Companies Act, 2008 (Act No. 71 of 2008)Chapter 2 : Formation, Administration and Dissolution of CompaniesPart D : Capitalisation of profit companies47. Capitalisation shares |
| (1) | Except to the extent that a company’s Memorandum of Incorporation provides otherwise— |
| (a) | the board of that company, by resolution, may approve the issuing of any authorised shares of the company, as capitalisation shares, on a pro rata basis to the shareholders of one or more classes of shares; |
| (b) | shares of one class may be issued as a capitalisation share in respect of shares of another class; and |
| (c) | subject to subsection (2), when resolving to award a capitalisation share, the board may at the same time resolve to permit any shareholder entitled to receive such an award to elect instead to receive a cash payment, at a value determined by the board. |
| (2) | The board of a company may not resolve to offer a cash payment in lieu of awarding a capitalisation share, as contemplated in subsection (1)(c), unless the board— |
| (a) | has considered the solvency and liquidity test, as required by section 46, on the assumption that every such shareholder would elect to receive cash; and |
| (b) | is satisfied that the company would satisfy the solvency and liquidity test immediately upon the completion of the distribution. |