Transfer and liquidation: A critical analysis of the transfer of shares during the process of liquidation and an analysis of Sections 8(2)(b), 15(6) and schedule 5 of the Companies Act 71 of 2008

Abstract

In corporate law, the transfer of shares plays an important role and until the case of Smuts v Booyens; Markplaas (Edms) Bpk v Booyens 2001 (4) SA [SCA] courts were not always clear on the meaning of ‘transfer’. What constitutes a transfer of shares and the juncture at which the law regards that transfer as having taken effect is therefore of critical importance where an insolvent company is being wound-up. The objective of this study is to provide a thorough analysis of the restrictions and limitations imposed on the transfer of shares of a private company being wound-up or any alteration in the status of its shareholders effected after the commencement of the winding-up. The position on transferability of shares is one of the defining features of a private company, in order to exist as a private company, it has to provide such restrictions as it deems fit by way of its Memorandum of Incorporation.