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

Chapter 1 : Interpretation, Purpose and Application

Part A : Interpretation

6. Anti-avoidance, exemptions and substantial compliance

 

 

1) A court, on application by the Commission Panel or an exchange in respect of a company listed on that exchange, may declare any agreement, transaction, arrangement, resolution or provision of a company’s Memorandum of Incorporation or rules
a) to be primarily or substantially intended to defeat or reduce the effect of a prohibition or requirement established by or in terms of an unalterable provision of this Act; and
b) void to the extent that it defeats or reduces the effect of a prohibition or requirement established by or in terms of an unalterable provision of this Act.

 

2) A person may apply to the Companies Tribunal for an administrative order exempting an agreement, transaction, arrangement, resolution or provision of a company’s Memorandum of Incorporation or rules from any prohibition or requirement established by or in terms of an unalterable provision of this Act, other than a provision that falls within the jurisdiction of the Panel.

 

3) The Companies Tribunal may make an administrative order contemplated in subsection (2) if it is satisfied that—
a) the agreement, transaction, arrangement, resolution or provision serves a reasonable purpose other than to defeat or reduce the effect of that prohibition or requirement; and
b) it is reasonable and justifiable to grant the exemption, having regard to the purposes of this Act and all relevant factors, including—
i) the purpose and policy served by the relevant prohibition or requirement; and
ii) the extent to which the agreement, transaction, arrangement, resolution or provision infringes or would infringe the relevant prohibition or requirement.

 

4) The producer of a prospectus, notice, disclosure or document that is required, in terms of this Act, to be published, produced or provided to a potential investor, a company’s creditor or potential creditor, a holder of a company’s securities, a member of a non-profit company, an employee of a company or a representative of any employees of a company, must publish, produce, or provide that prospectus, notice, disclosure or document—
a) in the prescribed form, if any, for that prospectus, notice, disclosure or document, or;
b) in plain language, if no form has been prescribed for that prospectus, notice, disclosure or document.

 

5) For the purposes of this Act, a prospectus, notice, disclosure or document is in plain language if it is reasonable to conclude that a person of the class of persons for whom the prospectus, notice, disclosure or document is intended, with average literacy skills and minimal experience in dealing with company law matters, could be expected to understand the content, significance and import of the prospectus, notice, disclosure or document without undue effort, having regard to—
a) the context, comprehensiveness and consistency of the prospectus, notice, disclosure or document;
b) the organisation, form and style of the prospectus, notice, disclosure or document;
c) the vocabulary, usage and sentence structure of the prospectus, notice, disclosure or document; and
d) the use of any illustrations, examples, headings or other aids to reading and understanding in the prospectus, notice, disclosure or document.

 

6) The Commission may publish guidelines for methods of assessing whether a prospectus, notice, disclosure or document satisfies the requirements of subsection (4)(b).

 

7) An unaltered electronically or mechanically generated reproduction of any document, other than a share certificate, may be substituted for the original for any purpose for which the original could be used in terms of this Act, if that reproduction satisfies any applicable prescribed requirements as to the form or manner of reproduction.

 

8) If a form of document, record, statement or notice is prescribed in terms of this Act for any purpose—
a) it is sufficient if the person required to prepare or complete such a document, record, statement or notice does so in a form that satisfies all of the substantive requirements of the prescribed form; and
b) any deviation from the design or content of the prescribed form does not invalidate the action taken by the person preparing or completing that document, record, statement or notice, unless the deviation—
i) negatively and materially affects the substance of the document, record, statement or notice; or
ii) is such that it would reasonably mislead a person reading the document, record, statement or notice.

 

9) If a manner of delivery of a document, record, statement or notice is prescribed in terms of this Act for any purpose—
a) it is sufficient if the person required to deliver such a document, record, statement or notice does so in a manner that satisfies all of the substantive requirements as prescribed; and
b) any deviation from the prescribed manner does not invalidate the action taken by the person delivering that document, record, statement or notice, unless the deviation—
i) materially reduces the probability that the intended recipient will receive the document, record, statement or notice; or
ii) is such as would reasonably mislead a person to whom the document, record, statement or notice is, or is to be, delivered.

 

10) If, in terms of this Act, a notice is required or permitted to be given or published to any person, it is sufficient if the notice is transmitted electronically directly to that person in a manner and form such that the notice can conveniently be printed by the recipient within a reasonable time and at a reasonable cost.

 

11) If, in terms of this Act, a document, record or statement, other than a notice contemplated in subsection (10), is required—
a) to be retained, it is sufficient if an electronic original or reproduction of that document is retained as provided for in section 15 of the Electronic Communications and Transactions Act; or
b) to be published, provided or delivered, it is sufficient if—
i) an electronic original or reproduction of that document, record or statement is published, provided or delivered by electronic communication in a manner and form such that the document, record or statement can conveniently be printed by the recipient within a reasonable time and at a reasonable cost; or
ii) a notice of the availability of that document, record or statement, summarising its content and satisfying any prescribed requirements, is delivered to each intended recipient of the document, record or statement, together with instructions for receiving the complete document, record or statement.

 

12) If a provision of this Act requires a document to be signed or initialled—
a) by or on behalf of a person, that signing or initialling may be effected in any manner provided for in the Electronic Communications and Transactions Act; or
b) by two or more persons, it is sufficient if—
i) all of those persons sign a single original of the document, in person or as contemplated in paragraph (a); or
ii) each of those persons signs a separate duplicate original of the document, in person or as contemplated in paragraph (a), and in such a case, the several signed duplicate originals, when combined, constitute the entire document.

 

13) The Commission may—
a) establish a system, using any means of electronic communication, to facilitate the automated—
i) reservation of names in terms of Part A of Chapter 2 or in terms of any other legislation listed in Schedule 4;
ii) incorporation and registration of companies or close corporations; or
iii) filing of any information contemplated by this Act or by any legislation listed in Schedule 4; or
b) accredit an established system that—
i) is capable of facilitating any activity contemplated in paragraph (a); and
ii) satisfies any prescribed requirements.

 

14) The Minister may—
a) make regulations relating to the standards of operation, accessibility, technical requirements, service quality, and fees for the use of any system contemplated in subsection 13; and
b) declare any system established or accredited by the Commission to be an acceptable mechanism for the filing of any particular document, in lieu of any other requirements set out in legislation relating to the filing of that document.

 

15) To the extent that the specific content, or a particular effect, of any provision of a company's Memorandum of Incorporation-
a) is required of the company by or in terms of any applicable public regulation, or by the listing requirements of an exchange; and
b) has the effect of negating, restricting, limiting, qualifying, extending or otherwise altering the substance or effect of an unalterable provision of the Act,

that provision of the company's Memorandum of Incorporation must not be construed as being contrary to section 15(1)(a).