SOUTH AFRICA Law and Practice Contributed by: Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
• the approached shareholders must sign an acknowledgement that they will not disclose any information to any person or use such information for their own direct or indirect benefit or that of any other person until the details of the offer have been announced; • strict confidentiality must be observed before details of the offer are announced; and • the parties must adhere to the provisions of the Financial Markets Act as regards insider trading and market abuse. In the private company context, bids usually remain private unless they are voluntarily disclosed to the media. For companies that are listed on the JSE, as discussed at 5.1 Requirement to Disclose a Deal , there are a range of different disclosures that are required during the course of an offer which, by its nature, publicises a deal. All announcements and communications dissemi - nated by a listed target are made through the stock exchange news service operated by JSE Limited. The stock exchange news service is a real-time facil - ity designed to allow listed companies on the JSE to disseminate price-sensitive information or corporate news. Any announcements, as well as any company information, may also be published in the press and on a company’s website. 7.2 Type of Disclosure Required As mentioned in 6.3 Consideration , when an offer consideration is in the form of securities, there are enhanced disclosure requirements relating to such securities which are triggered to allow shareholders to properly assess and consider the merits of the offer consideration. In such cases, the disclosure require - ments in the offer circular or combined offer circular would include: 7. Disclosure 7.1 Making a Bid Public • the annual financial statements of the offeror for the last three financial periods, an audit-reviewed pro forma balance sheet and a pro forma income
statement, and a pro forma earnings and assets per security; • an express confirmation by the bidder that it has sufficient authorised shares to settle the offer con - sideration; and • an opinion by the independent board of the bid - der company on the value of the bidder company’s securities and price. If any issue of shares would amount to an “offer to the public”, the issuance must comply with the prospec - tus disclosure requirements of the Companies Act. In addition, the prospectus must be approved by and registered with the Companies and Intellectual Prop - erty Commission. This would be equally applicable for a rights offer of listed securities. 7.3 Producing Financial Statements If the offer consideration consists wholly or partly in shares of the bidder, the bidder will need to produce financial statements which must be prepared in com - pliance with the standards and formats prescribed by the Companies Act, save to the extent that the constitutional documents of the company provide otherwise. 7.4 Transaction Documents Typically, only the material terms of the transaction documents are disclosed. However, the transacting parties are obliged, in terms of the Takeover Regula - tions, to disclose all documents that may be required to allow shareholders to make an informed decision on the transaction. Because of this, in some instances, the transacting parties will often make each relevant transaction document available for inspection.
8. Duties of Directors 8.1 Principal Directors’ Duties Statutory Duties
Directors’ duties are partially codified in terms of Sec - tion 76 of the Companies Act. The fiduciary duties in terms of the Companies Act are mandatory, pre - scriptive, unalterable, and apply to all companies. The duties of directors that have been included in the Companies Act consist of the duty:
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