LL.M. (Commercial Law) / In order to promote sound corporate conduct, it is essential that shareholders actively participate in the governance of the company. The primary mechanism to achieve this lies in the shareholder’s right to vote at meetings. However, an analysis of the nature of shares, and the history surrounding the introduction and development of uncertificated shares in particular, reveals a structure that often interposes multiple nominees between the issuing company and the underlying investor. Such a structure has the potential to dispossess the underlying investor of his rights, which may have concomitant negative effects on the corporate governance of the company. A comparative study of the legal framework for uncertificated shares in the United States, the United Kingdom and South Africa reveals varying degrees of protection for the underlying investor. Unfortunately, none of these countries has resolved the problem completely, and it is suggested that a move to a direct, transparent holding model, where the underlying investor, rather than an intermediary, is recorded in a company’s share register, is a better solution.

LL.M. (Commercial Law) / Please refer to full text to view abstract.

The capital maintenance doctrine presupposes that a company’s capital must not be returned to its shareholders. The doctrine was anchored on three rules, one of which was that a company cannot acquire its own shares as this amounted to a diversion of capital to the shareholders whose shares were acquired. This rule was partly rationalized as protecting the interests of shareholders. In South Africa the rule was embodied in s 85 of the Companies Act 61 of 1973. However, it was amended by s 9 of the subsequent Companies Amendment Act 37 of 1999 to provide that a company can acquire its own shares if certain substantive and procedural requirements were satisfied. Upon the enactment of Companies Act 71 of 2008, the requirements have not been substantially altered. They are partly geared towards protecting shareholders by ensuring that shareholders are treated equally and fairly. Moreover, the Johannesburg Securities Exchange Limited (hence the JSE Limited) was empowered by the Companies Act 61 of 1973 to promulgate requirements to be met when a company wishes to acquire its own shares. The Companies Act 71 of 2008 does not in express terms empower the JSE Limited to develop requirements to be met when a company wishes to acquire its own shares. However, the Act expressly requires that a listed company wishing to acquire its own shares must also comply with the requirements of the relevant exchange. Such requirements can therefore be deemed to subsist even amidst the new Act as an internal regulation of the JSE Limited. The said requirements are also partly aimed at protecting shareholders, largely by ensuring that adequate information is availed to shareholders to empower them to make informed decisions. / Private Law / LL. M. (Company Law)

The Companies Act of 71 of 2008 makes a number of important changes to the rules relating to capital maintenance. In line with the objectives of the Companies Act of 71 of 2008, section 44 of the Act has removed the prohibition on the provision of financial assistance by a company which was contained under the previous section 38 of the Companies Act 61 of 1973. Despite the repeal of the prohibition, a transaction which involves the provision of financial assistance by a company for the acquisition of or subscription of its own securities still needs to be effected in accordance with the requirements and conditions that are provided under the Act and Memorandum of Incorporation. To explore the new developments, within this study, the provision of financial assistance in terms of section 44 of the Companies Act of 2008 is, therefore, analysed in detail. On the other hand, the UK Companies Act of 2006 repealed the prohibition on the giving of financial assistance by private companies in most circumstances. It, however, retained the prohibition to public companies only because of the requirements of the Second Company Law Directive (77/91/EEC). This study also explores the rules of financial assistance by a company under the UK Companies Acts in detail. Though the source of financial assistance by a company both in South Africa and in English Company laws is rooted in the English decision of the Trevor v Whitworth case, currently these countries have adopted what is deemed appropriate and significant in their own countries. This study, therefore, examines and compares the rules governing the provision of financial assistance by a company in the company laws of these two countries. / Mercantile Law / LL.M. (Commercial law)

The Companies Act of 71 of 2008 makes a number of important changes to the rules relating to capital maintenance. In line with the objectives of the Companies Act of 71 of 2008, section 44 of the Act has removed the prohibition on the provision of financial assistance by a company which was contained under the previous section 38 of the Companies Act 61 of 1973. Despite the repeal of the prohibition, a transaction which involves the provision of financial assistance by a company for the acquisition of or subscription of its own securities still needs to be effected in accordance with the requirements and conditions that are provided under the Act and Memorandum of Incorporation. To explore the new developments, within this study, the provision of financial assistance in terms of section 44 of the Companies Act of 2008 is, therefore, analysed in detail. On the other hand, the UK Companies Act of 2006 repealed the prohibition on the giving of financial assistance by private companies in most circumstances. It, however, retained the prohibition to public companies only because of the requirements of the Second Company Law Directive (77/91/EEC). This study also explores the rules of financial assistance by a company under the UK Companies Acts in detail. Though the source of financial assistance by a company both in South Africa and in English Company laws is rooted in the English decision of the Trevor v Whitworth case, currently these countries have adopted what is deemed appropriate and significant in their own countries. This study, therefore, examines and compares the rules governing the provision of financial assistance by a company in the company laws of these two countries. / Mercantile Law / LL.M. (Commercial law)

The Companies Act 71 of 2008 (“2008 Companies Act”) will have far reaching effects on the manner in which a company is formed and operated under South African company law and in particular entrenches the procedure that must be followed by a company when acquiring its own shares. The radical amendment of the capital maintenance rules by the introduction of the solvency and liquidity tests to the Companies Act 61 of 1973 has been carried forward under the 2008 Companies Act. These tests impose an obligation on a company to ensure that the company is both solvent and liquid at the time of the acquisition of its own shares and for a stated period thereafter. The 2008 Companies Act further brings the duties and liabilities of the directors in line with their current fiduciary duties in terms of common law. / Mercantile Law / LLM

The Companies Act 71 of 2008 (“2008 Companies Act”) will have far reaching effects on the manner in which a company is formed and operated under South African company law and in particular entrenches the procedure that must be followed by a company when acquiring its own shares. The radical amendment of the capital maintenance rules by the introduction of the solvency and liquidity tests to the Companies Act 61 of 1973 has been carried forward under the 2008 Companies Act. These tests impose an obligation on a company to ensure that the company is both solvent and liquid at the time of the acquisition of its own shares and for a stated period thereafter. The 2008 Companies Act further brings the duties and liabilities of the directors in line with their current fiduciary duties in terms of common law. / Mercantile Law / LLM