The words 'regulated company' shouldn't intimidate you.
In terms of the Companies Act 71 of 2008, a regulated company is simply any company that takeover regulations apply to. Let's look at what that really means…
These three types of companies are considered 'regulated companies' in terms of the Companies Act
#1: Public companies. The Practical Tax Loose Leaf Service says these are companies that are often listed on the Johannesburg Stock Exchange (JSE). Examples include SABMiller and Anglo Gold Ashanti. The company will have Limited or Ltd after its name.
#2: State-owned companies. These are companies that are either 'state-owned enterprises' (Public Finance Management Act 1 of1999) or a company a municipality owns. It'll have SOC Ltd after its name, for example, Johannesburg Social Housing Company.
#3: A private company will become a regulated entity when it sells securities, in any 24-month period, of more than 10% of the value of their issued shares. This figure of more than 10% can be over a number of transactions during a 24-month period.
Note: When you sell a shelf company, it won't become a regulated company, but if the company's new owner decides to sell shares in this company, it'll become a regulated company.
For example, John is a budding entrepreneur. He buys a shelf company from Paul and sells shares in this company to his father, mother and two brothers. When he bought the shelf company from Paul, it was a non-regulated company. But as soon as he sold shares in the company, it became a regulated company.
Are there any laws that regulated companies must adhere to?
In October last year, we reported that if you're a regulated company and you want to enter into a fundamental transaction, the Companies Act requires you to first get your shareholders' permission.
Now that you know how the Companies Act defines 'regulated companies', be sure to also check out this article. It talks about the Takeover Regulation Panel and the control it has over regulated companies.
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