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Did you know that all of your related and inter-related Company
and Close Corporation loans granted from 1 May 2011 are invalid?
Furthermore did you know that all of your Directors’ loans
granted from 1 May 2011 are invalid?
In terms of Section 45 of the Companies Act, 2008 all
intra-group loans, guarantees and other financial assistance
require approval of the shareholders through a special
resolution.
Section 45 stipulates that the Board of Directors may not
authorise a Company to provide direct or indirect financial
assistance to the following:
1.
A Director
or Prescribed Officer of the Company or a Director or Prescribed
Officer of a related or inter-related Company;
2.
A related
or inter-related Company or Corporation;
3.
A member of
a related or inter-related Corporation;
4.
A person
related to such Company, Corporation, Director, Prescribed
Officer or Member;
Most notably before granting any such financial assistance, the
Board of Directors must ensure the following:
1.
That the
Company would satisfy the solvency and liquidity test; and
2.
That the
terms under which the financial assistance is proposed to be
given are fair and reasonable to the Company;
If the provisions of Section 45 are not
complied with, the financial assistance would then become void
and the Directors would be at risk of being held personally
liable.
Please contact Karen Venter for further information and
assistance in drafting of these highly important special
resolutions.
| Alexis Sacks
|
 |
Dave Rich
|
Important Note:
The information contained in this newsletter is of a general nature, and may in certain circumstances be subject to misinterpretation. Consequently, we recommend that our advice be sought when acting upon the information contained herein. Whilst every care has been taken in the compilation of this Newsletter, no responsibility of any nature whatsoever shall be accepted for any inaccuracies, errors or omissions.
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