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Companies Act, 2008 (Act No. 71 of 2008)

Chapter 5 : Fundamental Transactions, Takeovers and Offers

Part A : Approval for certain fundamental transactions

116. Implementation of amalgamation or merger

 

 

1) Subject to subsection (2), after a resolution approving an amalgamation or merger has been adopted by each company that is a party to the agreement—
a) each of the amalgamating or merging companies must cause a notice of the amalgamation or merger to be given in the prescribed manner and form to every known creditor of that company;
b) within 15 business days after delivery of a notice required by paragraph (a), a creditor may seek leave to apply to a court for a review of the amalgamation or merger only on the grounds that the creditor will be materially prejudiced by the amalgamation or merger; and
c) a court may grant leave contemplated in paragraph (b) only if it is satisfied that—
i) the applicant for leave is acting in good faith;
ii) if implemented, the amalgamation or merger would materially prejudice the creditor; and
iii) there are no other remedies available to the creditor.

 

2) Subsection (1) does not apply to a company engaged in business rescue proceedings, in respect of any transaction pursuant to or contemplated in the company’s business rescue plan adopted in accordance with Chapter 6.

 

3) A notice of amalgamation or merger must be filed after the transaction has satisfied all the  applicable requirements set out in section 115, and—
a) after the time contemplated in subsection (1)(b), if no application has been made to the court in terms of that subsection; or
b) in any other case—
i) after the court has disposed of any proceedings arising in terms of subsection (1)(b) and (c); and
ii) subject to the order of the court.

 

4) A notice of amalgamation or merger must include—
a) confirmation that the amalgamation or merger—
i) has satisfied the requirements of sections 113 and 115;
ii) has been approved in terms of the Competition Act, if so required by that Act;
iii) has been granted the consent of the Minister of Finance in terms of section 54 of the Banks Act or obtained the approval of the Registrar of Securities Services in terms of section 64 of the Financial Markets Act, 2012, if so required by that Act; and
iv) is not subject to—
aa) further approval by any regulatory authority; or
bb) any unfulfilled conditions imposed by or in terms of any law administered by a regulatory authority; and
b) the Memorandum of Incorporation of any company newly incorporated in terms of the agreement.

[Subsection 4(a)(iii) amended by Section 111 of the Financial Markets Act, 2012]

 

5) After receiving a notice of amalgamation or merger, the Commission must—
a) issue a registration certificate for each company, if any, that has been newly incorporated in terms of the amalgamation or merger agreement; and
b) deregister any of the amalgamating or merging companies that did not survive the amalgamation or merger.

 

6) An amalgamation or merger—
a) takes effect in accordance with, and subject to any conditions set out in the amalgamation or merger agreement;
b) does not affect any—
i) existing liability of a party to the agreement, or of a director of any of the amalgamating or merging companies, to be prosecuted in terms of any applicable law;
ii) civil, criminal or administrative action or proceeding pending by or against an amalgamating or merging company, and any such proceeding may continue to be prosecuted by or against any amalgamated or merged company; or
iii) conviction against, or ruling, order or judgment in favour of or against, an amalgamating or merging company, and any such ruling, order or judgment may be enforced by or against any amalgamated or merged company.

 

7) When an amalgamation or merger agreement has been implemented—
a) the property of each amalgamating or merging company becomes the property of the newly amalgamated, or surviving merged, company or companies; and
b) each newly amalgamated, or surviving merged company is liable for all of the obligations of every amalgamating or merging company,

in accordance with the provisions of the amalgamation or merger agreement, or any other relevant agreement, but in any case subject to the requirement that each amalgamated or merged company must satisfy the solvency and liquidity test, and subject to subsection (8), if it is applicable.

 

8) If, as a consequence of an amalgamation or merger, any property that is registered in terms of any public regulation is to be transferred from an amalgamating or merging company, to an amalgamated or merged company, a copy of the amalgamation or merger agreement, together with a copy of the filed notice of amalgamation or merger, constitutes sufficient evidence for the keeper of the relevant property registry to effect a transfer of the registration of that property.

 

9) If, with respect to a transaction involving a company that is regulated in terms of the Banks Act or the Financial Markets Act, 2012, there is a conflict between a provision of subsection (7) and a provision of section 54 of the Banks Act or section 64 of the Financial Markets Act, 2012 Act, as the case may be, the provisions of those Acts prevail.

[Subsection 9 amended by Section 111 of the Financial Markets Act, 2012]