SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
5.5 Disclosure by Shareholders in Publicly Traded Companies The amendments to the Companies Act intro - duced by the GLAA (see below) have inserted the definition of an “affected company” , which essentially means a regulated company and a private company that is controlled by or is a sub - sidiary of a regulated company. In terms of Section 122, a person must notify an affected company in the prescribed manner and form within three business days after that person: • acquires a beneficial interest in sufficient securities of a class issued by that company such that, as a result of the acquisition, the person holds a beneficial interest in securities amounting to 5%, 10%, 15% or any further whole multiple of 5% of the issued securities of that class; or • disposes of a beneficial interest in sufficient securities of a class issued by a company such that, as a result of the disposition, the person no longer holds a beneficial interest in securities amounting to a particular multiple of 5% of the issued securities of that class. Upon having received such notice, an affected company must file a record of that notice with the CIPC. Upon receiving such notice, a regulated com - pany must: • file a copy with the Takeover Regulatory Panel (TRP); and • report the information to the holders of the relevant class of securities, unless the notice concerned a disposition of less than 1% of the class of securities.
The Takeover Regulations require a mandatory offer to be made to the remaining sharehold - ers when a party (operating alone or in concert) acquires securities in a regulated company that increase the acquiring party’s beneficial interest in the voting rights of such company to 35% or more. Amendments to the Companies Act Brought About by the GLAA As discussed in 2.1 Hot Topics in Corporate Governance (Greylisting of South Africa), the Companies Act has been amended by the GLAA to include the definition of “beneficial owner” , which means, in respect of a company, a natu - ral person who, directly or indirectly, ultimately owns or exercises effective control of that com - pany, including through: • the holding of beneficial interests in the secu - rities of that company; • the exercise of, or control of the exercise of, the voting rights associated with securities of that company; • the exercise of, or control of the exercise of, the right to appoint or remove members of the board of directors of that company; • the holding of beneficial interests in the secu - rities, or the ability to exercise control, includ - ing through a chain of ownership or control, of a holding company of that company; • the ability to exercise control, including through a chain of ownership or control, of, inter alia, a juristic person other than a hold - ing company of that company; or • the ability to otherwise materially influence the management of that company. It is important to note here that the concept of “beneficial interest” pre-dates the GLAA and was therefore already in the Companies Act and is distinct from beneficial ownership. When used
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