n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - The legal effect of amalgamations and mergers upon third-party contracts containing anti-transfer provisions

Volume 25, Issue 1
  • ISSN : 1015-0099
  • E-ISSN: 1996-2185



With the objects of facilitating the creation of business combination, and promoting flexibility and enhancing efficiency in the economy, the Companies Act 71 of 2008 introduced the innovative American concept of 'amalgamations or mergers' ('statutory mergers' or 'M&As') into South African law. In essence, a statutory merger is a simple and effective procedure by which two or more companies (the 'constituent companies' or 'merging companies'), along with their respective assets and liabilities, are combined into one or more surviving, or newly formed, companies (the 'merged company' or 'merged companies'). M&As are effected through the implementation of a merger agreement between the constituent companies together with the requisite consent of their shareholders.

The primary concern of this article is the legal effect of a statutory merger upon the transfer of third-party contracts - that is, contracts between the constituent companies and third parties ('non-merging parties') - to the merged company where these contracts contain anti-transfer clauses, in particular clauses prohibiting cession (pacta de non cedendo).

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