By Jaco de Klerk – Director
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This third article in the series uncovering the amendments relating to the First and Second Companies Amendment Acts, we wish to draw attention to private companies with multiple shareholders.
The Companies Act currently provides that if a private company is party to an Affected Transaction and such private company had more than 10% (ten percent) of its shares transferred within the previous 12 (twelve) months, the private company qualifies as a ‘Regulated Company’, subjecting it to the takeover provisions of the Companies Act.
The recent amendment changes the aforesaid criteria of private companies and as such, a private company shall be regarded a ‘Regulated Company’ if:
The private company has:
- more than 10 (ten) shareholders, holding direct or indirect shareholding; and
- meets or exceeds the annual turnover or asset value threshold to be determined.
The financial thresholds referred to above, shall be determined by the Minister in consultation with the Takeover Regulation Panel and might be generic or industry specific.
The amendments, however, do not provide for a clear definition of ‘indirect shareholding’, which omission might result in some ambiguity when considering if a private company meets the aforesaid requirements.
Should a private company qualify as a ‘Regulated Company’ under the new criteria and be party to an Affected Transaction, such private company will be required to apply for approval or exemption (as the case may be) with the Takeover Regulation Panel.
In light if the above, private companies with multiple shareholders (albeit direct or indirect) should be cognisant of the aforesaid amendment once the amendments become effective, to avoid falling foul of the takeover provisions of the Companies Act, as amended.