NEW ENTREPRENEURIAL LAW PIET DELPORT LLB LLD (Pret) H Dip Tax Law (Wits)

NEW ENTREPRENEURIAL LAW PIET DELPORT LLB LLD (Pret) H Dip Tax Law (Wits) Members of the LexisNexis Group worldwide South Africa LexisNexis (Pty) Ltd DURBAN 215 Peter Mokaba Road (North Ridge Road), Morningside, Durban, 4001 JOHANNESBURG Building No. 9, Harrowdene Office Park, 124 Western Service Road, Woodmead, 2191 CAPE TOWN Office Floor 2, North Lobby, Boulevard Place, Heron Close, Century City, 7441 Australia LexisNexis, CHATSWOOD, New South Wales Austria LexisNexis Verlag ARD Orac, VIENNA Benelux LexisNexis Benelux, AMSTERDAM Canada LexisNexis Canada, MARKHAM, Ontario China LexisNexis, BEIJING France LexisNexis, PARIS Germany LexisNexis Germany, MÜNSTER Hong Kong LexisNexis, HONG KONG India LexisNexis, NEW DELHI Italy Giuffrè Editore, MILAN Japan LexisNexis, TOKYO Korea LexisNexis, SEOUL Malaysia LexisNexis, KUALA LUMPUR New Zealand LexisNexis, WELLINGTON Poland LexisNexis Poland, WARSAW Singapore LexisNexis, SINGAPORE United Kingdom LexisNexis, LONDON USA LexisNexis, DAYTON, Ohio © 2014 ISBN 978 0 409 11817 9 E-Book ISBN 978 0 409 12226 8 Copyright subsists in this work. No part of this work may be reproduced in any form or by any means without the publisher’s written permission. Any unauthorised reproduction of this work will constitute a copyright infringement and render the doer liable under both civil and criminal law. Whilst every effort has been made to ensure that the information published in this work is accurate, the editors, authors, writers, contributors, publishers and printers take no responsibility for any loss or damage suffered by any person as a result of the reliance upon the information contained therein. Editor: Marjorie Guy Technical Editors: Maggie Talanda and Luella Nicholls Printed in South Africa by Interpak Books Pietermaritzburg v Preface New Entrepreneurial Lawis the successor to Cilliers & Benade Entrepreneurial Lawand to the New Companies Act Manual . It is intended to be an aid to Henochsberg on the Companies Act 71 of 2008, and as companion to Nagel (ed) Commercial Law(2011). The chapters on close corporations and partnerships that originally appeared in Cilliers & Benade Entrepreneurial Law and authored by Professor JJ Henning were updated and a new chapter on trusts was added. For various reasons it was ‘. . . a deep and dark December . . .’ as quoted by Bruce Welling, and therefore I must even more so thank Marjorie Guy and Kerri Dixon for their support. In recognition of Hendrik Cilliers and Marius Benade. PIET DELPORT December 2014 vii Contents Page Preface ....................................................................................................... v Abbreviations .............................................................................................. ix PART A: COMPANIES Chapter 1 Introduction and background ................................................... 1 Chapter 2 Legal personality and registration of companies ......................... 11 Chapter 3 Corporate finance ................................................................... 43 Chapter 4 Corporate capital .................................................................... 81 Chapter 5 Capacity and representation ..................................................... 97 Chapter 6 Corporate governance: shareholders ......................................... 109 Chapter 7 Corporate governance: directors ............................................... 123 Chapter 8 Groups of companies .............................................................. 163 Chapter 9 Accounting records, financial statements and audit ..................... 171 Chapter 10 Fundamental transactions and take-over regulation .................... 191 Chapter 11 Business rescue and compromise ............................................. 217 Chapter 12 Remedies and enforcement...................................................... 241 Chapter 13 Winding-up, deregistration and dissolution ................................ 271 PART B: TRUSTS Chapter 14 Trusts ................................................................................... 283 PART C: PARTNERSHIPS Chapter 15 Partnerships ........................................................................... 299 PART D: CLOSE CORPORATIONS Chapter 16 Close corporations .................................................................. 343 Appendix A: Standard forms ......................................................................... 377 Appendix B: Alterable provisions.................................................................... 421 Bibliography ................................................................................................ 443 Table of cases ............................................................................................. 445 Table of statutes ......................................................................................... 455 Index ......................................................................................................... 473 ix Abbreviations 1973 Act/1973 Companies Act Companies Act 61 of 1973 2011 CAA Companies Amendment Act 3 of 2011 AC Audit committee ADR Alternative Dispute Resolution AFS Annual financial statements AGM Annual general meeting CC Close Corporation CIPC Companies and Intellectual Property Commission CC Act Close Corporations Act 69 of 1984 CoR Company forms dti Department of Trade and Industry FRSC Financial Reporting Standards Council IFRS International Financial Reporting Standards Insolvency Act Insolvency Act 24 of 1936 IPO Initial public offering IRBA Independent Regulatory Board for Auditors MOI Memorandum of Incorporation NOI Notice of Incorporation NPC Non-profit company PIS Public Interest Score Regulations R351 in Government Gazette34239 of 26 April 2011 SEC Social and ethics committee SOC State-owned company the Act/2008 Act/2008 Companies Act Companies Act 71 of 2008 TRP Takeover Regulation Panel 1 Chapter 1Introduction and background 1 Introduction ................................................................ 1 2 Purpose of the Companies Act ....................................... 4 3 Application and interpretation ....................................... 6 4 New concepts .............................................................. 6 5 New entities ................................................................ 10 1 Introduction The Department of Trade and Industry (dti) published a policy paper named ‘South African Company law for the 21st century – Guidelines for Corporate Law Reform’1 which envisaged the development of a ‘clear, facilitating, predictable and consistently enforced law’ to provide ‘a protective and fertile environment for economic activity’. Bill 61D of 2008 was assented to by the National Assembly on 19 November 2008 and the Companies Act 2 was signed by the President on 8 April 2009. Implementation, however, would be by proclamation as determined in section 225. The Act contained numerous mistakes and on 22 December 2009, a so-called ‘rectification’ notice was published,3 listing the mistakes to be addressed. The proposed regulations were also published 4 and comments were invited. A proposed Companies Amendment Bill was published (electronically only, on the then Companies and Intellectual Property Registration Office (CIPRO) and dti websites) on 27 July 2010, correcting 297 mistakes. The Companies Amendment Bill 40 of 2010 was published in Government Gazette33695 of 27 October 2010 and Bill 40B of 2010 was ______________ 1 Government Gazette 26493 of 23 June 2004. 2 Act 71 of 2008 (the Act/2008 Act). 3 N 1663 Government Gazette 32832 of 22 December 2009. 4 N 1664 Government Gazette 32832 of 22 December 2009.