Abstract
Section 45 of the Companies Act 71 of 2008 in South Africa allows companies to provide financial assistance to the directors of related or interrelated companies, in contrast to the previous prohibition under the Companies Act 61 of 1973. This new provision requires board authorization, approval through a special resolution from shareholders, and adherence to solvency and liquidity tests. The financial assistance includes loans, guarantees, and securing obligations, while ensuring the terms remain fair to the company. Section 45(2A) of the Companies Amendment Act 16 of 2024 exempts a holding company from the stringent requirements of section 45 of the Companies Act 71 of 2008 when providing financial assistance to its subsidiaries. This dissertation suggests that the broader South African approach could benefit from adopting some principles from Australian company law, which offers a more restrictive framework that balances commercial freedom with creditor protection.