S40 Future payment for shares

COMPANIES ACT AMENDMENTS NO. 16 OF 2024

Shares Bought on Loan and Future Payment for Shares Issued or Allotted
Amendment of Section 40 of the Companies Act

Shares issued for future consideration or value must be issued and then transferred to a stakeholder in accordance with a stakeholder agreement (i.e., held in trust).

Shares that are to be issued for a value to be realized by the company at a later date, based on an agreement concluded by the company, must be issued and then transferred to a stakeholder in accordance with a stakeholder agreement, and later to the subscriber as per the stakeholder agreement.
The requirement in this regard has remained substantially the same after the amendment. Previously, shares issued in this manner had to be issued and held by a third party in a trust, in accordance with a trust agreement. Following the amendment, the shares must be issued and transferred to a stakeholder, to be held by the stakeholder in accordance with a stakeholder agreement. The Companies Act defines a stakeholder as an independent third party in this context, and the agreement as one concluded between the company and the stakeholder.

The Companies Act Amendments 2024:

Pertinent changes were made to our South Africa Companies Act recently after the Companies Amendment Act 2024, No. 16 and the Companies Act Second Amendment, 2024 No. 17 were ascended into law on 25 July 2024.

The amended provisions are not yet operational and will come into effect after President Cyril Ramaphosa makes proclamation in the Gazette as to the effective date.

Statucor continues to unpack the amendments and the effect that they may have on our valued clients, and we look forward to publishing further communications on our observations in future. Click here for a full summary of all changes made to the Companies Act through the 2024 Amendments or view our News page for our latest articles on the Companies Act, Governance and Compliance matters that may be pertinent to you.