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

Chapter 2 : Formation, Administration and Dissolution of Companies

Part D : Capitalisation of profit companies

48. Company or subsidiary acquiring company's shares

 

(1) This section does not apply to—
(a) the making of a demand, tendering of shares and payment by a company to a shareholder in terms of a shareholder’s appraisal rights set out in section 164 ; or
(b) the redemption by the company of any redeemable securities in accordance with the terms and conditions of those securities.

 

(2) Subject to subsections (3) and (8), and if the decision to do so satisfies the requirements of section 46—
(a) the board of a company may determine that the company will acquire a number of its own shares; and
(b) the board of a subsidiary company may determine that it will acquire shares of its holding company, but—
(i) not more than 10%, in aggregate, of the number of issued shares of any class of shares of a company may be held by, or for the benefit of, all of the subsidiaries of that company, taken together; and
(ii) no voting rights attached to those shares may be exercised while the shares are held by the subsidiary, and it remains a subsidiary of the company whose shares it holds.

 

(3) Despite any provision of any law, agreement, order or the Memorandum of Incorporation of a company, the company may not acquire its own shares, and a subsidiary of a company may not acquire shares of that company, if, as a result of that acquisition, there would no longer be any shares of the company in issue other than—
(a) shares held by one or more subsidiaries of the company; or
(b) convertible or redeemable shares.

 

(4) An agreement with a company providing for the acquisition by the company of shares issued by it is enforceable against the company, subject to subsections (2) and (3).

 

(5) If a company alleges that, as a result of the operation of subsection (2) or (3), it is unable to fulfil its obligations in terms of an agreement contemplated in subsection (4)—
(a) the company must apply to a court for an order in terms of paragraph (c);
(b) the company has the burden of proving that fulfilment of its obligations would put it in breach of subsections (2) or (3); and
(c) if the court is satisfied that the company is prevented from fulfilling its obligations pursuant to the agreement, the court may make an order that—
(i) is just and equitable, having regard to the financial circumstances of the company; and
(ii) ensures that the person to whom the company is required to make a payment in terms of the agreement is paid at the earliest possible date compatible with the company satisfying its other financial obligations as they fall due and payable.

 

(6) If a company acquires any shares contrary to section 46, or this section, the company must, not more than two years after the acquisition, apply to a court for an order reversing the acquisition, and the court may order—
(a) the person from whom the shares were acquired to return the amount paid by the company; and
(b) the company to issue to that person an equivalent number of shares of the same class as those acquired.

 

(7) A director of a company is liable to the extent set out in section 77(3)(e)(vii) if the director—
(a) was present at the meeting when the board approved an acquisition of shares contemplated in this section, or participated in the making of such a decision in terms of section 74; and
(b) failed to vote against the acquisition of shares, despite knowing that the acquisition was contrary to this section or section 46.

 

(8) A decision by the board of a company contemplated in subsection (2)(a)—
(a) must be approved by a special resolution of the shareholders of the company if any shares are to be acquired by the company from a director or prescribed officer of the company, or a person related to a director or prescribed officer of the company; and
(b) is subject to the requirements of sections 114 and 115 if, considered alone, or together with other transactions in an integrated series of transactions, it involves the acquisition by the company of more than 5% of the issued shares of any particular class of the company's shares.