n Acta Juridica - A microscopic analysis of the new merger and amalgamation provision in the Companies Act 71 of 2008 : corporate governance and mergers & takeovers : part ll
|Article Title||A microscopic analysis of the new merger and amalgamation provision in the Companies Act 71 of 2008 : corporate governance and mergers & takeovers : part ll|
|© Publisher:||Juta Law Publishing|
|Author||Ezra Davids, Trevor Norwitz and David Yuill|
|Publication Date||Jan 2010|
|Pages||337 - 371|
This article argues that the drafters of the Companies Act, 2008 largely succeeded in their stated objective of providing for 'equitable and efficient amalgamations, mergers and takeovers of companies'. The authors do, however, point out a few drafting idiosyncrasies and ambiguities which may require further judicial refinement in order for those provisions to be effective as intended. While retaining the basic structure of pre-existing South African takeover law, the new Act includes some new innovations in company law (largely drawn from foreign experience but tailored for the specific South African situation), which should enhance the objective of balancing the encouragement of economic activity and prudent risk-taking with appropriate protections for the interests of all company stakeholders. These new provisions include a new statutory merger procedure, an appraisal rights remedy for shareholders who dissent from corporate control transactions, and an 'early-warning' disclosure requirement for significant acquisitions of public company shares. This article concentrates in particular on the first two of these new additions - the merger procedure and the appraisal rights remedy - and conducts a detailed analysis of the relevant provisions of the new Act. Among other things, this article considers the extent to which the new statutory merger procedure is likely to become practitioners' M&A vehicle of choice, given its greater flexibility and versatility vis-à-vis the existing procedures available under the current Act. It also considers the safeguards which are provided for minority shareholders and creditors, which are more protective than in other jurisdictions and, in some cases, in the view of the authors, may undermine some of the benefits sought to be achieved by the new law.
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