n Annual Survey of South African Law - Company law (including close corporations)

Abstract

Two new classifications of companies were introduced into the Companies Act with the inclusion of definitions of a 'widely held company' and a 'limited interest company'. The relevance of these classifications becomes apparent when the amendments to the provisions regulating auditors are considered (see below).

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A company is considered to be widely held if its articles provide for an unrestricted transfer of its shares, or its articles permit it to offer shares to the public, or it resolves by special resolution to be a widely held company, or if it is a subsidiary of a widely held company (s 1(6)(a)(i)-(iv)). A company is also a widely held company if it has two or more types or classes of shares and its articles provide for the unrestricted transfer of its shares in one or more of these types or classes (s 1(6)(b)). A company need thus comply with only one of the requirements specified in order to be classified as widely held. If it is not a widely held company, it is classified as a limited interest company (s 1(6)(d)). Most public companies will be classified as widely held and any private company that is a subsidiary of a widely held company will be considered to be widely held irrespective of what the articles of the subsidiary may provide.