Abstract
This dissertation analyses the provisions of the Companies Act 71 of 2008 which protect minority shareholder rights in the context of all change of control transactions with a focus on amalgamation or merger, and offers including takeover offers. In so doing, it compares the South African regulations to the comparable provisions in the United States, and the protection provided to minority shareholders in the USA, Delaware being used primarily for comparison to State legislation.
It highlights where such takeover laws correspond and explores the reason for such corresponding legislation whilst focusing on the interaction between two principal objectives of takeover law in South Africa, the protection of shareholder’s rights and the enhancement of the market.
The critical research method undertaken in this dissertation suggests that the divergence can largely be explained by considering the different markets and the particular market users in each country.
Those provisions that exist in the act that ensure procedures and rules are followed by companies, boards of companies and offerors in the situation of a change of control are fully explored.
The purpose of the appraisal remedy is discussed, and it is noted that in South Africa, the appraisal remedy focuses primarily on the determination of value, whereas in the USA, protection provides for the determination of value as well as insuring protection from wrongful conduct.
The issue of fairness, central to protection of minorities, is reviewed within the legislation in South Africa, whereas case law in various states determines the application of the principal in the USA.
On a similar basis, director's behaviour and requisite independence as legislated in South Africa is considered, whereas again, case law in the USA determines these parameters.
The Federal Law vs State Law environment in the USA results in an uneven application of minority protectionist measures across the different states, effecting merger and offer transactions. Whereas in South Africa, the protection of minorities in the context of change of control transactions, has clearly benefited from the holistic approach which was followed in the rewriting and introduction of the Companies Act 71 of 2008.
In conclusion, although the laws in South Africa and the USA do show differences, in both regimes, the principal objectives are to protect shareholder’s interests and to enhance investment.
LL.M. (Commercial Law)