Chapter 2: Formation, Administration and Dissolution of Companies
Part D: Capitalisation of profit companies

s42: Options for subscription of securities

  • (1) A company may issue options for the allotment or subscription of authorised shares or other securities of the company.
    • (2) The board of a company must determine the consideration or other benefit for which, and the terms upon which:
      • (a) any options are issued; and
        • (b) the related shares or other securities are to be issued.
        • (3) A decision by the board that the company may issue:
          • (a) any options, constitutes also the decision of the board to issue any authorised shares or other securities for which the options may be exercised; or
            • (b) any securities convertible into shares of any class, constitutes also the decision of the board to issue the authorised shares into which the securities may be converted.
            • (4) A director of a company is liable to the extent set out in section 77(3)(e)(iii) if the director:
              • (a) was present at a meeting when the board approved the granting of an option or a right as contemplated in this section, or participated in the making of such a decision in terms of section 74; and
                • (b) failed to vote against the granting of the option or right, despite knowing that any shares:
                  • (i) for which the options could be exercised; or
                    • (ii) into which any securities could be converted,
                  • had not been authorised in terms of section 36.

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