Abstract
The Companies Act 71 of 2008 (the 2008 Act) replaced the Companies Act No. 61 of 1973, effective 1 May 2011. The 2008 Act was aimed at keeping pace with developments in company law internationally. It is not intended to entirely replace the well-established principles and has largely retained the pre-existing South African company law. The mergers and acquisitions provisions are aimed at creating transparent, efficient, and simple procedures. Different types of mergers and acquisitions are clearly defined as “affected transactions” or “offers” in section 117. Section 118 provides for companies to which the provisions apply. The reasons for regulating these transactions and powers of the regulator – The Takeover Regulation Panel, have been reviewed, clarified, and improved. The previous section on disposal of all or greater part of assets or undertaking of a company has been re-written. The 2008 Act further introduces a new type of affected transaction in section 113, in the form of a “merger” or an “amalgamation.” The 2008 Act has retained the scheme of arrangement in section 114, but has changed its format by removing compulsory court application and approval. The courts get involved under certain prescribed circumstances. The 2008 Act has enhanced shareholder protection for fundamental transactions in the form of section 164 – Appraisal Rights and section 115, dealing with shareholder approval of fundamental transactions. Some scholars and practitioners have criticised certain provisions. However, in general, the provisions have received favourable commentary. They regarded as progressive and comparable with others internationally.
Highlights
The Companies Act 71 of 2008 replaced the Companies Act No 61 of 1973, effective 1 May 2011
The DTI Guidelines indicated that the mergers and acquisitions provisions published under the 1973 Act are aligned with international practices
The Takeover Regulation Panel (TRP) has no authority to regulate affected transactions relating to fundamental transactions entered into by a company that is subject to a business rescue plan in terms of Chapter 6.33
Summary
The 2008 Act creates, empowers and clarifies the role of the Takeover Regulation Panel (TRP), a new body that replaced the Securities Regulation Panel (SRP). The TRP performs the same functions as that of the SRP that existed under the 1973 Act. The members of the Takeover Special Committee are designated from time to time by the TRP from those members of the TRP who have been appointed by the Minister in terms of section 197(1)(d). The number of Appeal Committee in the SRP Code consisted of 5 members, and it may have included any member of the SRP, irrespective of the body or organisations that nominated the person.. In the case of the TSC only members appointed by the Minister in terms of section 197(1)(d) of the Act may be members of the TSC.30 Another difference is that section 202(2) of the Act requires that the chairperson of the TSC be either an Attorney or an Advocate, whether practising or not.
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