13.4 BOARD REPORT
Sub-regulation 7 deals with the board report that must be sent out with the proposed special resolution to convert par value shares to no par value shares. The following items should be dealt with in the board report.
a. The report must state all information that may affect the value of the securities caused by the proposed conversion; and
b. The report must identify the class of holders of the company securities affected by the proposed resolution and;
c. The report must describe the material effects that the proposed conversion will have on the rights of any holders of shares, and;
d. The report must evaluate any material adverse effects of the proposed arrangement against any compensation to those persons who receive compensation owing to the conversion.
It appears that the board report is designed to indicate if there is a change to any of the rights of shareholders which may trigger a capital gains event as the board report and the special resolution must be filed at SARS.
Regulation 31 (8) says that the company must publish a special resolution contemplated in sub-regulation (6) together with the report required by sub regulation (7) which must be made available to the shareholders before the meeting (which must have proper notice) at which the resolution is to be considered. It appears that the notice cannot be waived in this instance.
The special resolution and the report must be filed with the CIPC as well as the South African Revenue Service by emailing the special resolution and board report to regulation31@sars.gov.za. We suggest that a certified copy of the email proving submission to SARS or a copy of the documents with the SARS official stamp will reduce the chance of rejection by the CIPC.