Two Bills seeking to amend the Companies Act, 2008 (“the Act”) have been approved by the National Assembly and are under consideration by the National Council of Provinces.   

The first Bill seeks, among other things, to amend the categories of private companies to which Parts B and C of Chapter 5 of the Act and the Takeover Regulations (“the Takeover Provisions”) apply.

The current position

The Takeover Provisions currently apply to state-owned companies (unless exempt therefrom) and public companies.  They also apply to private companies if: −

• the Memorandum of Incorporation of that company expressly provides that the company and its securities are subject to the Takeover Provisions; or
• the percentage of the issued securities of that company that have been transferred, other than by transfer between or among related or inter-related persons, within the period of 24 months immediately before the date of a particular affected transaction or offer exceeds 10%.

The anticipated position

The Bill anticipates that the Takeover Provisions will apply to state-owned companies (unless exempt therefrom) and public companies. They will also apply to private companies if: −

• the Memorandum of Incorporation of that company expressly provides that the company and its securities are subject to the Takeover Provisions; (or)
• that company has 10 or more shareholders with a direct or indirect shareholding in the company and meets or exceeds the financial threshold of annual turnover or asset value determined by the Minister: Provided that the Takeover Regulation Panel (“the Panel”) may exempt any particular transaction affecting a private company.

The Minister, in consultation with the Panel, will determine the financial thresholds based on the annual turnover or asset value of the company in South Africa, in general or in relation to specific industries, for purposes of determining or identifying the private companies to which the Takeover Provisions will apply.

If the Takeover Provisions apply to a company

If the Takeover Provisions apply to any company, in appropriate circumstances that company must engage with the Panel and, ultimately, obtain from the Panel either: −

• a compliance certificate, confirming that the Panel is satisfied that the relevant offer or transaction satisfies the requirements of the Takeover Provisions; or
• an exemption, whereby the Panel wholly or partially, and with or without conditions, exempts the offeror to an affected transaction or an offer from the application of any of the Takeover Provisions.

We suggest that you contact your commercial attorney if you need advice regarding the Takeover Provisions and their applicability to your company and/or any particular offer or transaction.

Tel: +27 31 570 5469  email: janine.will@gb.co.za