COMPANIES BILL - Department of Trade and Industry

(b)(c)(d)the company must return to any person the fair value of the considerationreceived by the company in respect of that share issue to the extent that it isnullified, together with interest in accordance with the Prescribed Rate ofInterest Act, 1975 (Act No. 55 of 1975), from the date on which theconsideration for the shares was received by the company, until the date onwhich the company complies with this paragraph;any certificate evidencing a share so issued and nullified, and any entry in asecurities register in respect of such an issue, is void; anda director of the company is liable to the extent set out in section 77(3)(e)(i) ifthe director—(i)(ii)43was present at a meeting when the board approved the issue of anyunauthorised shares, or participated in the making of such a decision interms of section 74; andfailed to vote against the issue of those shares, despite knowing that theshares had not been authorised in accordance with section 36.51015Pre-emptive right to be offered and to subscribe shares39. (1) This section—(a) does not apply to a public company or state-owned enterprise, except to theextent that the company’s Memorandum of Incorporation provides otherwise;and(b) applies to a private company or personal liability company with respect to anyissue of its shares, other than—(i) shares issued—(aa) in terms of options or conversion rights; or(bb) as contemplated in section 40(5) to (7); or(ii) capitalisation shares issued as contemplated in section 47.(2) If a private company proposes to issue any shares, other than as contemplated insubsection (1)(b), each shareholder of that private company has a right, before any otherperson who is not a shareholder of that company, to be offered and, within a reasonabletime to subscribe for, a percentage of the shares to be issued equal to the voting powerof that shareholder’s general voting rights immediately before the offer was made.(3) A private or personal liability company’s Memorandum of Incorporation maylimit, negate, restrict or place conditions upon the right set out in subsection (2), withrespect to any or all classes of shares of that company.(4) Except to the extent that a private or personal liability company’s Memorandumof Incorporation provides otherwise—(a)(b)in exercising a right in terms of subsection (2), a shareholder may subscribefewer shares than the shareholder would be entitled to subscribe under thatsubsection; andshares not subscribed by a shareholder within the reasonable time contemplatedin subsection (2), may be offered to other persons to the extentpermitted by the Memorandum of Incorporation.2025303540Consideration for shares40. (1) The board of a company may issue authorised shares only—(a) for adequate consideration to the company, as determined by the board;(b) in terms of conversion rights associated with previously issued securities ofthe company; or(c) as a capitalisation share as contemplated in section 47.(2) Before a company issues any particular shares, the board must determine theconsideration for which, and the terms on which, those shares will be issued.(3) A determination by the board of a company in terms of subsection (2) as to theadequacy of consideration for any shares may not be challenged on any basis other thanin terms of section 76, read with section 77(2).(4) Subject to subsections (5) to (7), when a company has received the considerationapproved by its board for the issuance of any shares—(a)(b)those shares are fully paid; andthe company must issue those shares and cause the name of the holder to beentered on the company’s securities register in accordance with Part E of thisChapter.455055