Can BR Practitioner Issue Shares?2 May 2017 02:03
http://www.mondaq.com/southafrica/x/278364/Corporate+Commercial+Law/Can+a+business+rescue+practitioner+issue+shares
South Africa: Can A Business Rescue Practitioner Issue Shares?
Few extracts below...
It must be remembered that in terms of the Companies Act, shareholders are included in the definition of an "affected person" and therefore have the right to be notified of important and relevant events and to participate in court proceedings and business rescue proceedings as allowed by section 146.
The duty of the business rescue practitioner is to prepare a business rescue plan for consideration by affected persons and possible adoption at a meeting convened in terms of section 150(1) of the Act. At such meeting the business rescue practitioner must introduce the plan for consideration by creditors and, if applicable, by the shareholders. The practitioner must invite discussion on the plan and conduct a vote on the plan. If voting on the plan takes place and the plan is supported by more than 75% in value of all creditors who voted, and at least 50% in value of independent creditors who voted, and no rights of shareholders of any class were altered, than the plan is regarded as finally adopted.
If the plan provides for the issue of any authorised shares of the company, the practitioner may determine the consideration for these shares and in accordance with the plan, issue any authorised securities of the company, in terms of section 152(6)(a) of the Act.
It must be remembered that section 140(1)(a) confers upon the business rescue practitioner full management control of the company in substitution for the board and pre-existing management during the company's business rescue proceedings. In terms of section 140(3)(b), the business rescue practitioner also has the responsibilities, duties and liabilities of a director of the company, as set out in section 75 to 77 of the Act.
Accordingly the business rescue practitioner assumes full management control and the total control of the board of directors. This will in itself allow him to issue the relevant authorised but unissued shares to the investor and he would not need the consent or cooperation of the board of directors to do so.
The business rescue plan will still nonetheless have to be passed on a majority of more than 75% of the voting interest, of which 50% will have to be independent creditors as envisaged in terms of section 152(2) of the Act. Accordingly it is only the creditors who will, in terms of section 145 of the Act, be entitled to vote in respect of the issuing of the shares, which issuing of shares will have to be canvassed in the business rescue plan.
P.S....some very interesting points above....Thoughts welcome.
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