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Companies Act, 2008 (Act No. 71 of 2008)

Chapter 4 : Public Offerings of Company Securities

108. Restrictions on allotment

 

(1) A company that has offered securities to the public must not allot any of those securities or accept any subscription for any of those securities unless—
(a) the subscription has been made on an application form that has been attached to or accompanied by a prospectus; or
(b) it is shown that the applicant, at the time of the application, was in fact in possession of a copy of the prospectus or was aware of its contents.

 

(2) A company that has offered securities to the public must not allot any of those securities unless the amount stated in that prospectus as the minimum amount which in the opinion of the directors of the company concerned must be raised by the issue of securities in order to provide for the matters prescribed to be covered by minimum subscription and the amount so stated has been paid to and received by the company.

 

(3) For the purposes of subsection (2)—
(a) an amount stated in any cheque received by the company must not be regarded to have been paid to it until the amount of the cheque has been unconditionally credited to its account with its bankers; and
(b) any amount paid to and received by the company must be reduced by the amount of any money, bill, promissory note or cheque that it has at any time delivered to the payer otherwise than in discharge of a debt bona fide due by the company.

 

(4) The minimum amount contemplated in subsection (2) must be reckoned exclusively of any amount payable otherwise than in cash.

 

(5) Until the minimum amount contemplated in subsection (2) has been made up, any amount paid on an application contemplated in this section must—
(a) be paid into a separate account with a banking institution registered under the Banks Act; and
(b) not be used or made available for the purposes of the company or for the satisfaction of its debts.

 

(6) If the circumstances contemplated in subsection (2) have not been realised within 40 business days after the issue of the prospectus, all amounts received from applicants must be repaid to them promptly without interest.

 

(7) If any money required to be repaid to an applicant in terms of subsection (6) has not been repaid within 55 business days after the issue of the prospectus, each director or prescribed officer of the company is jointly and severally liable, with all other such directors and prescribed officers of the company, to repay that money with interest, in accordance with the Prescribed Rate of Interest Act, 1975 (Act No. 55 of 1975), from the expiration of the 55th business day, unless the default in payment was not due to any misconduct or negligence on the part of that director or prescribed officer.