Company Law: Disposal of a company’s assets and financial assistance to third parties or the directors of the company
Disposal refers to an act of giving away or selling assets to another person or company. Should the company intend to dispose assets or undertaking, special resolution which gives effect to the aforesaid disposal needs to be adopted. It is however vital that such disposal be effected in accordance with the requirements set out in the Companies Act as non-compliance of the Act may render such disposal null and void. A special resolution, which also adheres with the requirements set out in the Companies Act, needs to be adopted in case of financial assistance by the company... Read More
Company Law: The importance of KING IV’S principles on Corporate Governance
In light of recent events and certain professions going under review by regulatory bodies, we once again are reminded to be cognisant of the importance of applying principles of governance in an organisation that are not only proper but also effective. Corporate governance is defined by King Code IV as the exercise of ethical and effective leadership by a governing body towards the achievement of the following governance outcomes: ethical culture, good performance, effective control, and legitimacy.
In this article, focus is given to the leading governance model entrenched in King Code IV which came into effect on 1st April 2017 and has been leading organisations to date... Read More
Company Law: The KING IV Report “At a Glance”
It has been eleven years since the release of King Report III, hence the need for a revision of this code of Corporate Governance.
King Code IV, in contrast to King Code III, has consolidated 76 principles into 16. These principles pertain to the ‘RAFT’ Governance ideals, namely: responsibility, accountability, fairness and transparency.
These 16 principles are categorically divided into five chapters, with each producing a governance outcome.
These 5 chapters are: Chapter 1- Leadership, Ethics and Corporate Citizenship; Chapter 2- Performance and Reporting; Chapter 3 – Governing Structures and Delegation; Chapter 4 – Governance Functional Areas; and Chapter 5 – Stakeholder Relationships... Read More
Foreign companies: mortgage bonds and property ownership
Section 1 of the new Companies Act 71 of 2006, which came into operation on 1 May 2012, defines an “external company” as “a foreign company that is carrying on business, or non-profit activities, as the case may be, within the Republic, subject to section 23 (2).”
Section 23(2) of the Act goes further to state that:
“For the purposes of subsection (1), and the definition of “external company” as set out in section 1, a foreign company must be regarded as “conducting business, or non-profit activities, as the case may be, within the Republic” if that foreign company— (a) is a party to one or more employment contracts within the Republic; or (b) subject to subsection (2A), is engaging in a course of conduct, or has engaged in a course or pattern of activities within the Republic over a period of at least six months, such as would lead a person to reasonably conclude that the company intended to continually engage in business or non-profit activities within the Republic.”
If a company meets the requirements set out above in that it is regarded as an external company in terms of the Act, it is required, within 20 business days after it first begins to conduct business, or non-profit activities, as the case may be, within the Republic, to register with the Companies and Intellectual Property Commission (CIPC)... Read More