Companies Act, 1973 (Act No. 61 of 1973)

Chapter V: Share capital, Acquisition by Companies of own Shares, Shares, Allotment and Issue of Shares, Members and Register of Members, Debentures, Transfers, and Restrictions on Offering Shares for Sale

Transfer of Shares and Debentures

138. Warranty and indemnity by persons lodging documents of transfer

Subject to the provisions of subsection (2), any person who, for the purposes of the transfer of any security of any company, as principal or agent, lodges with that company any document relating to that transfer, shall be deemed thereby to warrant that such document, excluding a certificate of ownership or any other document evidencing title to such security, is genuine and that he or she, or when he or she is acting as agent, his or her principal jointly and severally with him or her, indemnifies the said company against any claim made upon it and against any loss or damage suffered by it arising out of a transfer registered by the company of the security referred to in such document.

The indemnification contemplated in subsection (1) shall not apply where it is proved by the person who lodged the documents concerned that he or she acted in good faith and that the company acted negligently in registering the transfer of the securities referred to in those documents: Provided that if the Court holds that the loss or damage contemplated in subsection (1) is caused partly by the negligence of such company and partly by the negligence of such person the damage recoverable in respect thereof shall be reduced by the Court to such extent as the Court may deem just and equitable having regard to the degree in which the company or such person, as the case may be, was negligent in relation the damage.