LEGAL VIEWPOINT
Getting to grips with
the Companies Act
A wide range of transactions fall under new
financial assistance rules, says Werksmans
Attorneys director Richard Roothman.
T
he new Companies Act widens the net over corporate
finance transactions that require board approval,
shareholder approval and, in certain cases, notice to
be given to shareholders.
‘The financial assistance rules in the new Act affect
more types of instruments and transactions than before, and also
apply to related companies, such as subsidiaries, holding companies
and companies under common control,’ says Werksmans Attorneys
director Richard Roothman. ‘There is hardly any form of corporate
loan structure that does not fall under the new rules.’
If the relevant board approval or the agreement to provide
financial assistance does not comply with the requirements of the
Act or the relevant company’s memorandum of incorporation, such
approval or financial assistance would be void, and a director of
the company can be held personally liable for any loss or damage
sustained by the company as a direct or indirect consequence of
the provision of such financial assistance.
Do you roll with the changes?
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