Minority protections under the Company’s Act

AC Corporate Transaction Services
Jan 27, 2023
2 min read

Introduction

Key aspects of the companies act that apply automatically and without discretion is Section 114.

In terms of section 114 of the company’s act, the company repurchasing the shares needs to retain an independent expert to report on certain information to the shareholders/board.

Section 114

Details which must be provided includes:

a) all prescribed information relevant to the value of the securities affected by the proposed arrangement;

b) identify every type and class of holders of the company’s securities affected by the proposed arrangement;

c) describe the material effects that the proposed arrangement will have on the rights and interests of the persons mentioned in paragraph (b);

d) evaluate any material adverse effects of the proposed arrangement against

(i) the compensation that any of those persons will receive in terms of that arrangement; and

(ii) any reasonably probable beneficial and significant effect of that arrangement on the business and prospects of the company;

e) state any material interest of any director of the company or trustee for security holders, and state the effect of the arrangement on those interests and persons;

f) state the effect of the proposed arrangement on the interest and person contemplated in paragraph (e); and

g) include a copy of sections 115 and 164.

Other Sections

Other sections which contain important provisions related to transactions include:

Section 115: Required approval for transactions contemplated in Part.
Section 164: Dissenting shareholders appraisal rights provides that a shareholder may demand that the company pay the shareholder the fair value for all of the shares of the company held by that person.