Companies Amendment Act 16 of 2024 now partially effective

Topic

Old Act

Amendment

Section 114 & 115:

Share buy-backs

A re-purchase by a company of more than 5% of its shares was subject to the stringent requirements contained in Section 114 & 115

Reference to the requirements in section 114 & 115 is removed.

Section 77:

Director breaches

Action against directors due to a breach of their fiduciary duties was subject to a prescription period of three years

The prescription period may now be capable of extension by court on good cause shown

Section 95:

Employee share schemes

Only subscriptions and issuance of shares fell within the definition of an employee share schemes

Provides for the purchase of shares to be included in the definition of employee share schemes

Section 135:

Landlord’s position in business rescue

Protection for post business rescue commencement finance assistance was limited

Now provides protection to Landlord’s in that their claims for charges will be regarded as post commencement finance.

Section 61 and 72:

Social and ethics committee

Provided that the social and ethics committee must consist of at least 3 directors, one of which must be non-executive for at least the past 3 financial years

Provided that the committee be appointed by the board of directors

Provides that the majority of the members of the committee must be non-executive and must be so for the past 3 financial years

Now provides that the committee must be appointed by the shareholders at the annual general meeting.

Section 40:

Share issuance for further consideration

Shares issued for future consideration were to be held in a “trust arrangement” which led to uncertainty as to the legal requirements pertaining to this “trust arrangement” in terms of the Trust Property Control Act

These shares must now be transferred to a “stakeholder” to be held in escrow

Section 16:

MOI filings

Described the amendment of a companies Memorandum of Incorporation to take effect on the later of the date on and time at which the Notice of Amendment was “filed” OR the date as set out in the notice

The amendment takes effect 10 business days from receipt of the Notice of Amendment by the Companies and Intellectual Property Commission (“CIPC”), unless endorsed or rejected by CIPC

Section 45:

Financial assistance

The requirements for providing financial assistance placed an unnecessary burden on companies

Now provides that these requirements no longer apply where the financial assistance is given to a subsidiary.