The Companies Act 71 of 2008 (Companies Act) introduced a new regime to South African corporate law whereby two or more companies can merge their respective assets and liabilities into one or more combined companies (we refer to this as a “statutory merger”).
The Companies Act defines an “amalgamation or merger” to essentially include any transaction where: (1) Each of the merging companies are dissolved and the assets and liabilities of these merging companies are transferred to a newly formed company or companies; (2) No new company is formed but at least one of the merging companies survives and the assets and liabilities of the non-surviving merging companies, which are subsequently dissolved, are transferred to the surviving company or companies.
The reform was aimed at providing an uncomplicated framework for company mergers. However, the tax legislation in South Africa is not fully aligned with the new Companies Act. Some of the key issues are below.
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Robert Gad is a director and Janel Strauss is an associate with Edward Nathan Sonnenbergs (ENS)
Johannesburg
150 West Street
Sandton
Johannesburg
South Africa
2196
Tel: +27 11 269 7400
Fax: +27 11 269 7899
E-mail: info@ens.co.za
