GUIDE TO THE MEMORANDUM OF INCORPORATION
GUIDE TO THE MEMORANDUM OF INCORPORATION GUIDE TO THE MEMORANDUM OF INCORPORATION
2.4 COMPANY TO MAKE APPLICATION TOTRIBUNAL FOR DIRECTIONS DURING TWO YEAR“GRACE” PERIODSchedule 5, Item 2(5) inserted by the Amendment Act provides that:If as a consequence of the coming into effect of the Act and the repeal ofthe previous Act, a conflict, dispute or doubt arises within two years after theeffective date concerning the particular manner or form in which, or time bywhich a pre-existing company is required to: –a) Prepare it annual financial statements, convene an annual generalmeeting, provide to its shareholders copies of its annual financialstatements, any notice or any other document, orb) File an particular document with the Commissionc) Take any other particular action required in terms of this Act or thecompany’s MOIThe company may apply to the Tribunal for directions and a member of theTribunal may make an administrative order that is appropriate and reasonablein the circumstances.2.5 PAR VALUE SHARES, CAPITAL ACCOUNTS ANDSHARE CERTIFICATES[Schedule 5, Item 6 and Item 2(4) of the Amendment Act]●●Section 35(2): specifies that no shares shall have a nominal or par value,except for banks, as defined in the Banks Act, which entails that a preexistingcompany needs to convert its existing par value shares to shareswith no par value within the two year grace period;Schedule 5, Item 6(2): Despite Section 35(2) any shares of a pre-existingcompany that have been issued with a nominal or par value, and are heldby a shareholder immediately before the effective date, continue to havethe nominal or par value assigned to them when issued, subject to theregulations made in terms of sub-item (3);Item 6(3) as amended by the Amendment Act: The Minister, inconsultation with the member of Cabinet responsible for nationalfinancial matters, must make regulations to take effect as of the generaleffective date, providing for the optional conversion and transitionalstatus of any nominal or par value shares, and capital accounts of a preexistingcompany, but any such regulations must preserve the rights ofshareholders associated with such shares, as at the effective date, to theextent doing so is compatible with the purposes of this item;Regulation 31: Conversion of nominal or par value shares, and relatedmattersRegulation 31 does not apply to a bank, as defined in the Banks Act,1993;Regulation 31(2):A pre-existing company may not authorise any par value shares or shareshaving a nominal value on or after the effective date;6
Regulation 31(3):Form CoR 31 (Notice of Board Resolution to Convert Par Value Shares)may be filed with the Commission at any time but only in respect of classesof authorised shares from which shares have not been issued or if issuedare no longer outstanding. There is no fee for filing the form if it is filedwithin two years after the effective date of the Act.The Board of the company is required to pass a resolution to convert theclass or classes of authorised shares to shares having no nominal or parvalue, and filing the Form CoR 31 with the Commission at any time afterthe effective date.It is important to note that the rights attached to any par value shares, heldby a shareholder are not affected by the conversion, to the extent that it iscompatible with the purposes of Item 6.2.6 COMPANY FINANCE AND GOVERNANCE[Schedule 5, Item 7]●●●●●●A director, alternate director, prescribed officer, company secretary andauditor of a pre-existing company will continue to hold office as suchsubject to the MOI and the Act;But if such a person is, in terms of the new Act, ineligible or disqualifiedfrom being a director, alternate director, prescribed officer, companysecretary or auditor, that person is regarded as having resigned from everysuch office in any company as from the effective date;As from the effective date, a pre-existing company is deemed to have anumber of vacancies on the board equal to the difference between –a) the minimum number of directors required by or in terms of this Act;b) the actual number of directors of that pre-existing companyimmediately before the effective date, if that number is less than theminimum referred to in (a);2.7 PROVISIONS WHICH APPLY IMMEDIATELY – NOTRANSITIONAL PERIOD:●●●●The following provisions of the new Act will apply immediately as from theeffective date to all pre-existing companies {irrespective of what is statedin the company’s MOI}, in other words no “grace” period is afforded tocompany’s in regard to the following:a) the duties, conduct and liability of directors will apply to every director(and prescribed officer);b) the rights of shareholders to receive any notice or have access to anyinformation will apply (see Table C page 42);c) meetings of shareholders or directors and adoption of resolutions apply;d) Chapter 5 (fundamental transactions/take-overs) will apply except tothe extent exempted by or in terms of Chapter 5.[Schedule 5, Item 7(5)]In addition the right of a person to seek a remedy in terms of the new Actwill apply in respect of conduct pertaining to a pre-existing company whichoccurred prior to the effective date, (i.e retrospectively) if that person didnot institute proceedings before 1 May 2011 [Schedule 5, Item 7(7)].7
- Page 3 and 4: CONTENTSNotes on the guide to draft
- Page 5 and 6: 1. OVERVIEW OF LEGISLATIONThe Act w
- Page 7: SHAREHOLDER AGREEMENTS[Schedule 5,
- Page 11 and 12: Any order of court in terms of the
- Page 13 and 14: ●●It may thus incorporate “re
- Page 15 and 16: ●●●●●●If a rule has bee
- Page 17 and 18: ●●Form CoR 15.1E - Long Standar
- Page 19 and 20: It may state that such authority is
- Page 21 and 22: Applicable sections in the Act:Sect
- Page 23 and 24: ................. does not apply wi
- Page 25 and 26: For example, the MOI might set out
- Page 27 and 28: 3.7 Record date for exercise of sha
- Page 29 and 30: The Notice of meeting to shareholde
- Page 31 and 32: Note: the minimum % of 50% will how
- Page 33 and 34: NOTE: Section 66(4)(b) - A profit c
- Page 35 and 36: (5) Conduct of meetings:The authori
- Page 37 and 38: (ii) for wilful misconduct or breac
- Page 39 and 40: ●●A shareholder (and any other
- Page 41 and 42: pre-existing company means a jurist
- Page 43 and 44: Table BRELATED AND INTER-RELATED PE
- Page 45 and 46: Table DSOLVENCY AND LIQUIDITY TESTS
- Page 47 and 48: Table GLENIENCY RE GOVERNANCE FOR C
- Page 49 and 50: g) approve a decision of the board
- Page 51: CONTACT DETAILS:National:Gauteng (C
Regulation 31(3):Form CoR 31 (Notice of Board Resolution to Convert Par Value Shares)may be filed with the Commission at any time but only in respect of classesof authorised shares from which shares have not been issued or if issuedare no longer outstanding. There is no fee for filing the form if it is filedwithin two years after the effective date of the Act.The Board of the company is required to pass a resolution to convert theclass or classes of authorised shares to shares having no nominal or parvalue, and filing the Form CoR 31 with the Commission at any time afterthe effective date.It is important to note that the rights attached to any par value shares, heldby a shareholder are not affected by the conversion, to the extent that it iscompatible with the purposes of Item 6.2.6 COMPANY FINANCE AND GOVERNANCE[Schedule 5, Item 7]●●●●●●A director, alternate director, prescribed officer, company secretary andauditor of a pre-existing company will continue to hold office as suchsubject to the MOI and the Act;But if such a person is, in terms of the new Act, ineligible or disqualifiedfrom being a director, alternate director, prescribed officer, companysecretary or auditor, that person is regarded as having resigned from everysuch office in any company as from the effective date;As from the effective date, a pre-existing company is deemed to have anumber of vacancies on the board equal to the difference between –a) the minimum number of directors required by or in terms of this Act;b) the actual number of directors of that pre-existing companyimmediately before the effective date, if that number is less than theminimum referred to in (a);2.7 PROVISIONS WHICH APPLY IMMEDIATELY – NOTRANSITIONAL PERIOD:●●●●The following provisions of the new Act will apply immediately as from theeffective date to all pre-existing companies {irrespective of what is statedin the company’s MOI}, in other words no “grace” period is afforded tocompany’s in regard to the following:a) the duties, conduct and liability of directors will apply to every director(and prescribed officer);b) the rights of shareholders to receive any notice or have access to anyinformation will apply (see Table C page 42);c) meetings of shareholders or directors and adoption of resolutions apply;d) Chapter 5 (fundamental transactions/take-overs) will apply except tothe extent exempted by or in terms of Chapter 5.[Schedule 5, Item 7(5)]In addition the right of a person to seek a remedy in terms of the new Actwill apply in respect of conduct pertaining to a pre-existing company whichoccurred prior to the effective date, (i.e retrospectively) if that person didnot institute proceedings before 1 May 2011 [Schedule 5, Item 7(7)].7
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