n Acta Juridica - Public offerings of company securities : a closer look at certain aspects of chapter 4 of the Companies Act 71 of 2008 : corporate formation and corporate finance : part I

Volume 2010, Issue 1
  • ISSN : 0065-1346
  • E-ISSN: 1996-2088



Chapter 4 of the Companies Act 71 of 2008 deals with public offerings of company securities and introduces fundamental changes to this area of company law. Section 99 places restrictions on offers to the public of the securities of a company and also prescribes certain requirements (most notably the issue of a prospectus) in this regard. The section draws new distinctions between the primary and secondary markets, as well as listed and unlisted securities. These distinctions provide legal clarity and certainty as to the relevant requirements, but are also aimed at supplying would-be investors with the information they require to make informed investment decisions without placing the offer or under an unreasonable or unnecessary administrative and financial burden. The fact that separate provision is made for offers pertaining to listed and unlisted securities should provide prospective investors with the requisite protection without unnecessary duplication or over regulation in terms of compliance with stock exchange and company law requirements. The drafting of the new section also provides clarity on legal problems which currently exist in relation to the definition of 'offers to the public' and 'employee share schemes'. Potential liability for untrue statements in a prospectus has been extended but largely decriminalised. Finally, the layout and structure of this section of the legislation as a whole has been simplified and the improved definitions and legal framework should provide improved and more certain guidelines in this area of law both for companies and the courts.

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