LML4806 - STUDY UNIT 5
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Certainly! Here are the questions numbered along with their respective answers:
1. **What is the legal definition of a share under the Companies Act 71 of 2008?**
- A share is defined as "one of the units into which the proprietary interest in a profit
company is divided." It is a unit of contribution to share capital, property that can be traded,
and a measure of a shareholder’s interest, including personal rights that can be transferred.
2. **How can the classes of shares authorized by a company, and the rights attached to
those classes, be amended?**
- According to section 36 of the Companies Act 2008, the rights attached to a specific class
are determined by the MOI and the terms of issue. The MOI must specify the classes, their
numbers, preferences, rights, limitations, and other terms. The board can reclassify unissued
shares and increase or decrease authorized shares, with changes filed via a Notice of
Amendment. Alterations from the 1973 Act required a special resolution, but this is rarely
used now.
3. **What types of preference shares are used?**
- Preference shares enjoy priority over other classes for dividends and sometimes capital
on winding-up, often with limited voting rights. They usually offer modest income returns
and may have voting rights on amendments affecting their preferences. They cannot be
issued unless the company has ordinary or other shares, and typically do not have priority
for repayment of capital on winding-up.
4. **Under what circumstances will the holder of non-voting shares have the right to vote?
**
- Non-voting shares generally do not carry voting rights, but the Companies Act permits
voting rights in certain circumstances such as amendments to the preferences, rights,
limitations, or terms associated with their shares.
5. **When must the board obtain the approval of the shareholders before issuing shares?**
- Shareholder approval is required when issuing shares to directors, related persons, or
nominees, especially if the issue results in the voting power of new shares reaching or
exceeding 30%. No approval is needed when issuing under underwriting agreements, pre-
[Document subtitle]
[DATE]
[COMPANY NAME]
[Company address]
, Certainly! Here are the questions numbered along with their respective answers:
1. **What is the legal definition of a share under the Companies Act 71 of 2008?**
- A share is defined as "one of the units into which the proprietary interest in a profit
company is divided." It is a unit of contribution to share capital, property that can be traded,
and a measure of a shareholder’s interest, including personal rights that can be transferred.
2. **How can the classes of shares authorized by a company, and the rights attached to
those classes, be amended?**
- According to section 36 of the Companies Act 2008, the rights attached to a specific class
are determined by the MOI and the terms of issue. The MOI must specify the classes, their
numbers, preferences, rights, limitations, and other terms. The board can reclassify unissued
shares and increase or decrease authorized shares, with changes filed via a Notice of
Amendment. Alterations from the 1973 Act required a special resolution, but this is rarely
used now.
3. **What types of preference shares are used?**
- Preference shares enjoy priority over other classes for dividends and sometimes capital
on winding-up, often with limited voting rights. They usually offer modest income returns
and may have voting rights on amendments affecting their preferences. They cannot be
issued unless the company has ordinary or other shares, and typically do not have priority
for repayment of capital on winding-up.
4. **Under what circumstances will the holder of non-voting shares have the right to vote?
**
- Non-voting shares generally do not carry voting rights, but the Companies Act permits
voting rights in certain circumstances such as amendments to the preferences, rights,
limitations, or terms associated with their shares.
5. **When must the board obtain the approval of the shareholders before issuing shares?**
- Shareholder approval is required when issuing shares to directors, related persons, or
nominees, especially if the issue results in the voting power of new shares reaching or
exceeding 30%. No approval is needed when issuing under underwriting agreements, pre-
