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

s43: Securities other than shares

  • (1) In this section:
    • (a) ['debt instrument'];
      • (i) includes any securities other than the shares of a company, irrespective of whether or not issued in terms of a security document, such as a trust deed; but
        • (ii) does not include promissory notes and loans, whether constituting an encumbrance on the assets of the company or not; and
        • (b) ['security document'] includes any document by which a debt instrument is offered or proposed to be offered, embodying the terms and conditions of the debt instrument including, but not limited to, a trust deed or certificate.
        • (2) The board of a company:
          • (a) may authorise the company to issue a secured or unsecured debt instrument at any time, except to the extent provided otherwise by the company's Memorandum of Incorporation; and
            • (b) must determine whether each such debt instrument is secured or unsecured.
            • (3) Except to the extent that a company's Memorandum of Incorporation provides otherwise, a debt instrument issued by the company may grant special privileges regarding:
              • (a) attending and voting at general meetings and the appointment of directors; or
                • (b) allotment of securities, redemption by the company, or substitution of the debt instrument for shares of the company, provided that the securities to be allotted or substituted in terms of any such privilege, are authorised by or in terms of the company's Memorandum of Incorporation in accordance with section 36.
                • (4) Every security document must clearly indicate, on its first page, whether the relevant debt instrument is secured or unsecured.
                  • (5) A company may appoint any person, including a juristic person, as trustee for the holders of the company's debt instruments, if:
                    • (a) the person;
                      • (i) is not a director or prescribed officer of the company, or a person related or inter-related to the company, a director or a prescribed officer; and
                        • (ii) does not have any interest in, or relationship with, the company that might conflict with the duties of a trustee; and
                        • (b) the board is satisfied that the person has the requisite knowledge and experience to carry out the duties of a trustee.
                        • (6) Any new trustee appointed for the purpose of this section must:
                          • (a) satisfy the requirements of subsection (5)(a); and
                            • (b) be approved by the holders of at least 75% by value of debt instruments present at a meeting called for that purpose.
                            • (7) Any provision contained in a trust deed for securing any debt instruments, or in any agreement with the holders of any debt instruments secured by a trust deed, is void to the extent that it would exempt a trustee from, or indemnify a trustee against, liability for breach of trust, or failure to exercise the degree of care and diligence required of the prudent and careful person, having regard to the provisions of the trust deed respecting the powers, authorities or discretions of the trustee.
                              • (8) Subsection (7) does not invalidate:
                                • (a) any release validly given in respect of anything done or omitted to be done by a trustee before the giving of the release; or
                                  • (b) any provision of a debt instrument;
                                    • (i) enabling a release to be given with the consent of the majority of not less than three fourths in value of the holders of debt instruments present and voting at a meeting called for the purpose; and
                                      • (ii) with respect to a specific act or omission, or of the trustee dying or ceasing to act.

                                    Related Sections

                                    s36: Authorisation for shares

                                    Related Regulations

                                    No related regulations.

                                    Related Notes

                                    No related note.

                                    Related Forms

                                    No related forms.