Complying with Changes in Legislation

Loans or other financial assistance to directors (Section 45)

 In this section, ‘‘financial assistance’’:

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  Includes lending money, guaranteeing a loan, or other obligation, and securing any debt or obligation; but
  
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  Does not include:
  
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    lending money in the ordinary course of business by a company whose primary business is the lending of money;
    
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    an accountable advance to meet:
    
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      legal expenses in relation to a matter concerning the company; or
      
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      anticipated expenses to be incurred by the person on behalf of the company; or
      
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      an amount to defray the person’s expenses for removal at the company’s request.
      

Except to the extent that the MOI provides otherwise, the board may authorise the company to provide direct or indirect financial assistance to a director or prescribed officer of the company or of a related or inter-related company.

Despite any provision of the MOI to the contrary, the board may not authorise any financial assistance, unless:

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  The particular provision of financial assistance is:
  
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    pursuant to an employee share scheme; or
    
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    pursuant to a special resolution of the shareholders, adopted within the previous two years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category; and
    
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    the board is satisfied that immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test.
    

The board must ensure that any conditions or restrictions respecting the granting of financial assistance set out in the company’s Memorandum of Incorporation have been satisfied.

If the board adopts a resolution, the company must provide written notice of that resolution to all shareholders, unless every shareholder is also a director of the company, and to any trade union representing its employees:

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  Within 10 business days after the board adopts the resolution, if the total value of all loans, debts, obligations or assistance contemplated in that resolution, together with any previous such resolution during the financial year, exceeds one-tenth of 1% of the company’s net worth at the time of the resolution; or
  
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  Within 30 business days after the end of the financial year, in any other case.
  

 Distributions must be authorised by the board (Section 46)

A company must not make any proposed distribution unless the distribution:

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  Is pursuant to an existing legal obligation of the company, or a court order; or
  
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  The board of the company, by resolution, has authorised the distribution;
  
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  It reasonably appears that the company will satisfy the solvency and liquidity test immediately after completing the proposed distribution; and
  
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  The board of the company, by resolution, has acknowledged that it has applied the solvency and liquidity test, and reasonably concluded that the company will satisfy the solvency and liquidity test immediately after completing the proposed distribution.
  

Regulation Application of solvency and liquidity test to groups of companies. Whenever the "aggregate assets of a company", and the "aggregate liabilities of a company", within a group of companies are required to be evaluated, the evaluation must consider whether: The assets of the relevant company equal or exceed its liabilities; and The assets of each subsidiary of the relevant company equal or exceed that subsidiary's liabilities.

Mandatory appointment of company secretary (Section 86)

A public company or state-owned company must appoint a person knowledgeable or experienced in relevant laws as a company secretary.

Every company secretary must be a permanent resident of the Republic.

Within 60 business days after a vacancy arises in the office of company secretary, the board must fill the vacancy by appointing a person whom the directors consider to have the requisite knowledge and experience.

Appointment of auditor (Section 90)

Upon its incorporation, and each year at its annual general meeting, a public company or state-owned company must appoint an auditor.

To be appointed as an auditor a person or firm:

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  Must be a registered auditor;
  
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  Must not be a director or prescribed officer of the company;
  
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  An employee or consultant of the company who was or has been engaged for more than one year in the maintenance of any of the company’s financial records or the preparation of any of its financial statements;
  
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  A director, officer or employee of a person appointed as company secretary;
  
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  A person who, alone or with a partner or employees, habitually or regularly performs the duties of accountant or bookkeeper, or performs related secretarial work, for the company;
  
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  A person who, at any time during the five financial years immediately preceding the date of appointment, was a person mentioned above, or a person related to a person mentioned above;
  
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  Must be acceptable to the company’s audit committee as being independent of the company.
  

If a company that is required to appoint an auditor does not do so when it registers the incorporation of the company, the directors of the company must appoint the first auditor of the company within 40 business days after the date of incorporation of the company.

The first auditor of a company holds office until the conclusion of the first annual general meeting of the company.