Acquisition of securities in terms of Section 48 of the Companies Act 71 of 2008

Abstract

The Companies Amendment Act 37 of 1999 brought about a major change to the South African company law, the Amendment Act introduced share buyback provisions to our company law. The legislature had finally responded to numerous calls for amendments to our company law, particularly amendments that would make share buyback by a company of its own shares and share buyback by subsidiary company of shares in its holding company possible. The Amendment Act operated in a statutory scheme to which the capital maintenance doctrine was applicable, it was thus necessary that the Companies Act 61 of 1973 be overhauled and this was done through the enactment of the Companies Act 71 of 2008. On 1st May 2011, the Companies Act 71 of 2008 finally came into effect. This study is principally about the provisions governing a company’s acquisition of securities in terms of the new Companies Act. I will first give an exposition of the evolution of our Companies Act from capital maintenance to solvency and liquidity. I will then contrast the share buyback provisions of the 1973 Companies Act with the current Companies Act, I will also discuss and analyse the provision governing distributions in general and those pertaining to acquisition of securities in terms of section 48 of the Companies Act 71 of 2008.