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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

42. Options for subscription of securities

 

 

1) A company may issue options for the allotment or subscription of authorised shares or other securities of the company.

 

2) The board of a company must determine the consideration or other benefit for which, and the terms upon which—
a) any options are issued; and
b) the related shares or other securities are to be issued.

 

3) A decision by the board that the company may issue—
a) any options, constitutes also the decision of the board to issue any authorised shares or other securities for which the options may be exercised; or
b) any securities convertible into shares of any class, constitutes also the decision of the board to issue the authorised shares into which the securities may be converted.

 

4) A director of a company is liable to the extent set out in section 77(3)(e)(iii) if the director—
a) was present at a meeting when the board approved the granting of an option or a right as contemplated in this section, or participated in the making of such a decision in terms of section 74; and
b) failed to vote against the granting of the option or right, despite knowing that any shares—
i) for which the options could be exercised; or
ii) into which any securities could be converted,

had not been authorised in terms of section 36.