Abstract
This study considers the protective measures available for creditors in statutory mergers. Historically, through the Companies Act, 1926, and the Companies Act, 1973, mergers were not specifically provided for in either Act. Under the 1926 Companies Act, there were two mechanisms for the acquisition of full control of one company by another. These include an ordinary takeover offer followed by compulsory acquisition under section 103ter and through a scheme of arrangement to carry out a merger. Under the 1973 Companies Act, mergers occurred through one company acquiring the shares or assets of another company through a sale of the business of the company as a going concern, or the scheme of arrangement, or a takeover offer with compulsory acquisition of securities of the minority. The study considers statutory mergers as currently specifically regulated by the Companies Act 71 of 2008. The study considers the creditor protective measures available in statutory mergers in terms of the Companies Act. While doing so, the study assesses the adequacy of such protective measures. The study also considers whether the creditors’ protective measures may be strengthened. To determine this, the study comparatively assesses the creditor protective measures available under the German Transformation Act, 1994, which regulates German statutory mergers, amongst other types of transformation of companies. Where applicable, possible reforms are suggested.