The regulation of financial assistance in terms of section 45 the Companies Act 71 of 2008

Abstract

This dissertation will evaluate the regulation of financial assistance in terms of the Companies Act 71 of 2008 (the 2008 Act) with a particular focus on holding companies providing financial assistance to their subsidiaries without an intent to acquire shares in the company providing the financial assistance. This specific context is necessary to evaluate the proposed amendment to section 45 of the 2008 Act (the Companies Amendment Bill).

An investigation of the relevant legislation of the United Kingdom and Canada, followed by an analysis of sections 37 and 226 of the Companies Act 61 of 1973, will provide the necessary context to evaluate the provisions of the 2008 Act in a holistic manner. Thereafter, the current provisions of section 45 of the 2008 Act will be evaluated with a view to identifying the problems relating to section 45 in its current format.

Once the problems of section 45 are identified, it will be considered whether the Companies Amendment Bill would adequately address the problems of section 45 in its current format. Finally, recommendations will be made in response to the problems discussed in this dissertation to improve the protection of creditors and shareholders in South Africa.