LML4806
Assignment 2
Semester 1
Due April 2026
,QUESTION
Scenario: Mahamba Logistics Ltd acquires all assets and liabilities of Buffalo
Haulage Ltd for R300 million. Shareholders of Buffalo Haulage Ltd approve 84%
of the resolution, while 16% dissent. Both companies are public companies.
Q1: May the dissenting shareholders of Buffalo Haulage Ltd seek court intervention to
stop the implementation of the Transaction?
Answer
1.1 Introduction
The transaction involves the acquisition of all assets and liabilities of a company,
followed by deregistration of the target company (Buffalo Haulage Ltd). In South
African company law, this is categorised as a merger or “scheme of arrangement”
type transaction, commonly referred to as an amalgamation under sections 112–114
of the Companies Act 71 of 2008.
Dissenting shareholders who believe that the transaction is unfair or prejudicial have
specific remedies under the Act, including court intervention to challenge or restrain
implementation.
1.2 Identification of the type of transaction
Section 114 of the Companies Act 71 of 2008 defines a “merger or amalgamation” as
a transaction in which:
• One or more companies transfer all or part of their assets and liabilities to
another company, and
, • The transferring company may be deregistered, or continue as a subsidiary.
In this scenario:
• Buffalo Haulage Ltd transfers all assets and liabilities to Mahamba Logistics
Ltd.
• Buffalo Haulage Ltd will be deregistered following the transaction.
Therefore, this transaction is an amalgamation or merger under section 114 of the
Companies Act.
1.3 Dissenting shareholders’ rights
1.3.1 Statutory protection
Section 115(3) of the Companies Act provides that any shareholder who voted
against a merger resolution may apply to court for relief if they believe:
1. The transaction is unfair to them, or
2. Their rights as shareholders are prejudiced.
This is commonly referred to as the “oppression or unfair prejudice remedy”. Courts
consider:
• Whether the consideration offered is fair,
• Whether the strategic rationale is reasonable, and
• Whether shareholders were properly informed and able to participate in
decision-making.
1.3.2 Application to the facts
In this case:
• 16% of shareholders opposed the resolution because they believe:
o the cash consideration of R10.00 per share is unfair, and
o the strategic rationale is unsound.
Assignment 2
Semester 1
Due April 2026
,QUESTION
Scenario: Mahamba Logistics Ltd acquires all assets and liabilities of Buffalo
Haulage Ltd for R300 million. Shareholders of Buffalo Haulage Ltd approve 84%
of the resolution, while 16% dissent. Both companies are public companies.
Q1: May the dissenting shareholders of Buffalo Haulage Ltd seek court intervention to
stop the implementation of the Transaction?
Answer
1.1 Introduction
The transaction involves the acquisition of all assets and liabilities of a company,
followed by deregistration of the target company (Buffalo Haulage Ltd). In South
African company law, this is categorised as a merger or “scheme of arrangement”
type transaction, commonly referred to as an amalgamation under sections 112–114
of the Companies Act 71 of 2008.
Dissenting shareholders who believe that the transaction is unfair or prejudicial have
specific remedies under the Act, including court intervention to challenge or restrain
implementation.
1.2 Identification of the type of transaction
Section 114 of the Companies Act 71 of 2008 defines a “merger or amalgamation” as
a transaction in which:
• One or more companies transfer all or part of their assets and liabilities to
another company, and
, • The transferring company may be deregistered, or continue as a subsidiary.
In this scenario:
• Buffalo Haulage Ltd transfers all assets and liabilities to Mahamba Logistics
Ltd.
• Buffalo Haulage Ltd will be deregistered following the transaction.
Therefore, this transaction is an amalgamation or merger under section 114 of the
Companies Act.
1.3 Dissenting shareholders’ rights
1.3.1 Statutory protection
Section 115(3) of the Companies Act provides that any shareholder who voted
against a merger resolution may apply to court for relief if they believe:
1. The transaction is unfair to them, or
2. Their rights as shareholders are prejudiced.
This is commonly referred to as the “oppression or unfair prejudice remedy”. Courts
consider:
• Whether the consideration offered is fair,
• Whether the strategic rationale is reasonable, and
• Whether shareholders were properly informed and able to participate in
decision-making.
1.3.2 Application to the facts
In this case:
• 16% of shareholders opposed the resolution because they believe:
o the cash consideration of R10.00 per share is unfair, and
o the strategic rationale is unsound.
