An agreement cannot be revived by way of an addendum once the agreement has lapsed.
February 3, 2025Unmarried, Separated, and Parenting: What Are Your Rights and Your Children’s Future?
February 3, 2025The amendments introduced by the Companies Amendment Act 16 of 2024 and Companies Second Amendment Act 17 of 2024 mark a significant development of the Companies Act 71 of 2008. The amendments improve certain procedural inefficiencies and include new provisions to promote transparency and accountability in practice. While certain of the amendments came into force and effect on 27 December 2024, those amendments requiring supporting regulations will come into force and effect on a date to be proclaimed by the President (expected to be in April 2025). Given extent of the amendments, it is imperative that companies familiarise themselves with the relevant amendments and adapt their business practices accordingly. While certain key amendments are not yet in force, companies should ensure that they are prepared for and are able to comply with the amended requirements once in force.
Overview of key amendments
| Section | Original Provision | Amended Provision | Insights | Operative |
|---|---|---|---|---|
| Section 16(9) | A Notice of Amendment of an MOI takes effect immediately on the date and time that it was filed with CIPC | A Notice of Amendment of an MOI takes effect 10 business days after the date on which it was filed with CIPC, unless endorsed or rejected earlier by CIPC. | The amendments clarify when a Notice of Amendment will be effective. Timing implications should be considered as part of any M&A transaction requiring amendments to a company’s MOI. | In effect |
| Section 26(2) | Any person has the right to inspect or copy the securities register and register of directors of a profit company. | Any person has the right to inspect or copy the register of members, register of beneficial owners, register of directors and annual financial statements of a profit company. Companies with public interest scores below specified thresholds are exempt from the requirement to disclose their financial statements | The amendments will significantly increase the information that members of the public may request and obtain from private companies. Companies should ensure that they have appropriate systems in place to ensure that, once operative, they are able to comply with the amended access to information provisions | Not in effect |
| Section 38A | An issue of shares which has not been authorised or which is in excess of the number of authorised shares of any class may be retroactively authorised by shareholders within 60 business days of the share issue, failing which the share issue will be a nullity | An invalid creation, allotment or issue of shares may, on application by the company or any other person who holds an interest in the company, be retroactively validated by a court at any time if the court is satisfied that it is just and equitable to so. This applies in addition to the existing provisions set out in section 38. | The amended provisions will provide a useful mechanism to validate an invalid creation or allotment of shares, or an issue of shares which has not been retroactively authorised by the company’s shareholders within 60 business days after the date on which the shares were issued. Although not clear, it appears that section 38A cannot be relied on where shareholders have voted against retroactively validating an invalid share issue in terms of section 38(1). | Not in effect |
| Section 45 | The requirements relating to the provision of financial assistance (i.e. shareholder approval by special resolution, compliance with the solvency and liquidity test and fair and reasonableness) apply to the provision of financial assistance by a company to any related or inter-related person of that company. | The requirements for the provision of financial assistance do not apply in respect of financial assistance provided by a company to or for the benefit a subsidiary of that company. | Companies should review their existing MOIs to ensure that the requirements set out therein align with the amended provisions of the Companies Act. While the requirements for the provision of financial assistance by companies to their subsidiaries have been relaxed, this only applies in relation to South African subsidiaries. Financial assistance provided to foreign subsidiaries will remain subject to the requirements of section 45. Similarly, the financial assistance requirements set out in section 44 continue to apply in respect of any financial assistance provided by a company in connection with the acquisition of shares in that company (or a related company). | In effect |
| Section 48 (8) | A repurchase by a company of 5% or more of any class of shares is subject to the requirements of sections 114 and 115, including those relating to the appointment of an independent expert. | All share repurchases must be approved by way of a special resolution of shareholders, unless the share repurchase is part of a pro rata offer to all shareholders or is undertaken on a stock exchange by a listed company. | Share repurchases are now no longer subject to the onerous requirements set out in section 114 and 115 of the Companies Act. The simplified mechanisms will make share repurchases an attractive alternative when structuring shareholder exits | In effect |
| Section 118 | A private company qualifies as a regulated company and is subject to the provisions of the takeover regulations if more than 10% of the company’s issued share capital has been transferred in the preceding 24 months. | A private company will qualify as a regulated company and be subject to the takeover regulations if it has 10 or more shareholders holding a direct or indirect shareholding in the company and meets the financial threshold of annual turnover or asset value as determined by the Takeover Regulation Panel from time to time. | The amendments significantly alter when private companies will be subject to the requirements of the takeover regulations. It is not, however, clear how far up the corporate structure one must look to ascertain whether a company will meet the threshold of having 10 or more shareholders with a ‘direct or indirect shareholding in the company’. For example, will a wholly owned subsidiary whose holding company has more than 10 shareholders qualify as a regulated company. It remains to be seen whether the Takeover Regulation Panel or CIPC will issue any guidance as to how this threshold is to be implemented in practice | Not in effect |