76F. Payments to be made only if company is solvent

Question 1

76F. Payments to be made only if company is solvent

Answer 1

General overview
[76F.01] A company shall be solvent before it can undertake a share buyback in accordance with ss 76C, 76D, 76DA or 76E. Hence, subsection (4) provides for a test of solvency of a company to be satisfied before the share buy-back can be effected.

Question 2

Solvency

Answer 2

[76F.02] Section 76F(4) provides for a solvency test that is identical to the solvency test provided in s 7A. Presumably, in line with the spirit of the new amendments in Act No 36 of 2014, the statement of solvency can be signed by every director, or in the case of s 76F, the manager of the company. See s 7A for the cases on solvency.

Question 3

Permitted expenses

Answer 3

[76F.03] Sections 76F(1A) and 76G(2) introduced vide Act No 36 of 2014 permit expenses including commissions and brokerages incurred in the share buyback exercise by the company to be paid by the company: see s 62B above.

Question 4

Treasury shares

Answer 4

[76F.04] The aggregate number of shares in any one class or classes of shares that are repurchased shall not exceed 10% of the total number of shares of the company. Treasury shares do not carry any voting and distribution rights at all: s 76J(2), (3) and (4). Act No 36 of 2014 introduced an amendment which includes “directors or other persons” in addition to employees under an employees’ share scheme