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

Acquisition by Companies of own Shares

86. Liability of directors and shareholders under certain circumstances
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1)The directors of a company who, contrary to the provisions of section 85(4), allow the company to acquire any share issued by it, are jointly and severally liable to restore to the company any amount so paid and not otherwise recovered by the company, subject to any relief granted by the Court under section 248.

 

2)A director who is liable under subsection (1) may apply to the Court for an order compelling a shareholder or former shareholder to pay to the company any money that was paid to such shareholder contrary to section 85(4).

 

3)Where the acquisition by the company of shares issued by it is in contravention of the provisions of section 85(4), any creditor who was a creditor at the time of the acquisition, or who is a creditor by reason of a cause of debt which arose before such acquisition, or any shareholder, may apply to the Court for an order, and the Court may, if it finds it equitable to do so-
a)order a shareholder or former shareholder to pay to the company any money or return any consideration that was paid or given by the company to acquire the shares;
b)order the company to issue an equivalent number of shares to the shareholder or former shareholder;
c)make such other order as it thinks fit.

 

4)An action to enforce a liability imposed by this section must be instituted within three years after the date of completion of the acquisition.

 

5)Nothing contained in this section shall limit or diminish any liability which any person may incur under this Act or any other law, or the common law.

 

6)For the purposes of this section and section 89 'director of a company' includes any director of a holding company of such company.