Public offerings of company securities: A closer look at certain aspects of chapter 4 of the Companies Act 71 of 2008
| Jurisdiction | South Africa |
| Published date | 15 August 2019 |
| Date | 15 August 2019 |
| Pages | 117-130 |
| Author | Jacqueline Yeats |
Public offerings of company securities: a
closer look at certain aspects of
chapter 4 of the Companies Act
71 of 2008
JACQUELINE YEATS*
Chapter 4 of the Companies Act 71 of 2008 deals with public offerings of
company securities and introduces fundamental changes to this area of
company law. Section 99 places restrictions on offers to the public of the
securities of a company and also prescribes certain requirements (most notably
the issue of a prospectus) in this regard. The section draws new distinctions
between the primary and secondary markets, as well as listed and unlisted
securities. These distinctions provide legal clarity and certainty as to the
relevant requirements, but are also aimed at supplying would-be investors
with the information they require to make informed investment decisions
without placing the offeror under an unreasonable or unnecessary administra-
tive and financial burden. The fact that separate provision is made for offers
pertaining to listed and unlisted securities should provide prospective investors
with the requisite protection without unnecessary duplication or over-
regulation in terms of compliance with stock exchange and company law
requirements. The drafting of the new section also provides clarity on legal
problems which currently exist in relation to the definition of ‘offers to the
public’ and ‘employee share schemes’. Potential liability for untrue statements
in a prospectus has been extended but largely decriminalised. Finally, the
layout and structure of this section of the legislation as a whole has been
simplified and the improved definitions and legal framework should provide
improved and more certain guidelines in this area of law both for companies
and the courts.
I INTRODUCTION
Chapter 4 of the Companies Act 71 of 2008 (hereinafter ‘the Act’) deals
with public offerings of company securities and introduces some funda-
mental changes to this area of South African company law. The objective
of this article is to examine certain of the new and amended provisions of
the Act and to comment on how, if at all, these changes are likely to
* BA LLB LLM (US), Lecturer in the Department of Commercial Law,University of Cape
Town,Cape Town.
117
2010 Acta Juridica 117
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