is delivered in terms of [section 12(3) or section 14(3),] this Act with respect to an application for reservation of a name, registration of a defensive name, application to transfer the reservation of a name or the registration of a defensive name, or the registration of a company's name, or any other person with an interest in 55 the name of a company, may apply to the Companies Tribunal in the prescribed manner and form for a determination whether the name, or the reservation, registration or use of the name, or the transfer of an')i'Slicti
96 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMEN[)MENT ACT, 2011
reservation or registration of a name, satisfies the requirements of [section 11] this Act.";
(b) by the substitution in subsection (3) for paragraph (a) of the following paragraph:
"(a) must make a determination whether that name, or the reservation. 5 registration or use of the name, or the transfer of the reservation or registration of the name, satisfies the requirements of [section 11] this Act; and"; and
(c) by the substitution in subsection (3)(h) for subparagraph (i) of the following subparagraph: 10
"(i) the Commission to- (aa) reserve a contested name, or register a particular defensive
name that had been contested, for the applicant [in terms of section 12];
( bb) register [the contested] ~ name [,] or amended name that had 15 been contested as the name of a company; [or]
(cc) cancel [a] the reservation of a name, or the registration of a defensive name, [granted in terms of section 12, if the reserved name has not been used by the person entitled to W;m W
(dd) tranSfer, or cancel the transfer of, the reservation of a name, or the registration of a defensive name; or".
Amendment of section 161 of Act 71 of 2008
100. Section 161 of the principal Act is hereby amended by the substitution in subsection (2) for the words preceding paragraph (a) of the following words: 25
"The right to apply to a court in terms of this section is in addition to any other remedy available to a holder of a [companies] company's securities-".
Amendment of section 162 of Act 71 of 2008
101. Section 162 of the principal Act is hereby amended- ( a) by the substitution in subsection (2) for the words preceding paragraph (a) of 30
the following words: "A company, a shareholder, director, company secretary or prescribed
officer of a company, a registered trade union that represents employees of the company or another representative of the employees of a company may apply to a court for [a] an order declaring a person delinquent or 35 under probation if-"; -
(b) by the substitution in subsection (5)(f) for the words preceding subparagraph (i) of the following words:
"within a period of five years, was a director of one or more companies or a managing member of one or more close corporations, or controlled 40 or participated in the control of a juristic person, irrespective of whether concurrently, sequentially or at unrelated times, that were convicted of an offence, or subjected to an administrative fine or similar penalty, in terms of any legislation, and-"; and
(c) by the substitution in subsection (7)(b) for subparagraph (i) of the following 45 subparagraph:
"(i) the person has been a director of more than one company, or a managing member of more than one close corporation, irrespective of whether concurrently, sequentially or at unrelated times; and".
98 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Acl No. 3 of lOll COMPANIES AMENDMENT ACT, 2011
Amendment of section 163 of Act 71 of 2008
102. Section 163 of the principal Act is hereby amended by the deletion of subseclion (4).
Amendment of section 164 of Act 71 of 2008
103. Section 164 of the principal Act is hereby amended- 5 (a) by the substitution in subsection (8) for the words preceding paragraph (a) of
the following words: ''A demand delivered in terms of subsections (5) to (7) must also be
delivered to the Panel, and must state-"; --- (h) by the substitution in subsection (9) for paragraph (c) of lhe following 10
paragraph: "(c) the company, by a subsequent special resolution, revokes the
adopted resolution that gave rise to the shareholder's rights under this section.";
(c) by the substitution in subsection (15)(c)(v) for item (aa) of the following item: 15 "(aa) the dissenting shareholders to either withdraw their respective
demands [,in which case the shareholder is reinstated to their full rights as a shareholder,] or to comply with subsection (13)(a); and";
(d) by the insertion after subsection (15) of the following subseclion: 20 "(15A) At any time before the court has made an order contemplated
in subsection (!5)(c)(v), a dissenting shareholder may accept the offer made by the company in terms of subsection (II), in which case- ( a) that shareholder must comply with the requirements of subsection
!3(a); and 25 (h) the company must comply with the requirements of subsection
~";and (e) by the insertion after subsection (19) of the following subsection:
"(20) Except to the extent- (a) expressly provided in this section; or 30 (b) that the Panel rules otherwise in a particular case, a payment by a company to a shareholder in terms of this section docs not obligate any person to make a comparable offer under section 125 to any other person.".
Amendment of section 165 of Act 71 of 2008 35
104. Section 165 of the principal Act is hereby amended- ( a) by the substitution in subsection (8) for paragraph (a) of the following
paragraph: "(a) a person is a third party if the company and that person arc not
related or [interrelated] inter-related; and"; and 40 (b) by the substitution in subsection (14) for paragraph (b) of the following
paragraph: "(b) the court may take that ratification or approval into account in
making any (judgement] judgment or order.".
Amendment of section 166 of Act 71 of 2008 45
105. Section 166 of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:
"(I) As an alternative to applying for relief to a court, or filing a complaint with the Commission in terms of Part D, a person who would be entitled to apply for relief. or file a complaint in terms of this Act, may refer a matter that could be the 50 subject of such an application or complaint for resolution by mediation, conciliation or arbitration to- ( a) the Companies Tribunal; [or] (b) an accredited entity, as defined in subsection (3) [, for resolution by
mediation, conciliation or arbitration]; or 55 (c) anyotherperson.". -
100 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
Amendment of section 168 of Act 71 of 2008
106. Section 168 of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:
"(I) Any person may file a complaint in writing- ( a) with the Panel in respect of a matter contemplated in Part B or C of Chapter 5
5, or in the Takeover Regulations; or (b) with the Commission in respect of any provision of this Act not referred to in
paragraph (a). [alleging that a person has acted in a manner inconsistent with this Act, or that the complainant's rights under this Act, or under a company's Memorandum of Incorporation or rules, have been infringed) I 0
alleging that a person has acted in a manner inconsistent with this Act, or that the complainant's rights under this Act, or under a company's Memorandum of Incorporation or rules, have been infringed.".
Amendment of section 169 of Act 71 of 2008
107. Section 169 of the principal Act is hereby amended by the substitution for 15 paragraph (b) of subsection (I) of the following paragraph:
"(b) if they think it expedient as a means of resolving the matter, refer the complainant to the Companies Tribunal, or to an accredited entity, as defined in section 166(3), with a recommendation that the complainant seek to resolve the matter with the assistance of that agency or person; or". 20
Amendment of section 171 of Act 71 of 2008
108. Section 171 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection:
"( 1) Subject to subsection (3), the Commission, or the Executive Director of the Panel, may issue a compliance notice in the prescribed 25 form to any person whom the Commbsion or Executive Director. as the case may be, on reasonable grounds believes- ( a) has contravened this Act; or (b) assented to, was implicated in, or directly or indirectly benefited
from, a contravention of this Act, [unless the alleged contraven- 30 tion could otherwise be addressed in terms of this Act by an application to a court or to the Companies Tribunal)
unless the a11eged contravention could otherwise be addressed in terms of this Act by an application to a court or to the Companies Tribunal.";
(b) by the substitution for subsection (4) of the following subsection: 35 "(4) A compliance notice contemplated in subsection (I) must set
out- [( a) must set out-]
[(i)) !E)_ the person or association to whom the notice applies; [(ii)] !£1 the provision of this Act that has been contravened; 40
[(iii)) (£! details of the nature and extent of the non-compliance; [(iv)) !.!!!. any steps that are required to be taken and the period
within which those steps must be taken; and [(v)) i£1 any penalty that may be imposed in terms of this Act if
those steps are not taken."; and 45 (c) by the substitution for subsection (7) of the following subsection:
"(7) If a person to whom a compliance notice has been issued fails to comply with the notice, the Commission or the Executive Director, as the case may be, may either-
102 No. 34243
Act No. 3 of 2011
GOVERNMENT GAZETTE, 20 APRIL 2011
COMPANIES AMENDMENT ACT, 20I I
(a) apply to a court for the imposition of an administrative fine~ or (b) refer the matter to the National Prosecuting Authority for prosecu-
tion as an offence in terms of section 214(3), [but may not do both in respect of any particular compliance notice]
but may not do both in respect of any particular compliance notice.". 5
Amendment of section 172 of Act 71 of 2008
109. Section 172 of the principal Act is hereby amended- ( a) by the substitution in subsection (I) for the words preceding paragraph (a) of
the followings words: "Any person issued with a compliance notice in terms of[section 171] 10
this Act may apply to the Companies Tribunal in the case of a notice issued by the Commission, or to the Takeover Special Committee in the case of a notice issued by the Executive Director, or to a court in either case, to review the notice within-"; and
(b) by the substitution for subsection (4) of the following subsection: 15 "(4) A decision by the Companies Tribunal or the Takeover Special
Committee in terms of this section is binding, subject to any right of review £¥,or appeal to, [by] a court.".
Amendment of section 175 of Act 71 of 2008
110. Section 175 of the principal Act is hereby amended by the substitution in 20 subsection (2) for paragraph (j) of the following paragraph:
"(f) the degree to which the respondent has co-operated with the Commission or Panel, as the case may be, and [a] the court; and".
Amendment of section 191 of Act 71 of 2008
11 I. Section 191 of the principal Act is hereby amended by the substitution in 25 subsection (I) for paragraph (b) of the following paragraph:
"(b) [Commissioner] Commission on the management of the Commission's resources, or the performance of any of its functions.".
Amendment of section 194 of Act 71 of 2008
112. Section 194 of the principal Act is hereby amended- 30 (a) by the substitution in subsection (3) for paragraph (b) of the following
paragraph: "(b) sufficient persons with legal training and experience to satisfy the
requirements of [subsection] section 195(3)(a)."; and (b) by the insertion after subsection (6) of the following subsection: 35
"(7) The chairperson and each other member of the Tribunal serves for a term of five years and may, subject to subsection (2)(b), be reappointed for a second term.".
Amendment of section 195 of Act 71 of 2008
I 13. Section 195 of the principal Act is hereby amended by the substitution for 40 subsection (7) of the following subsection:
"(7) ''[An] A decision by the Companies Tribunal with respect to a decision of, or a notice or Order issued by, the Commission is binding on the Commission, subject to any review by, or appeal to, a [the] court.".
Amendment of section 200 of Act 71 of 2008
114. Section 200 of the principal Act is hereby amended- ( a) by the substitution for subsection (I) of the following subsection:
"(!)The Panel may subject to subsection (4) appoint-
45
104 No. 34243
Act No. 3 or 2011
GOVERNMENT GAZE1TE, 20 APRIL 2011
COMPANIES AMENDMENT ACT. 2011
(a) an Executive Director; and (b) one or more deputy Executive Directors, [on terms and conditions
determined by the PaneiJ on terms and conditions determined by the Panel."; and
(b) by the insertion after subsection (3) of the following subsection: 5 "(4) The chairperson of the Panel, designated in terms of section 198,
in consultation with the Minister and with the concurrence of the Minister of Finance, may determine the remuneration, allowances, benefits. and conditions of appointment of- ( a) the Executive Director; 10 (b) each member of the Panel, and (c) each member of the Takeover Special Commiuee.".
Amendment of section 202 of Act 71 of 2008
115. Section 202 of the principal Act is hereby amended by the substitution for subsection (2) of the following subsection: 15
"(2) The Takeover Special Committee consists of- (a) a chairperson, who must be an attorney or advocate whether practicing or not;
and (b) at least two other persons, [each of whom must be designated from time to
time by the Takeover Regulation Panel from among those ofits members 20 appointed by the Minister in terms of section 197(l)(d)]
each of whom must be designated from time to time by the Panel from among those of its members appointed by the Minister in terms of section 191(1)(d).".
Amendment of section 203 of Act 71 of 2008
116. Section 203 of the principal Act is hereby amended by the substitution for 25 subsection (I) of the following subsection:
"(I) The Minister must establish a council, to be known as the Financial Reporting Standards Council. consisting of- ( a) four persons, each of whom is registered and practicing as an auditor~ (b) two persons, each of whom is responsible for preparing financial statements 30
on behalf of public companies; (c) two persons responsible for preparing financial statements for private
companies, or personal liability companies; (d) four persons who. in their capacity as holders of securities issued by a
company, or as creditors of a company, arc reasonably expected to rely on 35 financial statements, as contemplated in the definition of 'financial state- ment' in section (1);
(e) two persons knowledgeable in company Jaw; (/) one person nominated by the executive officer of the Financial Services Board
as defined in [section I of] the Financial Services Board Act, 1990 (Act No. 40 97 of 1990), or any successor body to it;
(g) one person nominated by the Governor of the South African Reserve Bank. or any successor body to it~ and
(h) a number of persons, nominated one each by any exchange that imposes adherence to financial reporting standards as a listing requirement [each of 45 whom must be appointed by the Minister, to serve for a term of three years),
each of whOm must be appointed by the Minister, to serve for a term of three years.".
Amendment of section 206 of Act 71 of 2008
117. Section 206 of the principal Act is hereby amended by the substitution in subsection (2)(e) for the words preceding subparagraph (i) of the following words:
"divulge any confidential information referred to in paragraph (d) to any third party, except as contemplated in section 212[(5)](6), or-'".
50
106 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 201 I
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 2011
Amendment of section 212 of Act 71 of 2008
118. Section 212 of the principal Act is hereby amended by the substitution in subsection (6) for the following subsection:
"(6) If any reasons for a decision in terms of this Act would reveal any confidential information, the Commission, the Panel, the Companies Tribunal or 5 the Council, as the case may be, must provide a copy of the proposed reasons to the party claiming confidentiality at least [five] !Q business days before publishing those reasons.".
Amendment of section 214 of Act 71 of 2008
119. Section 214 of the principal Act is hereby amended- 10 (a) by the substitution in subsection (I) for paragraphs (c) and (d) of the following
paragraphs: "(c) was knowingly a party to an act or omission by a company
calculated to defraud a creditor or employee of the company, or a holder of the company's securities, or with another fraudulent 15 purpose; or [
(i) conduct prohibited by section 22 (1); or (ii) an act or omission by a bnsiness calculated to defraud a
creditor, employee or security holder of the company, or with another fraudulent purpose; or] 20
(d) is a party to the preparation, approval, dissemination or publication of a prospectus or a written statement contemplated in section 1 01, that contains an 'untrue statement' as defined and described in section 95 [-
(i) financial statements or summaries, to the extent set out in 25 section 29(6); or
(ii) a prospectus, or a written statement contemplated in section 101, that contained an 'untrue statement' as defined and described in section 95].";
(b) by the substitution in subsection (2) for the words preceding paragraph (a) of 30 the following words:
"Forthe purposes of subsection (I )(d) and section 29(6), a person is a party to the preparation of a document contemplated in that subsection if-"; and
(c) by the insertion after subsection (3) of the following subsection: 35 "(4) A person who contravenes section 99(1), (2), (3), (4), (5), (8) or
(9) and, if that person is a company, every director or prescribed officer of the company who knowingly was a party to the contravention, is- ( a) guilty of an offence; and (b) liable to any other person for any losses sustained as a consequence 40
of that contravention.".
Amendment of section 218 of Act 71 of 2008
120. Section 218 of the principal Act is hereby amended by the substitution for subsection (I) of the following subsection:
"(I) [Nothing] Subject to any provision in this Act specifically declaring void an 45 agreement, resolution or provision of an agreement, Memorandum of Incorpora- tion, or rules of a company, nothing in this Act renders void [anl any other agreement, resolution or provision of an agreement, [resolution,] Memorandum of Incorporation or rules of a company that is prohibited, [void,] voidable or that may be declared unlawful in terms of this Act, unless a court [declares] has-;;;3de a 50 declaration to that effect regarding that agreement, resolution or provision [to be void].".
108 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 20ll
Amendment of section 225 of Act 71 of 2008
121. Section 225 of the principal Act is hereby substituted for the following section: ill This Act is called the Companies Act, 2008, and, subject to subsection (2),
comes into operation on a date fixed by the President by proclamation in the Gazette[, which may not be earlier than one year following the date on which 5 the President assented to this Act].
(2) Section ll(l)(a)(ii) and (iii) shall come into operation three years from the date of commencement of this Act.".
Amendment of Schedule 1 to Act 71 of 2008
122. Schedule I to the principal Act is hereby amended- I 0 (a) by the substitution in items I (I)( b). I (5), I (5)(b J(i), 2(3) and 5( 4) for the word
"subitcm" or "subitems" of the word "sub-item" or "sub-items", respec- tively;
(b) by the substitution in item 1(3) for the words preceding paragraph (a) of the following words: 15
"A non-profit company must not, directly or indirectly, pay any portion of its income or transfer any of its assets, regardless [whether] how the income or asset was derived, to any person who is or was an incorporator of the company, or who is a member or director, or person appointing a director, of the company, except-"; and 20
(c) by the substitution in sub-item (4)(bJ for the expression "external non-profit companies" of the expression "registered external non-profit companies".
Amendment of Schedule 2 to Act 71 of 2008
123. Schedule 2 to the principal Act is hereby amended by the substitution in item l for sub-item (2) of the following sub-item: 25
"(2) A notice of conversion must be accompanied by- ( a) a [certified copy of a special resolution] written statement of consent
approving the conversion of the close corporation signed by members of the corporation holding in aggregate, at least 75% of the members' interest in the corporation; 30
(b) [either a new]!'_ Memorandum of Incorporation[, or an amendment to the company's Memorandum of Incorporation] consistent with the require· ments of this Act[, in either case]; and
(c) the prescribed filing fee.".
Amendment of Schedule 3 to Act 71 of 2008 35
124. Item 4 of Part A of Schedule 3 to the principal Act is hereby amended- ( a) by the substitution in the amendment of section 19(1 )(b) of Act No. 69 of 1984
for the expression "section II( 4 )" of the expression "section II (3 )"; and (b) by the substitution in the amendment of section 20 of Act No. 69 or 1984 for
the expression "Sections 14( 4)" of the ex pression "Sections 14(2) and (3)". 40
Amendment of Schedule 4 to Act 71 of 2008
125. Schedule 4 to the principal Act is hereby amended by the insertion, at the end of the Schedule, of the following:
"Part A of Chapter 4 of the Consumer Protection Act, 2008 (Act No. 68 of 2008)". 45
110 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT. 201 I
Amendment of Schedule 5 to Act 71 of 2008
126. (I) Item 2 of Schedule 5 to the principal Act is hereby amended- ( a) by the insertion after the item number of the expression "(I)"; and (h) by the insertion after the existing item of the following item;
"(2) Despite section II, a pre-existing company- 5 (a) whose name, immediately before the effective date, satisfied the
requirements of section 49 of the previous Act is not required to change its name to comply with section 11(3)(c) solely on the ground that any part of its name was in an official language other than English; and I 0
(h) may continue to usc a translated name that, immediately before the effective date, was registered and otherwise met the requirements of section 50(2) of the previous Act.
(3) Despite the repeal of the previous Act, section 49(5) to (7) of the previous Act continues to apply to a pre-existing company that was, 15 immediately before the effective date, engaged in any circumstances contemplated in those provisions.
(4) Despite the repeal of the previous Act, a pre-existing company retains all of the powers set out in that Act in respect of its shares that were issued and outstanding immediately before the effective date, to the 20 extent necessary to give full effect to- ( a) section 35(6); and (b) item 6(2) of this Schedule.
(5) If, as a consequence of the coming into effect of the Act and the repeal of the previous Act, a conflict, dispute or doubt arises within two 25 years after the effective date concerning the particular manner or form in which, or time by which, a pre-existing company is required to- ( a) prepare its annual financial statements, convene an annual general
meeting, provide to its shareholders copies of its annual financial statements, any notice or any other document; 30
(b) file any particular document with the Commission; or (c) take any other particular action required in terms of this Act or the
company's Memorandum of Incorporation, the company may apply to the Tribunal for directions, and a member of the Tribunal may make an administrative order that is appropriate and 35 reasonable in the circumstances.
(6) An external company that, immediately before the effective date, was registered as such in terms of the previous Act must be regarded as having registered on the effective date as an external company in terms of this Act. 40
(7) If, immediately before the general effective date, a particular pre-existing company has passed its financial year end but has not completed the requirements in terms of the previous Act for publishing, audit and approval of its annual financial statements for that financial year- 45 (a) the provisions of the previous Act continue to apply with respect to
the publishing, audit and approval of those statements; and (b) the provisions of this Act will apply to each subsequent financial
year end and annual financial statements of that company.". (2) Item 3 of Schedule 5 to the principal Act is hereby amended- 50
(a) by the substitution for the item heading of the following heading: "Pending [filings] matters"; and
(b) by the substitution in sub-item (I) for the following sub-item: "(I) Any matter [filed with] pending before the Registrar under the
[Companies Act, 1973 (Act No. 61 of 1973)] previous Act, or a 55 provision of the Close Corporations Act, (Act No. 69 of I 984). amended by this Act, before the effective date and not fully addressed at that time, must be concluded by the Registrar in terms of [that] such Act, despite its repeal or amendment.".
112 No. 34243 GOVERNMENT GAZETTE, 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(3) Item 4 of Schedule 5 to the principal Act is hereby amended- ( a) by the substitution in sub-items (I)( a), (I )(h), (I)( c) and (I)( d) for the
expression "section II (3)(b)" of the expression "section II (3)"; (b) by the substitution in sub-item (I)( b) for the expression "section 53( c)" of the
expression "section 53(b)"; 5 (c) by the insertion after sub-item (3) of the following sub-item;
"(3A) If, before the general effective date, the shareholders of a pre-existing company had adopted any agreement between or among themselves, under whatever style or title, comparable in purpose and effect to an agreement contemplated in section 15(7), any such 10 agreement continues to have the same force and effect- ( a) as of the general effective date, for a period of two years, despite
section 15(7), or until changed by the shareholders who arc parties to the agreement; and
(b) after the two-year period contemplated in paragraph (a), to the 15 extent that the agreement is consistent with this Act and the company's Memorandum of Incorporation."; and
(d) by the substitution for sub-item (4) of the following sub-item; "( 4) During the period of two years immediately following the general
effective date- 20 (a) if there is a conflict between-
ill a provision of this Ac~ and a provision of a [preexisting) pre-existing company's Memorandum of Incorporation, the latter provision prevails, except to the extent that this Schedule provides otherwise; 25
(ii) a binding provision contemplated in sub-item (3), and this Act, the binding provision prevails; or
(iii) a provision of an agreement contemplated in sub-item (3A), and this Act or the company's Memorandum of Incorporation, the provision of the agreement prevails, except to the extent 30 that the agreement, or the Memorandum of Incorporation, provides otherwise; and
(b) despite Chapter 7, until a pre-existing company has filed an amendment contemplated in [snbitem) sub-item (2)(a), neither the Commission nor the Panel may issue a compliance notice to that 35 company with respect to conduct that is-
(i) inconsistent with this Act; but (ii) consistent with [that company's Memorandum of Incorpo-
ration] a provision that prevails over this Act in terms of paragraphia).". 40
( 4) Item 6 of Schedule 5 to the principal Act is hereby amended- ( a) by the substitution for sub-item (3) of the following sub-item:
"(3) The Minister, in consultation with the member of Cabinet responsible for national financial matters, must make regulations, to take effect as of the general effective date, providing for the optional 45 conversion and transitional status [and conversion) of any nominal or par value shares, [treasury shares] and capital accounts of a pre-existing company, but any such regulations must [-(a)) preserve the rights of shareholders associated with such shares, as at the effective date, to the extent doing so is compatible with the purposes of this item[; or (b) 50 provide for the company to compensate its shareholders for the loss of any such rights]."; and
(b) by the insertion after sub-item (4) of the following sub-item; "(5) Section 164 does not apply with respect to the conversion by a
company of par value or nominal value shares of a pre-existing company 55 in terms of this item, and in accordance with the regulations.".
114 No. 34243 GOVERNMENT GAZETTE. 20 APRIL 2011
Act No. 3 of 2011 COMPANIES AMENDMENT ACT, 2011
(5) Item 7 of Schedule 5 to the principal Act is hereby amended- ( a) by substitution in sub-item (I) for the expression "preexisting" of the
expression "pre-existing": (b) by the substitution for sub-item (2) of the following sub-item:
"(2) A person contemplated in [suhitem] sub-item (I) who, in terms 5 of this Act, is ineligible to be, or disqualified from being, a director, alternate director, prescribed officer, company secretary of auditor is regarded [to have] as having resigned from [that] every such office iQ any company as from the effective date.";
(c) by the substitution in sub-item (3) for the expression "general effective date" 10 of the expression "effective date"; and
(d) by the addition after sub-item ( 10) of the following sub-item: "(11) The five consecutive financial years contemplated in section
92(1) must be calculated from the date of commencement of this Act.". (6) Item 8 of Schedule 5 to the principal Act is hereby amended by the substitution in 15
sub-item (3) for paragraph (b) of the following paragraph: "(b) a defensive name, or renewal of the registration of a defensive name, in terms
of section 43 of the previous Act that was in effect immediately before the effective date must be regarded as if it had been [reserved] registered in terms of section 12~ of this Act, as from the [effective date, but any such 20 reservation of a name expires on the earlier of-
(i) the date the name is used by a company incorporated by the person for who the name has been reserved; or
(ii) the second anniversary of the general effective date] actual date on which that registration or renewal was granted.". 25
(7) Item II of Schedule 5 to the principal Act is hereby amended by the substitution for sub-item (3) of the following sub-item:
"(3) A document that, before the effective date, had been served or filed in accordance with the previous Act must be regarded as having been satisfactorily served or filed for any comparable purpose of this Act". 30
(8) Item 12 of Schedule 5 to the principal Act is hereby amended- ( a) by the substitution in sub-item (4) for the expression "subitem (2)" of the
expression "sub-items (I) and (2)"; and (b) by the substitution in sub-item (5) for the expression "subitems (2) and (3)"
of the expression "sub-items (I) to (3)". 35 (9) Item 13 of Schedule 5 to the principal Act is hereby amended by the substitution
in sub-item (I )(c)(i) for subparagraph (i) of the following sub-item: "(i) the Commission may exercise any power of the Minister, [or] the Registrar, or
the Panel may exercise any power of the Securities Regulation Panel, in terms of the previous Act to investigate and prosecute any breach of that Act that 40 occurred during the period of three years immediately before the effective date, subject to [subitem] sub-item (2); and".
Short title and commencement
127. This Act is called the Companies Amendment Act, 2011, and comes into operation on the date on which the principal Act comes into operation in terms of section 45 225 of that Act