| Summary: | The Companies Act of 71 of 2008 makes a number of important changes to the rules relating to
capital maintenance. In line with the objectives of the Companies Act of 71 of 2008, section 44
of the Act has removed the prohibition on the provision of financial assistance by a company
which was contained under the previous section 38 of the Companies Act 61 of 1973. Despite the
repeal of the prohibition, a transaction which involves the provision of financial assistance by a
company for the acquisition of or subscription of its own securities still needs to be effected in
accordance with the requirements and conditions that are provided under the Act and
Memorandum of Incorporation. To explore the new developments, within this study, the
provision of financial assistance in terms of section 44 of the Companies Act of 2008 is,
therefore, analysed in detail.
On the other hand, the UK Companies Act of 2006 repealed the prohibition on the giving of
financial assistance by private companies in most circumstances. It, however, retained the
prohibition to public companies only because of the requirements of the Second Company Law
Directive (77/91/EEC). This study also explores the rules of financial assistance by a company
under the UK Companies Acts in detail.
Though the source of financial assistance by a company both in South Africa and in English
Company laws is rooted in the English decision of the Trevor v Whitworth case, currently these
countries have adopted what is deemed appropriate and significant in their own countries. This
study, therefore, examines and compares the rules governing the provision of financial assistance
by a company in the company laws of these two countries. === Mercantile Law === LL.M. (Commercial law)
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