25.2 FUNDAMENTAL TRANSACTIONS
Chapter 5 SS112 – 117 of the Act is headed fundamental transactions, take overs and offers.
The expression fundamental transactions are not defined in the Act. It is used to describe three types of transactions, each of which fundamentally alters a company due to a material change in its assets, its securities or its shareholders.
· The disposal of all or the greater part of the company’s assets or undertaking – s 112;
“all or the greater part of the assets or undertaking”, when used in respect of a company, means—
(a) in the case of the company’s assets, more than 50% of its gross assets at fair market value, irrespective of its liabilities; or
(b) in the case of the company’s undertaking, more than 50% of the value of its entire undertaking, at fair market value;
· A scheme of arrangement between a company and its security holders – s 114;
Proposals for scheme of arrangement.—(1) Unless it is in liquidation or in the course of business rescue proceedings in terms of Chapter 6, the board of a company may propose and, subject to subsection (4) and approval in terms of this Part, implement any arrangement between the company and holders of any class of its securities, by way of, among other things—
(a) a consolidation of securities of different classes;
(b) a division of securities into different classes;
(c) an expropriation of securities from the holders;
(d) exchanging any of its securities for other securities;
(e) a re-acquisition by the company of its securities; or
(f) a combination of the methods contemplated in this subsection.
[Sub-s. (1) substituted by s. 70 (a) of Act No. 3 of 2011.]
and
· An amalgamation or a merger- s113.
“amalgamation or merger” means a transaction, or series of transactions, pursuant to an
agreement between two or more companies, resulting in—
(a) the formation of one or more new companies, which together hold all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement, and the dissolution of each of the amalgamating or merging companies; or
(b) the survival of at least one of the amalgamating or merging companies, with or without the formation of one or more new companies, and the vesting in the surviving company or companies, together with such new company or companies, of all of the assets and liabilities that were held by any of the amalgamating or merging companies immediately before the implementation of the agreement;