n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Protection of holders of securities in the offeree regulated company during affected transactions : general offers and schemes of arrangements

Volume 26, Issue 3
  • ISSN : 1015-0099
  • E-ISSN: 1996-2185



A takeover of a company is a common commercial transaction and may be launched in order to gain, consolidate, or achieve total control of a company. The definition of an 'affected transaction', as takeovers are called in the Companies Act 71 of 2008 ('the Companies Act 2008'), covers a variety of transactions and reveals that a takeover can be structured in a number of ways. One way would be for an offeror to make a general offer to acquire the remaining voting securities of a company that the offeror does not already hold, potentially followed by the compulsory acquisition of securities from those holders who do not accept the offer. Another would be to use a scheme of arrangement to acquire control.

Whatever the method used, an affected transaction gives rise to a number of potential conflicts of interest. For example, there may be a conflict between the offeror who is attempting to acquire offeree company securities at the best price and the existing holders of those securities who wish to secure the highest price. Conflict could arise between an existing majority holder of securities in the offeree company and minority holders. Further, members of incumbent management of the offeree company might attempt to secure their own positions rather than act in the best interests of the company.

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