Section 427 of The Companies Act No. 17 of 2015: Duty to cancel shares in public company held by or for the company
(1) This section applies to a public company if—
(a) shares of the company are forfeited, or are surrendered to the company instead of forfeiture, as provided by the company's articles for a failure to pay an amount payable for the shares;
(b) shares of the company are acquired by it otherwise than in accordance with this Part or Part XVI and the company has a beneficial interest in the shares;
(c) a nominee of the company acquires shares of the company from a third person without financial assistance being given (directly or indirectly) by the company and the company has a beneficial interest in the shares; or
(d) a person acquires shares in the company with financial assistance given to the person (directly or indirectly) by the company for the purpose of, or in connection with, the acquisition and the company has a beneficial interest in the shares.
(2) Except when the shares or the company's interest in the shares have or has been already disposed of, a company to which this section applies shall—
(a) cancel the shares and diminish the amount of the company's share capital by the nominal value of the cancelled shares; and
(b) if the effect is that the nominal value of the company's allotted share capital is brought below the authorised minimum—apply to the Registrar for the registration of the conversion of the company into a private company, stating the effect of the cancellation.
(3) The deadline for complying with subsection (2)—
(a) in a case within subsection (1)(a) or (b), three years from the date of the forfeiture or surrender;
(b) in a case within subsection (1)(c) or (d), three years from the date of the acquisition; or
(c) in a case within subsection (1)(e), one year from the date of the acquisition.
(4) The directors of the company may take any measures necessary to enable the company to comply with this section, and may do so without complying with the provisions of Part XV relating to the reduction of a company's share capital.
(5) Neither the company nor, in a case within subsection (1)(d) or (e), the nominee or other shareholder may exercise voting rights in respect of the shares.
(6) Any purported exercise of those rights is invalid.
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