The Companies Amendment Act, 2024 has introduced significant changes to the Companies Act, 2008 (Companies Act). Although certain amendments took effect on 27 December 2024, changes to section 118, specifically those relating to private companies that will involuntarily qualify as “regulated companies”, and be subject to the Takeover Regulations, are yet to be implemented.

Amended requirements for regulated private companies 

The Takeover Regulation Panel (TRP) regulates affected transactions or offers involving a profit company or its securities if that company is a regulated company in terms of sections 118(1) and 118(2). At present, companies that are regulated by the Takeover Regulations include public companies and state-owned companies and private companies only if more than 10% of their shares have been transferred within the previous 24 months (other than by transfer between or among related or inter-related persons) immediately before the date of a particular affected transaction. A private company can voluntarily elect to be subject to the Takeover Regulations in terms of its memorandum of incorporation.

The pending amendment to section 118 will change the definition of a “regulated company” for private companies. A private company will involuntarily qualify as a regulated company if: 

  • it has 10 or more shareholders with a direct or indirect shareholding in the company; and
  • it meets or exceeds the financial threshold of annual turnover or asset value determined by the Minister of Trade, Industry and Competition (Minister) in terms of section 118(2) in general or in relation to specific industries.

This is subject to the proviso that the application of any provision of Parts B and C of Chapter 5 relating to Fundamental Transactions, Takeovers and Offers, or the Takeover Regulations in relation to any affected transaction or offer in respect of a regulated company is subject to any exemption that the TRP may grant.

Interestingly, the amended section 118(2) specifies that thresholds will be based on the annual turnover or asset value “in the Republic”. It is unclear why the thresholds will be limited to South African turnover and assets only, and this raises questions for multinational groups and South African companies with substantial global operations.

Impact on definition of “affected company”

The amendment, once in effect, will impact the definition of “affected company”, which is a regulated company or a private company controlled by, or a subsidiary of, a regulated company. As before, this means that private companies qualifying as regulated companies will be “affected companies”. In addition, if a private company is controlled by, or is a subsidiary of, a regulated company, it will fall within the definition of an “affected company”, even if it has fewer than 10 direct or indirect shareholders. Affected companies are required to establish and maintain a register of beneficial interest holders.

Private companies which, prior to the amended provisions coming into effect, are classified as “affected companies” but, following the amendments, will no longer meet the criteria, will have to ensure that the beneficial ownership information relating to the natural persons who are statutory beneficial owners of the company is duly recorded in their securities register.

 Considerations regarding pending amendments

While it is unclear when the amended provisions will be brought into effect, it is crucial for private companies that are involved with ongoing affected transactions, or will be involved in future affected transactions, to assess whether they may fall within the scope of the amended “regulated company” requirements, once they come into effect. This is particularly important if a transaction will suddenly be subject to the Takeover Regulations because the company will become a regulated company.