13.2 THE LAW
Schedule 5, Section 6 (2) says that par value shares may continue to exist forever after the effective date subject to any regulations made by the minister.
Where directors wish to increase the authorised share capital as there are not enough shares to issue the formalities of Regulation 31 must be carried out.
It is important to note that many of the Companies Act Regulations refer to the various sections in the act on how to carry out the procedures. This particular regulation 31 does not appear to be based on the act as it appears to be an afterthought actually extending the requirements of the law with even SARS having some input in regard to some tax issues.
In terms of section 36(2)(a) of the act a change of the authorised share capital is in fact an amendment to the MOI and requires a special resolution and submission of form CoR 15.2 together with the special resolution.
Form CoR 31 and regulation 31 (3) appear to be in conflict with this section as the regulation says that when a company has par value shares for which no shares are in issue a director’s resolution and form CoR 31 will be sufficient to request the CIPC to change the share class from par value to no par value. It appears Form CoR 31 is in conflict with the act as even though no shares are in issue this is a change to the MOI and it would seem to be necessary to file a special resolution and form CoR 15.2 to make this change. This regulation specifically allows a director’s resolution in place of a shareholder’s resolution, where you have the situation of a share class where no shares are in issue as no shareholders are affected by this. It is necessary to file the CoR 31 and CoR 15.2 and the director’s resolution changing the MOI.
Please also note that in terms of Regulation 31 (5) (b) the directors may issue par value shares if there are sufficient authorised shares available. Where no changes in the share capital is envisaged par value shares can remain in existence forever as there is no minister’s regulation to this affect.
Regulation 31 (5) (c) says that an amendment to the MOI may be filed at no charge in order to change a class provided that sub-regulations 6 to 11 are complied with. This regulation kicks in when a company wishes to increase its authorised share capital.