Question 1

The Companies Act 71 of 2008 in South Africa regulates the appointment and
composition of the social and ethics committee. The board of directors appoints the
first social and ethics committee. According to Section 72 of the Act, every public
company and state-owned company is required to have a social and ethics
committee1. A social and ethics committee must be appointed at each annual
general meeting of the company. The committee should be made up of of at least
three directors or prescribed officers of the company, at least one of whom must be a
director who is not involved in the day-to-day management of the company’s
business and must not have been so involved within the previous three financial
years (cassim fhi, 2021, p. 353). The Act also specifies that at least one member of
the committee should have expertise in social and ethics matters.

Question 2

2.1

Acquisition/ merger transaction

Steel Co Ltd will acquire and hold all the assets and liabilities of Steel Works Ltd for
R300 million.

2.2

If shareholders of Steel Works Ltd feel that the board of directors is not acting in their
best interests or the interests of the firm or their shareholders, they may ask a court
to intervene, Shareholders who voted against the resolution to approve the
Transaction may do so. If a shareholder believes that a company's or its directors'
action is unfair and detrimental to their interests, they may file a court application for
remedy2. The court has the authority to issue orders, such as invalidating the
transaction or paying damages to the shareholders who were wronged.

1
Section 72 of the Companies Act 71 of 2008
2
Section 163 of the Companies Act 71 of 2008
2.3

The Commercial Bank of South Africa have several protections under the
Companies Act 71 of 2008 if the Transaction goes through. Any change in the
ownership or control of the corporation has no impact on its obligations or liabilities.
As a result, even if Steel Works Ltd is deregistered and its assets and liabilities is
transferred to Steel Co Ltd, it will still be liable for the R200 million loan from the
Commercial Bank of South Africa. As part of the Transaction, Steel Co Ltd will be
liable for repaying the loan. The bank may pursue Steel Co Ltd for repayment by
enforcing its rights under the loan agreement.
References

BOOKS

cassim fhi, cassim mf, cassim r,jooste r,shev j and yeats j, 2021. the law of business
structures. second edition ed. cape town: juta and company.

STATUTES

Section 72 of the Companies Act 71 of 2008

Section 163 of the Companies Act 71 of 2008