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It is trite law that, irrespective of the provisions of a Company’s Memorandum of Incorporation, a director can be removed by an ordinary resolution adopted at a shareholders meeting as provided for in Section 71 of the Companies Act 71 of 2008 (the “Act”). This provision was, however, recently scrutinized by the High Court in the matter of Foxvest Group (Pty) Ltd and Another v Rocky Park Holdings (Pty) Ltd and Others (2022/2807) [2023] ZAGPJHC 63 (27 January 2023).

The 2022 Tax Bills were promulgated on 5 January 2023. Among other changes, the final amendments to the definition of “contributed tax capital” (“CTC”) is now enacted.

Section 8C of the Income Tax Act No. 58 of 1962 (“ITA”) is directed at taxing employees and directors on the gains derived from “equity instruments” or share options as they are commonly referred to. Generally, this section seeks to ensure that the value derived under a share scheme attracts the correct (income) tax treatment, where the acquisition of the shares is linked to an employment relationship. But there are instances where the operation of section 8C creates this link fictitiously, in which case a lack of planning could result in an immensely expensive tax event.

When considering a private company’s composition, there is a general misconception that any information regarding the shareholding of a private company is privileged. Although not placed in the public domain, section 26(2) of the Companies Act 71, of 2008 (the “Companies Act”) provides that any person has the right to inspect or copy, inter alia, the share register of a private company upon formal request, subject to payment of a nominal fee.

In media statements released by the Competition Commission (“Commission”) on 23 September 2022 and 28 September 2022, the Commission reiterated its concerns that potential anti-competitive acquisitions in the digital or technology markets may escape regulatory scrutiny. These concerns emanate from such acquisitions usually taking place at an early stage in the life of the target companies. This results in target companies not having generated sufficient turnover or assets for purposes of monetary thresholds which would trigger mandatory merger notification in terms of the Competition Act, Act 89 of 1998 (the “Act”).

As general rule, a Vendor [a taxpayer registered for VAT] may only claim input-VAT on goods purchased from another Vendor under the provisions of the Value-Added Tax Act (the “Act”). As always with tax, there are exceptions to the general rule, one of which is when a Vendor purchases fixed property from a seller that is not registered for Value-Added Taxes (“VAT”).

The acquisition of an asset / business may trigger various regulatory obligations on the entities to the transaction, which generally involve observing the provisions of the Companies Act and the respective Tax Acts. In certain instances, the entities may also be required to notify the Competition Commission (“Commission”) of the acquisition transaction.

The Supreme Court of Appeal (“SCA”) delivered judgment in Commissioner for the South African Revenue Service v Capitec Bank Limited (94/2021) [2022] ZASCA 93 (“Capitec-case”) on 21 June 2022. The case, where the South African Revenue Service’s (“SARS”) appeal was upheld, mainly concerned Capitec’s entitlement to claim Value-Added Tax (“VAT”) deductions.

On 11 March 2022, the Constitutional Court (“CC”) handed down judgment in the matter of Barnard Labuschagne Incorporated / South African Revenue Service and Another CCT60/21. This case concerns the rescindability of civil judgments obtained by SARS in terms of the Tax Administration Act No. 28 of 2011 (“TAA”).

The South African Revenue Service (“SARS”), is empowered to scrutinize and make a finding on any transactional agreement concluded between parties in respect of a taxing position taken in terms of a provision of Tax Act.

The date (“Redemption Date”) on which a Preference Share is redeemed [buy-back] is significant when considering the definition of a ‘Hybrid Equity Instrument’ as defined in Section 8E of the Income Tax Act (“ITA”).

Section 48 of the Companies Act No 71 of 2008, permits a company to acquire its own share equity issued to its shareholder/s by means of a transaction colloquially known as a ‘share buy-back transaction’ (“Buy-Back”).