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

Chapter 1 : Interpretation, Purpose and Application

Part A : Interpretation

1. Definitions

 

 

In this Act, unless the context indicates otherwise—

 

"accounting records"

means information in written or electronic form concerning the financial affairs of a company as required in terms of this Act, including but not limited to, purchase and sales records, general and subsidiary ledgers and other documents and books used in the preparation of financial statements;

 

"acquiring party"

when used in respect of a transaction or proposed transaction, means a person who, as a result of the transaction, would directly or indirectly acquire or establish direct or indirect control or increased control over all or the greater part of a company, or all or the greater part of the assets or undertaking of a company;

 

‘‘advertisement’’

means any direct or indirect communication transmitted by any medium, or any representation or reference written, inscribed, recorded, encoded upon or embedded within any medium, by means of which a person seeks to bring any information to the attention of all or part of the public;

 

‘‘agreement’’

includes a contract, or an arrangement or understanding between or among two or more parties that purports to create rights and obligations between or among those parties;

 

"all or the greater part of the assets or undertaking"

when used in respect of a company, means-

a) in the case of the company's assets, more than 50% of its gross assets fairly valued, irrespective of its liabilities; or
b) in the case of the company's undertaking, more than 50% of the value of its entire undertaking, fairly valued;

 

‘‘alterable provision’’

means a provision of this Act in which it is expressly contemplated that its effect on a particular company may be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect by that company’s Memorandum of Incorporation;

 

‘‘alternate director’’

means a person elected or appointed to serve, as the occasion requires, as a member of the board of a company in substitution for a particular elected or appointed director of that company;

 

‘‘amalgamation or merger’’

means a transaction, or series of transactions, pursuant to an agreement between two or more companies, resulting in-

a) the formation of one or more new companies, which together hold all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement, and the dissolution of each of the amalgamating or merging companies; or
b) the survival of at least one of the amalgamating or merging companies, with or without the formation of one or more new companies, and the vesting in the surviving company or companies, together with such new company or companies, of all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement;

 

‘‘amalgamated or merged company’’

means a company that either—

a) was incorporated pursuant to an amalgamation or merger agreement; or
b) was an amalgamating or merging company and continued in existence after the implementation of the amalgamation or merger agreement,

and holds any part of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement;

 

‘‘amalgamating or merging company’’

means a company that is a party to an amalgamation or merger agreement;

 

‘‘annual general meeting’’

means the meeting of a public company required by section 61(7);

 

‘‘audit’’

has the meaning set out in the Auditing Profession Act but does not include an ‘independent review’ of annual financial statements, as contemplated in section 30(2)(b)(ii)(bb);

 

‘‘Auditing Profession Act’’

means the Auditing Profession Act, 2005 (Act No. 26 of 2005);

 

‘‘auditor’’

has the meaning set out in the Auditing Profession Act;

 

‘‘Banks Act’’

means the Banks Act, 1990 (Act No. 94 of 1990);

 

‘‘beneficial interest’’

when used in relation to a company’s securities, means the right or entitlement of a person, through ownership, agreement, relationship or otherwise, alone or together with another person to—

a) receive or participate in any distribution in respect of the company’s securities;
b) exercise or cause to be exercised, in the ordinary course, any or all of the rights attaching to the company’s securities; or
c) dispose or direct the disposition of the company’s securities, or any part of a distribution in respect of the securities,

but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002);

 

‘‘board’’

means the board of directors of a company;

 

‘‘business days’’

has the meaning determined in accordance with section 5(3);

 

‘‘Cabinet’’

means the body of the national executive described in section 91 of the Constitution;

 

‘‘central securities depository’’

has the meaning set out in section 1 of the Financial Markets Act, 2012;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘close corporation’’

means a juristic person incorporated under the Close Corporations Act, 1984 (Act No. 69 of 1984);

 

‘‘Commission’’

means the Companies and Intellectual Property Commission established by section 185;

 

‘‘Commissioner’’

means the person appointed to or acting in the office of that name, as contemplated in section 189;

 

‘‘Companies Tribunal’’

means the Companies Tribunal established in terms of section 193;

 

‘‘companies register’’

means the register required to be established by the Commission in terms of section 187(4);

 

‘‘company’’

means a juristic person incorporated in terms of this Act, a domesticated company, or a juristic person that, immediately before the effective date—

a) was registered in terms of the—
i) Companies Act, 1973 (Act No. 61 of 1973), other than as an external company as defined in that Act; or
ii) Close Corporations Act, 1984 (Act No. 69 of 1984), if it has subsequently been converted in terms of Schedule 2;
b) was in existence and recognised as an ‘existing company’ in terms of the Companies Act, 1973 (Act No. 61 of 1973); or
c) was deregistered in terms of the Companies Act, 1973 (Act No. 61 of 1973), and has subsequently been re-registered in terms of this Act;

 

‘‘Competition Act’’

means the Competition Act, 1998 (Act No. 89 of 1998);

 

‘‘consideration’’

means anything of value given and accepted in exchange for any property, service, act, omission or forbearance or any other thing of value, including—

a) any money, property, negotiable instrument, securities, investment credit facility, token or ticket;
b) any labour, barter or similar exchange of one thing for another; or
c) any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly;

 

‘‘Constitution’’

means the Constitution of the Republic of South Africa, 1996;

 

‘‘convertible’’

when used in relation to any securities of a company, means securities that may, by their terms, be converted into other securities of the company, including—

a) any non-voting securities issued by the company and which will become voting securities—
i) on the happening of a designated event; or
ii) if the holder of those securities so elects at some time after acquiring them; and
b) options to acquire securities to be issued by the company, irrespective of whether those securities may be voting securities, or non-voting securities contemplated in paragraph (a);

 

‘‘co-operative’’

means a juristic person as defined in the Co-operatives Act, 2005 (Act No. 14 of 2005);

 

‘‘Council’’

means the Financial Reporting Standards Council established by section 203;

 

‘‘director’’

means a member of the board of a company, as contemplated in section 66, or an alternate director of a company and includes any person occupying the position of a director or alternate director, by whatever name designated;

 

‘‘distribution’’

means a direct or indirect—

a) transfer by a company of money or other property of the company, other than its own shares, to or for the benefit of one more holders of any of the shares, or to the holder of a beneficial interest in any such shares, of that company or of another company within the same group of companies, whether—
i) in the form of a dividend;
ii) as a payment in lieu of a capitalisation share, as contemplated in section 47;
iii) as consideration for the acquisition—
aa) by the company of any of its shares, as contemplated in section 48; or
bb) by any company within the same group of companies, of any shares of a company within that group of companies; or
iv) otherwise in respect of any of the shares of that company or of another company within the same group of companies, subject to section 164(19);
b) incurrence of a debt or other obligation by a company for the benefit of one or more holders of any of the shares of that company or of another company within the same group of companies; or
c) forgiveness or waiver by a company of a debt or other obligation owed to the company by one or more holders of any of the shares of that company or of another company within the same group of companies,

but does not include any such action taken upon the final liquidation of the company;

 

"domesticated company"

means a foreign company whose registration has been transferred to the Republic in terms of section 13(5) to (11);

 

‘‘effective date’’

with reference to any particular provision of this Act, means the date on which that provision came into operation in terms of section 225;

 

‘‘electronic communication’’

has the meaning set out in section 1 of the Electronic Communications and Transactions Act;

 

‘‘Electronic Communications and Transactions Act’’

means the Electronic Communications and Transactions Act, 2002 (Act No. 25 of 2002);

 

‘‘employee share scheme’’

has the meaning set out in section 95(1)(c);

 

‘‘exchange’’

when used as a noun, has the meaning set out in section 1 of the Financial Markets Act, 2012;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘exercise’’

when used in relation to voting rights, includes voting by proxy, nominee, trustee or other person in a similar capacity;

 

‘‘ex officio director’’

means a person who holds office as a director of a particular company solely as a consequence of that person holding some other office, title, designation or similar status specified in the company’s Memorandum of Incorporation;

 

‘‘external company’’

means a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23(2);

 

‘‘file’’

when used as a verb, means to deliver a document to the Commission in the manner and form, if any, prescribed for that document;

 

‘‘financial reporting standards’’

with respect to any particular company’s financial statements, means the standards applicable to that company, as prescribed in terms of section 29(4) and (5);

 

‘‘financial statement’’

includes—

a) annual financial statements and provisional annual financial statements;
b) interim or preliminary reports;
c) group and consolidated financial statements in the case of a group of companies; and
d) financial information in a circular, prospectus or provisional announcement of results, that an actual or prospective creditor or holder of the company’s securities, or the Commission, Panel or other regulatory authority, may reasonably be expected to rely on;

 

‘‘foreign company’’

means an entity incorporated outside the Republic, irrespective of whether it is—

a) a profit, or non-profit, entity; or
b) carrying on business or non-profit activities, as the case may be, within the Republic;

 

‘‘general voting rights’’

means voting rights that can be exercised generally at a general meeting of a company;

 

‘‘group of companies’’

means a holding company and all of its subsidiaries;

 

‘‘holding company’’

in relation to a subsidiary, means a juristic person that controls that subsidiary as a result of any circumstances contemplated in section 2(2)(a) or 3(1)(a);

 

‘‘Human Rights Commission’’

means the South African Human Rights Commission established in terms of Chapter 9 of the Constitution;

 

‘‘incorporator’’

when used—

a) with respect to a company incorporated in terms of this Act, means a person who incorporated that company, as contemplated in section 13; or
b) with respect to a pre-existing company, means a person who took the relevant actions comparable to those contemplated in section 13 to bring about the incorporation of that company;

 

‘‘individual’’

means a natural person;

 

‘‘inspector’’

means a person appointed as such in terms of section 209(1);

 

‘‘inter-related’’

when used in respect of three or more persons, means persons who are related to one another in a linked series of relationships, such that two of the persons are related in a manner contemplated in section 2(1), and one of them is related to the third in any such manner, and so forth in an unbroken series;

 

"investigator"

means a person appointed as such in terms of section 209(3);

 

‘‘juristic person’’

includes—

a) a foreign company; and
b) a trust, irrespective of whether or not it was established within or outside the Republic;

 

‘‘knowing’’, ‘‘knowingly’’ or ‘‘knows’’

when used with respect to a person, and in relation to a particular matter, means that the person either—

a) had actual knowledge of the matter; or
b) was in a position in which the person reasonably ought to have—
i) had actual knowledge;
ii) investigated the matter to an extent that would have provided the person with actual knowledge; or
iii) taken other measures which, if taken, would reasonably be expected to have provided the person with actual knowledge of the matter;

 

‘‘listed securities’’

has the meaning set out in section 1 of the Financial Markets Act, 2012;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘Master’’

means the officer of the High Court, referred to in section 2 of the Administration of Estates Act, 1965 (Act No. 66 of 1965), who has jurisdiction over a particular matter arising in terms of this Act;

 

‘‘material’’

when used as an adjective, means significant in the circumstances of a particular matter, to a degree that is—

a) of consequence in determining the matter; or
b) might reasonably affect a person’s judgement or decision-making in the matter;

 

‘‘member’’

when used in reference to-

a) a close corporation, has the meaning set out in section 1 of the Close Corporations Act, 1984 (Act No. 69 of 1984 ); or
b) a non-profit company, means a person who holds membership in, and specified rights in respect of, that non-profit company, as contemplated in Schedule 1; or
c) any other entity, means a person who is a constituent part of that entity;

 

‘‘Memorandum or Memorandum of Incorporation’’

means the document, as amended from time to time that sets out rights, duties and responsibilities of shareholders, directors and others within and in relation to a company, and other matters as contemplated in section 15 and by which—

a) the company was incorporated in terms of this Act, as contemplated in section 13;
b) a pre-existing company was structured and governed before the later of—
i) effective date; or
ii) date it was converted to a company in terms of Schedule 2; or
c) a domesticated company is structured and governed;

 

‘‘Minister’’

means the member of the Cabinet responsible for companies;

 

‘‘nominee’’

means a person that acts as the registered holder of securities or an interest in securities on behalf of other persons;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘non-profit company’’

means a company—

a) incorporated for a public benefit or other object as required by item 1(1) of Schedule 1; and
b) the income and property of which are not distributable to its incorporators, members, directors, officers or persons related to any of them except to the extent permitted by item 1(3) of Schedule 1;

 

‘‘Notice of Incorporation’’

means the notice to be filed in terms of section 13(1), by which the incorporators of a company inform the Commission of the incorporation of that company, for the purpose of having it registered;

 

‘‘official language’’

means a language mentioned in section 6(1) of the Constitution;

 

‘‘ordinary resolution’’

means a resolution adopted with the support of more than 50% of the voting rights exercised on the resolution, or a higher percentage as contemplated in section 65(8)

a) at a shareholders meeting; or
b) by holders of the company’s securities acting other than at a meeting, as contemplated in section 60;

 

‘‘organ of state’’

has the meaning set out in section 239 of the Constitution;

 

‘‘Panel’’

means the Takeover Regulation Panel, established by section 196;

 

‘‘participant’’

has the meaning set out in section 1 of the Financial Markets Act, 2012;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘person’’

includes a juristic person;

 

‘‘personal financial interest’’

when used with respect to any person—

a) means a direct material interest of that person, of a financial, monetary or economic nature, or to which a monetary value may be attributed; but
b) does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act No. 45 of 2002), unless that person has direct control over the investment decisions of that fund or investment;

 

‘‘personal liability company’’

means a profit company that satisfies the criteria in section 8(2)(c);

 

‘‘pre-existing company’’

means a company contemplated in paragraph (a), (b) or (c) of the definition of ‘company’ in this section;

 

‘‘pre-incorporation contract’’

means a written agreement entered into before the incorporation of a company by a person who purports to act in the name of, or on behalf of, the proposed company, with the intention or understanding that the proposed company will be incorporated, and will thereafter be bound by the agreement;

 

‘‘premises’’

includes land, or any building, structure, vehicle, ship, boat, vessel, aircraft or container;

 

‘‘prescribed’’

means determined, stipulated, required, authorised, permitted or otherwise regulated by a regulation or notice made in terms of this Act;

 

‘‘prescribed officer’’

means a person who, within a company, performs any function that has been designated by the Minister in terms of section 66(10);

 

‘‘present at a meeting’’

means to be present in person, or able to participate in the meeting by electronic communication, or to be represented by a proxy who is present in person or able to participate in the meeting by electronic communication;

 

‘‘private company’’

means a profit company that—

a) is not a public, personal liability, or state-owned company; and
b) satisfies the criteria set out in section 8(2)(b);

 

‘‘profit company’’

means a company incorporated for the purpose of financial gain for its shareholders;

 

‘‘public company’’

means a profit company that is not a state-owned company, a private company or a personal liability company;

 

‘‘public regulation’’

means any national, provincial or local government legislation or subordinate legislation, or any licence, tariff, directive or similar authorisation issued by a regulatory authority or pursuant to any statutory authority;

 

‘‘records’’

when used with respect to any information pertaining to a company, means any information contemplated in section 24(1);

 

‘‘record date’’

means the date established under section 59 on which a company determines the identity of its shareholders and their shareholdings for the purposes of this Act;

 

‘‘registered auditor’’

has the meaning set out in the Auditing Profession Act;

 

‘‘registered external company’’

means an external company that has registered its office as required by section 23, and has been assigned a registration number in terms of that section;

 

‘‘registered office’’

means the office of a company, or of an external company, that is registered as required by section 23;

 

‘‘registered trade union’’

means a trade union registered in terms of section 96 of the Labour Relations Act, 1995 (Act No. 66 of 1995);

 

‘‘registration certificate’’

when used with respect to a—

a) company incorporated on or after the effective date, means the certificate, or amended certificate, issued by the Commission as evidence of the incorporation and registration of that company;
b) pre-existing company registered in terms of—
i) the Companies Act, 1973 (Act No. 61 of 1973), means the certificate of incorporation or registration issued to it in terms of that Act;
ii) the Close Corporations Act, 1984 (Act No. 69 of 1984), and converted in terms of Schedule 2 to this Act, means the certificate of incorporation issued to the company in terms of that Schedule, read with section 14; or
iii) any other law, means any document issued to the company in terms of that law as evidence of the company’s incorporation; or
c) registered external company, means the certificate of registration issued to it in terms of this Act or the Companies Act, 1973 (Act No. 61 of 1973); or
d) a domesticated company, means the certificate issued to it upon the transfer of its registration to the Republic in terms of section 13(5) to (11).

 

‘‘registry’’

means a depository of documents required to be kept by the Commission in terms of section 187(4);

 

‘‘regulated person or entity’’

means a person that has been granted authority to conduct business by a regulatory authority;

 

‘‘regulation’’

means a regulation made under this Act;

 

‘‘regulatory authority’’

means an entity established in terms of national or provincial legislation responsible for regulating an industry, or sector of an industry;

 

‘‘related’’

when used in respect of two persons, means persons who are connected to one another in any manner contemplated in section 2(1)(a) to (c);

 

‘‘relationship’’

includes the connection subsisting between any two or more persons who are related or inter-related, as determined in accordance with section 2;

 

‘‘rules’’ and ‘‘rules of a company’’

means any rules made by a company as contemplated in section 15(3) to (5);

 

‘‘securities’’

means any shares, debentures or other instruments, irrespective of their form or title, issued or authorised to be issued by a profit company;

 

"securities register"

means the register required to be established by a profit company in terms of section 50(1);

 

"series of integrated transactions"

has the meaning set out in section 41(4)(b);

 

‘‘share’’

means one of the units into which the proprietary interest in a profit company is divided;

 

‘‘shareholder’’

subject to section 57(1), means the holder of a share issued by a company and who is entered as such in the certificated or uncertificated securities register, as the case may be;

 

‘‘shareholders meeting’’

with respect to any particular matter concerning a company, means a meeting of those holders of that company’s issued securities who are entitled to exercise voting rights in relation to that matter;

 

‘‘solvency and liquidity test’’

means the test set out in section 4(1);

 

‘‘special resolution’’

means—

a) in the case of a company, a resolution adopted with the support of at least 75% of the voting rights exercised on the resolution, or a different percentage as contemplated in section 65(10)-
i) at a shareholders meeting; or
ii) by holders of the company’s securities acting other than at a meeting, as contemplated in section 60; or
b) in the case of any other juristic person, a decision by the owner or owners of that person, or by another authorised person, that requires the highest level of support in order to be adopted, in terms of the relevant law under which that juristic person was incorporated;

 

‘‘state-owned company’’

means an enterprise that is registered in terms of this Act as a company, and either—

a) is listed as a public entity in Schedule 2 or 3 of the Public Finance Management Act, 1999 (Act No. 1 of 1999); or
b) is owned by a municipality, as contemplated in the Local Government: Municipal Systems Act, 2000 (Act No. 32 of 2000), and is otherwise similar to an enterprise referred to in paragraph (a);

 

‘‘subsidiary’’

has the meaning determined in accordance with section 3;

 

‘‘Takeover Regulations’’

means the regulations made by the Minister in terms of sections 120 and 223;

 

‘‘this Act’’

includes the Schedules and regulations;

 

‘‘unalterable provision’’

means a provision of this Act that does not expressly contemplate that its effect on any particular company may be negated, restricted, limited, qualified, extended or otherwise altered in substance or effect by a company’s Memorandum of Incorporation or rules;

 

‘‘uncertificated securities’’

means any securities defined as such in section 1 of the Financial Markets Act, 2012;

[Amended by Section 111 of the Financial Markets Act, 2012]

 

‘‘uncertificated securities register’’

means the record of uncertificated securities administered and maintained by a participant or central securities depository, as determined in accordance with the rules of a central securities depository, and which forms part of the relevant company’s securities register established and maintained in terms of Part E of Chapter 2;

 

‘‘voting power’’

with respect to any matter to be decided by a company, means the voting rights that may be exercised in connection with that matter by a particular person, as a percentage of all such voting rights;

 

‘‘voting rights’’

with respect to any matter to be decided by a company, means—

a) the rights of any holder of the company’s securities to vote in connection with that matter, in the case of a profit company; or
b) the rights of a member to vote in connection with the matter, in the case of a non-profit company;

 

‘‘voting securities’’

with respect to any particular matter, means securities that—

a) carry voting rights with respect to that matter; or
b) are presently convertible to securities that carry voting rights with respect to that matter; and

 

‘‘wholly-owned subsidiary’’

has the meaning determined in accordance with section 3(1)(b).