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

Chapter 2 : Formation, Administration and Dissolution of Companies

Part D : Capitalisation of profit companies

39. Subscription of shares


(1) This section—
(a) does not apply to a public company or state-owned company, except to the extent that the company’s Memorandum of Incorporation provides otherwise; and
(b) applies to a private company or personal liability company with respect to any issue of its shares, other than—
(i) shares issued—
(aa) in terms of options or conversion rights; or
(bb) as contemplated in section 40(5) to (7); or
(ii) capitalisation shares issued as contemplated in section 47.


(2) If a private company proposes to issue any shares, other than as contemplated in subsection (1)(b), each shareholder of that private company has a right, before any other person who is not a shareholder of that company, to be offered and, within a reasonable time to subscribe for, a percentage of the shares to be issued equal to the voting power of that shareholder’s general voting rights immediately before the offer was made.


(3) A private or personal liability company’s Memorandum of Incorporation may limit, negate, restrict or place conditions upon the right set out in subsection (2), with respect to any or all classes of shares of that company.


(4) Except to the extent that a private or personal liability company’s Memorandum of Incorporation provides otherwise—
(a) in exercising a right in terms of subsection (2), a shareholder may subscribe for fewer shares than the shareholder would be entitled to subscribe for under that subsection; and
(b) shares not subscribed for by a shareholder within the reasonable time contemplated in subsection (2), may be offered to other persons to the extent permitted by the Memorandum of Incorporation.