n SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - The legitimacy of the triangular merger structures : the incompatibility of sections 113(2) and 115(4) of the Companies Act 71 of 2008 : analyses
|Article Title||The legitimacy of the triangular merger structures : the incompatibility of sections 113(2) and 115(4) of the Companies Act 71 of 2008 : analyses|
|© Publisher:||Juta Law Publishing|
|Journal||SA Mercantile Law Journal = SA Tydskrif vir Handelsreg|
|Affiliations||1 Bucerius Law School, Germany|
|Publication Date||Jan 2015|
|Pages||325 - 337|
The statutory amalgamation or merger, encompassed in ss 113, 115 and 116 of the Companies Act 71 of 2008 (hereafter 'the Act'), is fundamentally flawed in the context of triangular mergers. This is because, while s 113(2) of the Act seemingly permits the use of the triangular merger structures to achieve an amalgamation or a merger of two or more corporate entities, s 115(4) effectively inhibits an acquiring party, a person related to an acquiring party, or a person acting in concert with either of them from (i) forming part of the quorum at a shareholders' meeting called to vote on the proposed amalgamation or merger; and (ii) casting a vote on the proposed amalgamation or merger.
This article sets out and studies the abovementioned legislative discrepancy. This is done by first providing an overview of the relevant legislative provisions. Thereafter, so as to illustrate the ramifications of the said inconsistency, two hypothetical scenarios are provided and deliberated on in detail.
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