Browsing by Author "Blackman, M"

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    Offers of compromises and schemes of arrangements in South African Company Law
    (1997) Kralik, Florian; Blackman, M
    There are many different reasons why people want to. acquire companies. Although takeovers are an extremely dangerous and high risk game, they are becoming more and more numerous in the modern business world. An acquiror, however, tries to minimize his risk by trying to take over a company with a scheme of arrangement applying section 311 of the South African Companies Act, which gives him the necessary· tool to takeover a 'clean' company without unknown creditors. That means that such a scheme must be a compromise or arrangement 'between the company and its creditors' before it can be sanctioned by court and therefore becomes binding on all the creditors, whether they are known or unknown. At least 3/4 of the creditors votes and numbers must support the arrangement. To draft a scheme for this reason alone, however, would not be a big problem. What makes these takeovers so sophisticated is that every acquiror also wants to profit from the assessed loss of the target company, which is often available. Therefore to draft a scheme, which, on the one hand complies with section 311 of the Companies Act, and on the other hand, does not comply with section 20 (1) (a) (ii) of the Income Tax Act in order to profit from the assessed loss, makes the scheme industry difficult.
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    Public offer of shares
    (1988) Matlala, David; Blackman, M
    The purpose of this thesis is to look into and analyse the concept 'public offer of shares·. Our present Companies Act provides that no person shall offer any shares to the public otherwise than in accordance with the provisions of the Act. The provisions thereof prescribe that no shares shall be offered to the public unless there is an accompanying prospectus or written statement. 1. Act No. 61 of 1973 2. Section 143 3. Sections 145(1) and 146(1) 4. Section 141 In order to ensure compliance with the provisions of the Act when shares are offered to the public, there must therefore be a prospectus, which is issued, which issue should be public. The scope of this paper is thus limited to an inquiry into the prospectus itself (the meaning thereof), the 'issue' of the same and those to whom it is directed called the public. The requirements of form, content and consequences of a proper or improper prospectus fall outside the scope of this paper. The work is divided into four chapters. The first chapter is a preliminary one dealing with introductory matters, the purpose and stages of using the prospectus as a means of bringing to the attention of the public the shares and debentures which are being offered, as well as the usage and popularity of the method. The second chapter is devoted to the definitive elements of a prospectus as contained in the Act, with particular emphasis on the offer/invitation requirement as well as the advertisement element. While a prospectus is defined to include an advertisement, the latter is nowhere defined in the Act as a result of which a number of problems arise. For instructive guidance the statutory and judicial statements of an advertisement as a prospectus in the United Kingdom and Australia are discussed in considerable detail. The third chapter deals with the 'issue· concept. The link between the 'issue· requirement and 'public' is-given attention. It will be demonstrated that the Act itself in prohibiting the issue, distribution or publishing of a written statement in section 141 had, in fact, given indication of the probable meaning to be attached to the term. It will further be indicated the 'issue· required by the Act must be an authorised one. Finally, the 'issue' as used in the Act will be distinguished from its usage in other areas of our law. The fourth and final chapter of the thesis deals with the 'public' concept. It is intended to show that this is the thrust of the prospectus provisions. Hardships brought about by absence of a definition of the term will be pointed out. The paper further looks into problems created by allegations that the field of application of section 141 is as regards share hawking. It will be demonstrated that the allegations hold no truth. The South African cases dealing with the term 'public· are given a thorough treatment. Furthermore, the wide definition of 'offer to the public' in section 142 and its limitations in section 144 are studied in detail. Due to scarcity of judicial pronouncements on the concept 'public' in our law, the decisions in America, Australia and the United Kingdom, the various approaches and tests therein laid down form the central core of this work. In the light of the state of law in other jurisdictions and the inconclusive approach in our case law, a conclusion is reached that the law be amended by the definition of the term 'public' to be included in our section 142 and thus help. alleviate the obscurity prevalent at the moment.
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    Share buybacks
    (1999) Radzinski, Dirk; Blackman, M
    Share buy-backs, the top candidates. That was the title of the front page of Finance Week, April 2, 1999. One cannot tell on first sight whether this is meant to be good or bad news, or relevant news at all. But the title indicates an increasing interest among financial analysts, whether firms will be able to buyback their own shares or not. After reading the article one can be certain. Share buybacks are supposed to be exactly what the capital markets always wanted to have, but what was always denied to them. The article demonstrates one vital reason why share buybacks are advantageous for companies: The signalling effect for the market. Although buybacks in certain situations are hardly helpful for the companies, they are generally treated as a panacea. That creates a loophole. Once a company announces its intention to repurchase its own shares, the share market price increases. Because of that knowledge management is enticed into manipulating the market price. The situation is fairly exaggerated, but elucidates a common problem on stock markets. The market price is not only a reflection of the company's performance, but is also influenced by psychological factors which appear to be almost irrational. Bearing that in mind, a discussion of a legal framework for the repurchase of shares is somewhat difficult, and weighing the advantages and disadvantages is, to a large extent, a matter of personal taste. south Africa was in good company in prohibiting repurchases of shares in general. Almost every state all over the world restricted share buybacks to the extent that they hardly ever took place. Off course there was one major exception: the United States of America. After following the early English case of Trevor v Whitworth in prohibiting share buybacks, state legislation and early decisions in the United States abolished the prohibition. Instead they chose directly the opposite. Only a few restrictions were imposed, and management was, and is, vastly free in buying and selling the shares of their company. The world noticed what happened in the United States, but especially lawyers and politicians of other countries always emphasised the risks of share repurchases. They stuck to their prohibitions, and did not think about reformations until very recently. Nowadays it seems that changing the regulations about share buybacks is en vogue. One could describe it as a race. Countries which have not changed their legislation yet are very concerned not to fall behind the standards set by other countries. 'Global market' is no longer just some jargon used in newspapers; it has become reality. Since the economics of countries all over the world are dependent upon major companies, which cater for employment and taxes, nobody wants to loose these companies as a result of domestic legislation restricting financial management. The constant pressure from managers and economists surely played a major role in starting the 'revolution'. Most of the European Union states have already changed their legislation as well as Australia and New. Zealand. South Africa is on the verge of doing so. The Bill has already been passed parliament and is signed by the president. The new provisions will come into force on June 1, 1999. That is reason and incentive to have a closer look at share buybacks, especially at the various legislation surrounding it. A comparative analysis is supported by the Constitution of South Africa. When interpreting the bill of rights a court, tribunal or forum may consider foreign law (section 39 (1)(c)). Generally the standpoint in South Africa is, one should always consider the legal developments in foreign countries. It facilitates the discussion about any change in laws. As a native German, the author wishes that a similar approach would be considered in Germany.
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