25.2 THE LAW
Three relationships are defined namely between or amongst two or more:
1. natural persons.
2. juristic persons.
3. Natural and juristic persons
Section 1 of the Act contains the following definitions:
“related”, when used in respect of two persons, means persons who are connected to one another in any manner contemplated in section 2 (1) (a) to (c);
“inter-related”, when used in respect of three or more persons, means persons who are related to one another in a linked series of relationships, such that two of the persons are related in a manner contemplated in section 2 (1), and one of them is related to the third in any such manner, and so forth in an unbroken series;
2. Related and inter-related persons, and control.—
(1) For all purposes of this Act—
(a) an individual is related to another individual if they—
(i) are married, or live together in a relationship similar to a marriage; or
(ii) are separated by no more than two degrees of natural or adopted consanguinity or affinity;
(b) an individual is related to a juristic person if the individual directly or indirectly controls the juristic person, as determined in accordance with subsection (2); and
(c) a juristic person is related to another juristic person if—
(i) either of them directly or indirectly controls the other, or the business of the other, as determined in accordance with subsection (2);
(ii) either is a subsidiary of the other; or
(iii) a person directly or indirectly controls each of them, or the business of each of them, as determined in accordance with subsection (2).
(2) For the purpose of subsection (1), a person controls a juristic person, or its business, if—
(a) in the case of a juristic person that is a company—
(i) that juristic person is a subsidiary of that first person, as determined in accordance with section 3 (1) (a); or
(ii) that first person together with any related or inter-related person, is—
(aa) directly or indirectly able to exercise or control the exercise of a majority of the voting rights associated with securities of that company, whether pursuant to a shareholder agreement or otherwise; or
(bb) has the right to appoint or elect, or control the appointment or election of, directors of that company who control a majority of the votes at a meeting of the board;
(b) in the case of a juristic person that is a close corporation, that first person owns the
majority of the members’ interest, or controls directly, or has the right to control, the
majority of members’ votes in the close corporation;
(c) in the case of a juristic person that is a trust, that first person has the ability to control the majority of the votes of the trustees or to appoint the majority of the trustees, or to
appoint or change the majority of the beneficiaries of the trust; or
(d) that first person has the ability to materially influence the policy of the juristic person in a manner comparable to a person who, in ordinary commercial practice, would be able to exercise an element of control referred to in paragraph (a), (b) or (c).
(3) With respect to any particular matter arising in terms of this Act, a court, the Companies
Tribunal or the Panel may exempt any person from the application of a provision of this Act that would apply to that person because of a relationship contemplated in subsection (1) if the person can show that, in respect of that particular matter, there is sufficient evidence to conclude that the person acts independently of any related or inter-related person.
3. Subsidiary relationships.—
(1) A company is—
(a) a subsidiary of another juristic person if that juristic person, one or more other subsidiaries of that juristic person, or one or more nominees of that juristic person or any of its subsidiaries, alone or in any combination—
(i) is or are directly or indirectly able to exercise, or control the exercise of, a majority of the general voting rights associated with issued securities of that company, whether pursuant to a shareholder agreement or otherwise; or
(ii) has or have the right to appoint or elect, or control the appointment or election of, directors of that company who control a majority of the votes at a meeting of the board; or
(b) a wholly-owned subsidiary of another juristic person if all of the general voting rights
associated with issued securities of the company are held or controlled, alone or in any
combination, by persons contemplated in paragraph (a).
(2) For the purpose of determining whether a person controls all or a majority of the general voting rights associated with issued securities of a company—
(a) voting rights that are exercisable only in certain circumstances are to be taken into account only—
(i) when those circumstances have arisen, and for so long as they continue; or
(ii) when those circumstances are under the control of the person holding the voting rights;
(b) voting rights that are exercisable only on the instructions or with the consent or
concurrence of another person are to be treated as being held by a nominee for that other
person; and
(c) voting rights held by—
(i) a person as nominee for another person are to be treated as held by that other person; or
(ii) a person in a fiduciary capacity are to be treated as held by the beneficiary of those voting rights.
(3) For the purposes of subsection (2), “hold”, or any derivative of it, refers to the registered or
direct or indirect beneficial holder of securities conferring a right to vote.
Related – when used in respect of 2 or more persons who are connected to one another in the manner contemplated in s 2(1) (a) (b) and (c).
Inter-related - when used in respect of three or more person mean persons who are related to one another in a linked series of relationships such that two of the persons are related in a manner as defined in 2(1) and one of them is related to the third in any such matter and so forth in an unbroken series.
relationship includes the connection existing between any two or more persons who are related or inter related as determined in a in terms of 2.
Where 2 persons are related s 2(1) (a) (b) and (c).
Note the word persons includes juristic person.
S 2 provides that for the purposes of the Act any two natural persons are related to one another if they are married or live together in a relationship similar to a marriage or separated by more than two degrees of natural or adopted consanguinity or affinity. This includes children, grandchildren, parents, grandparents, siblings and in-laws including grandparents in law.
S 2 (1) (b) provides that a natural person is related to a juristic person if the natural person directly or indirectly controls the juristic person as determined in accordance with s 2 (2)
Section 2 (1) (c) provides that for all purposes of the Act two juristic persons are related to one another if;
1. Either of them directly or indirectly controls the other, or the business of the other as determined in accordance with s 2(2) or
2. Either is a subsidiary of the other, or;
3. A person directly or indirectly controls each of them or the business of each of them as determined in accordance with s 2.2.
This includes a holding company and it is direct and indirect subsidiaries as well as fellow subsidiaries of a common controlling shareholder irrespective of whether the controlling shareholder is a natural or juristic person.