ENFORCEMENT OF THE SECURITIES REGULATION CODE AND THE ROLE OF THE COURTS

Abstract

The Companies Act 61 of 1973 lays down the legislative framework for the regulation of takeovers and mergers in South Africa. The Act established the Securities Regulation Panel (hereinafter “the Panel”) and gave it the power to regulate affected transactions. The Securities Regulation Code on Takeovers and Mergers contains the rules that regulate such transactions. The Code enjoys the force of law and section 440L provides that unless an exemption has been granted by the Panel, no person is entitled to enter into or propose an affected transaction except in accordance with the rules. No difficulties arise if the parties involved in affected transactions obey the Code and any rulings issued by the Panel. However, various issues arise if any party refuses to comply with the Code or obey a ruling. This article considers how the Panel must proceed in order to enforce the Code or one of its rulings. It also considers the role of the court in this process, the status of Panel rulings and the ability of parties to frustrate an affected transaction. The financial ability of the Panel to ensure the enforcement of the Code is commented on. Further, consideration is given to the City Code on Takeovers and Mergers and the position of the UK Takeover Panel, bearing in mind the need to implement the European Takeover Directive and the UK Department of Trade and Industry’s proposals to do this.