The Corporate Laws Amendment Act (the "Act"),
which became law at the end of last year, has introduced a
number of changes to our company legislation.
The Act has introduced the concept of a "widely
held" company together with certain compliance
requirements which must be met should a company be categorized
as widely held. In terms of the Act, a company will be widely
its articles provide for the unrestricted transfer of its
shares, in other words the shares of the company are not
subject to pre-emptive rights in favour of all shareholders
in every proposal to sell to a third party; or
it is permitted by its articles to offer shares to the
it decides by special resolution to be a widely held
it is a subsidiary of a company which falls into one of
the categories above.
Since all public companies must be permitted by their
articles to offer shares to the public, it follows that public
companies will be classified as "widely held".
However, management of private companies will need to review
their company's articles of association to see whether they
contain the pre-emptive rights described in order to determine
whether their company is "widely held" or a
"limited interest" company.
The Act provides that "widely held" companies must
meet additional compliance requirements. For example, the
company will have to appoint an audit committee which will be
responsible for a number of issues such as the appointment of
an auditor, auditor independence and the approval of fees to be
paid to the auditor. The company will also have to report in
accordance with International Financial Reporting
We recommend that senior management review the articles of
association of their company and, if necessary, take steps to
ensure compliance with the Act or evaluate whether it would be
desirable, and possible, to amend their company's articles
for that company to fall outside the definition of a
"widely held" company.
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Act has brought about fundamental changes in the manner in which shareholder resolutions are passed.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).