1. DEFINING THE BATTLEFIELD
Ordinarily, the common law and company law rights of shareholders can only be modified or amended with the consent of each shareholder, however, the Companies Act, 61 of 2008 (the “Act”) contains provisions which can, and do, alter this position. Unfortunately the amended facts presented for review are ambiguous to the extent that the value of the resisting shareholders holding has not been provided. As such, this paper will consider primarily the procedure for compulsory acquisition and squeeze out contained in section 124 of the Act, however, bearing in mind the aforementioned ambiguity, the section 114 scheme of arrangement may be more suited to Flower Pot Limited (“Flower Pot”) should it transpire that the …show more content…
In practical terms therefore, assuming that Flower Pot holds 30% of the securities in the Class A ordinary shares and wishes to acquirer the remaining 70%, it is required to make an offer to acquire such. This offer must be accepted by at least 90% of the remaining 70% of the class (i.e. 63%) must accept the tender offer (section 118(1)(c) read with Regulation 91 of the Companies Act Regulations). (Smit 24))
It must also be noted that the squeeze-out procedure is restricted to regulated companies in terms of the Act (namely public, state-owned companies and private companies who have either elected to be regulated companies or have engaged in a transaction which for such purpose deems then a regulated company). This aspect is discussed further in point 5 below.
3. ‘A FEW’ REBELS STRIKE
Ordinarily, the common law and company law rights of shareholders can only be modified or amended with the consent of each shareholder, however, the Companies Act, 61 of 2008 (the “Act”) contains provisions which can, and do, alter this position. Unfortunately the amended facts presented for review are ambiguous to the extent that the value of the resisting shareholders holding has not been provided. As such, this paper will consider primarily the procedure for compulsory acquisition and squeeze out contained in section 124 of the Act, however, bearing in mind the aforementioned ambiguity, the section 114 scheme of arrangement may be more suited to Flower Pot Limited (“Flower Pot”) should it transpire that the …show more content…
In practical terms therefore, assuming that Flower Pot holds 30% of the securities in the Class A ordinary shares and wishes to acquirer the remaining 70%, it is required to make an offer to acquire such. This offer must be accepted by at least 90% of the remaining 70% of the class (i.e. 63%) must accept the tender offer (section 118(1)(c) read with Regulation 91 of the Companies Act Regulations). (Smit 24))
It must also be noted that the squeeze-out procedure is restricted to regulated companies in terms of the Act (namely public, state-owned companies and private companies who have either elected to be regulated companies or have engaged in a transaction which for such purpose deems then a regulated company). This aspect is discussed further in point 5 below.
3. ‘A FEW’ REBELS STRIKE