Chapter 5: Fundamental Transactions, Takeovers and Offers
Part A: Approval for certain fundamental transactions

s115: Required approval for transactions contemplated in Part

  • (4A) In subsection (4), ;act in concert; has the meaning set out in section 117(1)(b).
    • (1) Despite section 65, and any provision of a company's Memorandum of Incorporation, or any resolution adopted by its board or holders of its securities, to the contrary, a company may not dispose of, or give effect to an agreement or series of agreements to dispose of, all or the greater part of its assets or undertaking, implement an amalgamation or a merger, or implement a scheme of arrangement, unless:
      • (a) the disposal, amalgamation or merger, or scheme of arrangement;
        • (i) has been approved in terms of this section; or
          • (ii) is pursuant to or contemplated in an approved business rescue plan for that company, in terms of Chapter 6; and
          • (b) to the extent that Parts B and C of this Chapter and the Takeover Regulations apply to a company that proposes to;
            • (i) dispose of all or the greater part of its assets or undertaking;
              • (ii) amalgamate or merge with another company; or
                • (iii) implement a scheme of arrangement, the Panel has issued a compliance certificate in respect of the transaction, in terms of section 119(4)(b), or exempted the transaction in terms of section 119(6).
              • (2) A proposed transaction contemplated in subsection (1) must be approved :
                • (a) by a special resolution adopted by persons entitled to exercise voting rights on such a matter, at a meeting called for that purpose and at which sufficient persons are present to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised on that matter, or any higher percentage as may be required by the company's Memorandum of Incorporation, as contemplated in section 64(2);
                  • (b) by a special resolution, also adopted in the manner required by paragraph (a), by the shareholders of the company's holding company if any, if;
                    • (i) the holding company is a company or an external company;
                      • (ii) the proposed transaction concerns a disposal of all or the greater part of the assets or undertaking of the subsidiary; and
                        • (iii) having regard to the consolidated financial statements of the holding company, the disposal by the subsidiary constitutes a disposal of all or the greater part of the assets or undertaking of the holding company; and
                        • (c) by the court, to the extent required in the circumstances and manner contemplated in subsections (3) to (6).
                        • (3) Despite a resolution having been adopted as contemplated in subsections (2)(a) and (b), a company may not proceed to implement that resolution without the approval of a court if:
                          • (a) the resolution was opposed by at least 15% of the voting rights that were exercised on that resolution and, within five business days after the vote, any person who voted against the resolution requires the company to seek court approval; or
                            • (b) the court, on an application within 10 business days after the vote by any person who voted against the resolution, grants that person leave, in terms of subsection (6), to apply to a court for a review of the transaction in accordance with subsection (7).
                            • (4) For the purposes of subsections (2) and (3), any voting rights controlled by an acquiring party, a person related to an acquiring party, or a person acting in concert with either of them, must not be included in calculating the percentage of voting rights:
                              • (a) required to be present, or actually present, in determining whether the applicable quorum requirements are satisfied; or
                                • (b) required to be voted in support of a resolution, or actually voted in support of the resolution.
                                • (5) If a resolution requires approval by a court as contemplated in terms of subsection (3)(a), the company must either:
                                  • (a) within 10 business days after the vote, apply to the court for approval, and bear the costs of that application; or
                                    • (b) treat the resolution as a nullity.
                                    • (6) On an application contemplated in subsection (3)(b), the court may grant leave only if it is satisfied that the applicant:
                                      • (a) is acting in good faith;
                                        • (b) appears prepared and able to sustain the proceedings; and
                                          • (c) has alleged facts which, if proved, would support an order in terms of subsection (7).
                                          • (7) On reviewing a resolution that is the subject of an application in terms of subsection (5)(a), or after granting leave in terms of subsection (6), the court may set aside the resolution only if:
                                            • (a) the resolution is manifestly unfair to any class of holders of the company's securities; or
                                              • (b) the vote was materially tainted by conflict of interest, inadequate disclosure, failure to comply with the Act, the Memorandum of Incorporation or any applicable rules of the company, or other significant and material procedural irregularity.
                                              • (8) The holder of any voting rights in a company is entitled to seek relief in terms of section 164 if that person:
                                                • (a) notified the company in advance of the intention to oppose a special resolution contemplated in this section; and
                                                  • (b) was present at the meeting and voted against that special resolution.
                                                  • (9) If a transaction contemplated in this Part has been approved, any person to whom assets are, or an undertaking is, to be transferred, may apply to a court for an order to effect:
                                                    • (a) the transfer of the whole or any part of the undertaking, assets and liabilities of a company contemplated in that transaction;
                                                      • (b) the allotment and appropriation of any shares or similar interests to be allotted or appropriated as a consequence of the transaction;
                                                        • (c) the transfer of shares from one person to another;
                                                          • (d) the dissolution, without winding-up, of a company, as contemplated in the transaction;
                                                            • (e) incidental, consequential and supplemental matters that are necessary for the effectiveness and completion of the transaction; or
                                                              • (f) any other relief that may be necessary or appropriate to give effect to, and properly implement, the amalgamation or merger.

                                                              Related Sections

                                                              s64: Meeting quorum and adjournment
                                                              s65: Shareholder resolutions
                                                              s117: Definitions applicable to this Part, Part C and Takeover Regulations
                                                              s119: Panel regulation of affected transactions
                                                              s164: Dissenting shareholders appraisal rights

                                                              Related Regulations

                                                              No related regulations.

                                                              Related Notes

                                                              No related note.

                                                              Related Forms

                                                              No related forms.