SOUTH AFRICA Law and Practice Contributed by: Ulrike Naumann, Alison Mellon, Joshua Janks and Aneria Bouwer, Bowmans
5.5 Financial Assistance Except to the extent that the company’s consti- tutional documents provide otherwise, the board may authorise the company to provide financial assistance by way of a loan, guarantee, the pro- vision of security or otherwise to any person for the purpose of, or in connection with, the sub- scription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company, subject to certain require- ments (Section 44, Companies Act, 2008). The board cannot authorise financial assistance unless both: • the financial assistance is pursuant to either: (a) an employee share scheme that satis- fies the requirements of section 97 of the Companies Act, 2008; or (b) special resolution of the shareholders, adopted within the previous two years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients with the specific recipient falling within that category; and • the board of the company granting financial assistance is satisfied that: (a) immediately after providing the financial assistance, the company providing the financial assistance will satisfy the solven- cy and liquidity test (as set out in Section 4 of the Companies Act, 2008); and (b) the terms under which the financial assis- tance is proposed to be given are fair and reasonable to the company. The board must ensure that any other specific requirements for financial assistance contained in the company’s constitutional documents are adhered to.
process applies when uncertificated financial instruments are pledged. Intellectual property Various formalities need to be followed in order to register a hypothecation in respect of a pat- ent, registered trade mark or design. A hypoth- ecation must: • be recorded in writing; • be lodged with the Companies and Intellec- tual Property Commission, with an application in terms of form P16 for patents, form TM6 for trade marks or form D7 for designs to record the hypothecation; and • have the application served on the registered proprietor of (or applicant for) the patent, as well as any parties recorded on the register as having an interest in the patent. Proof of service must be provided to the Registrar of Patents. There are no formalities or perfection require- ments for taking a cession in security over intel- lectual property. 5.3 Registration Process The requirements relating to registration and perfection, as appropriate, of mortgage bonds, pledges, general notarial bonds, special notarial bonds, security in respect of aircraft and ships, cessions in security and security over intellectual property are outlined in 5.1 Types of Security Commonly Used and 5.2 Form Requirements . 5.4 Restrictions on Upstream Security In accordance with South African law, the restrictions and considerations (as outlined in 5.5 Financial Assistance and 5.6 Other Restric- tions ) apply to the provision of upstream secu- rity.
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