“Share – ing” may not always be caring if one wishes to sell and/or buy shares in a private company in South Africa. In South Africa, the legal consequences of selling shares in a company are governed by the Companies Act, the Securities Regulation Act, and relevant case law.
According to the Companies Act, a company must comply with certain requirements when issuing or selling shares, including proper disclosure and the obtaining of necessary approvals. Failure to comply with these requirements may result in civil or criminal penalties for the company and its directors.
The Securities Regulation Act governs the sale of securities, including shares, and requires companies to make full and fair disclosures to potential investors. Companies that engage in insider trading or other fraudulent activities may face severe penalties, including fines and imprisonment.
In addition to these statutory requirements, South African courts have also developed common law principles that may impact the sale of shares. For example, the courts have held that the seller of shares has a duty to disclose material information to the buyer that would affect the value of the shares being sold.
Therefore, in order to avoid any potential legal consequences, it is important to carefully consider the requirements of South African law and seek professional advice before selling shares in a company in South Africa. We at Tuckers can provide you with all the necessary legal advice in respect of purchasing and/or selling shares, attend to the drafting of the sale of shares agreement as well as attend to any further documentation required such as resolutions for example.
Should you feel like you would want to discuss this further, or any commercial matter in general, you are welcome to contact us for more information on 011 897 1900, 076 777 1920 or email us on info@tuckers.co.za.
Article contributed by Gareth Sleigh of Tuckers Attorneys.