Acquisition by a company of its own shares from the perspective of capital maintenance rules

Abstract

Abstract provided by author

The purpose of the present research paper is to critically analyze s38 and most importantly to revisit the Companies Amendment Act, to look at how the relevant provisions deal with the question of the acquisition of own shares. The paper aims at finding answers to important questions on the proper interpretation and meaning of s38, what its effect is and further the different approaches to the construction of the said section

The object, necessity and significance of the amendment of the provision by the Namibian Companies Act of 2004 will be discussed with exclusive reference to the South African Companies Act 37 of 1999

Firstly, the research will look at the background and context of the problem, the paper will then state what the problem is and give the justification for the research as well as its main objective(s).T the methodology to be used in the research will also be pointed out. The research questions will be identified

Secondly, the term capital maintenance rule and its different rules will be looked at

Thirdly, an analysis of s38 will be done by asking, what its proper interpretation is; its effect; what the proper test should be etc

Fourthly, the paper will look at how the relevant provisions of the Companies Amendment Act deal with the question of the acquisition of own shares. The object, necessity and significance of the Amendment will be discussed

Finally, an attempt will be made to identify some of the defects and doubts in the Amendment Act and the author will try to find ways to fill these gaps. The concluding argument of this study is that the Legislature should clarify some of the ambiguous and uncertain provisions of the Companies Act, in order for the new Act to be a success.