Abstract

Section 112(1) of the Companies Act 71 of 2008 exempts a whollyowned subsidiary of a company from obtaining shareholder approval from its holding company to authorise the disposal of all or the greater part of the subsidiary’s assets or undertakings. This exemption exposes the shareholder to abuses including the subsequent onward disposal of its newly acquired assets to a third party, which diminishes the value of the group as a whole, as well as the dilution of the holding company’s shareholding. In light of these threats, the shareholder vote exemption provisions of the Companies Act may need to be re-examined for purposes of guarding against the aforementioned abuses.