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Section 73 of The Companies Act No. 17 of 2015: Recent allotment of shares for non-cash consideration

    

(1) This section applies to shares that are allotted by a company during the
period between the date as at which the balance sheet required by section 72 is
prepared and the passing of the resolution converting the company into a public
company if the shares are allotted as fully or partly paid up as to their nominal value
or any premium on them otherwise than in cash.
(2) The Registrar may not register the conversion of a private company into a
public company, unless the application for registration—
(a) an independent valuation of non-cash consideration has been
conducted not more than six months before an allotment of shares; or
(b) the allotment is in connection with—
(i) a share exchange; or
(ii) a proposed merger with one or more other companies.
(3) An allotment is in connection with a share exchange for the purpose of
subsection (2)(b) if—
(a) the shares are allotted in connection with an arrangement under
which the whole or part of the consideration for the shares allotted is
provided by—
(i) the transfer to the company allotting the shares of shares, or
shares of a particular class, in another company; or
(ii) the cancellation of shares, or shares of a particular class, in
another company; and
(b) the allotment is open to all the holders of the shares of the other
company, or, if the arrangement applies only to shares of a particular
class, to all the holders of the company's shares of that class, to
take part in the arrangement in connection with which the shares are
allotted.
(4) In determining whether a person is a holder of shares for the purposes of
subsection (3), the following are to be disregarded—
(a) shares held by, or by a nominee of, the company allotting the shares;
(b) shares held by, or by a nominee of—
(i) the holding company of the company allotting the shares;
(ii) a subsidiary of the company allotting the shares; or
(iii) a subsidiary of the holding company of the company allotting
the shares.
(5) For the purposes of deciding whether an allotment is in connection with a
share exchange, it does not matter whether the arrangement in connection with
which the shares are allotted involves the issue to the company allotting the shares
of shares, or shares of a particular class, in the other company or companies.
(6) A proposed merger between two or more companies exists for the purposes
of this section if one of the companies proposes to acquire all the assets and
liabilities of the other or others in exchange for the issue of its shares or other
securities to shareholders of the other or others, whether or not the issue is
accompanied by a cash payment.
(7) For the purposes of this section—
(a) "another company" or "other companies" includes a body corporate
that is not a company within the meaning of this Act;
(b) the consideration for an allotment does not include an amount
standing to the credit of any of the company's reserve accounts, or of
its profit and loss account, that has been applied in paying up (to any
extent) any of the shares allotted or any premium on those shares;
and
(c) "arrangement" means any agreement, scheme or arrangement,
including an arrangement sanctioned under this Act or under the law
relating to insolvency.

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Disclaimer: This document is not to be taken as legal advise.

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