Page 248 - SAIT Compendium 2016 Volume1

s 38
Part II
Special provisions relating to companies (ss. 38–40E)
38 Classi cation of companies
(1) For the purposes of this Act a company shall in respect of each year of assessment be recognized as either a public or a private company, and the Commissioner shall upon the request of any company inform that company whether it is recognized as a public company or as a private company.
(2) The following companies shall, subject to the provisions of section thirty-nine, be recognized as public companies, namely—
(a) any company all classes of whose equity shares are
publicly quoted on the speci ed date by a stock exchange in the list issued under its authority, provided—
[Words in para. (a) preceding sub-para. (i) substituted by s. 58 (a) of Taxation Laws Amendment Act, 2015 (‘the Commissioner is satis ed’ deleted) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(i) that the stock exchange is a recognized and bona de stock exchange under adequate control;
(ii) that the rules and regulations of the stock exchange for granting and continuing a quotation for the purchase and sale of shares provide for full protection of the interests of the public in regard to dealings in the shares of the company;
(iii) that the memorandum of incorporation prohibits such restrictions on the right to acquire or transfer any of its shares as are likely to preclude members of the general public from becoming shareholders in any class of the company’s shares; and
[Sub-para. (iii) substituted by s. 59 (1) (a) of Act 7 of 2010.] (iv) that the general public was throughout the year of assessment in question interested either directly as shareholders in the company or indirectly as shareholders in any other company, in more than forty per cent, of every class of equity shares
issued by the company;
[Sub-para. (iv) substituted by s. 16 (a) of Act 90 of 1964.] (b) any other company, not being a private company as de ned in section 1 of the Companies Act, nor a close
corporation, if—
(i) the general public was throughout the year of
assessment in question interested either directly as shareholders in the company or indirectly as shareholders in any other company, in more than fty per cent of every class of equity shares issued by the company; and
(ii) the business of the company is conducted and its pro ts are distributed in such a manner that no person enjoys or receives or is entitled to enjoy or receive, by reason of shareholding, participation in the management or otherwise, any advantage which would not be enjoyed or received by him if the company had been under the control of a board of directors acting in the best interests of all its shareholders and had been one which could have been recognized as a public company under paragraph (a);
[Para. (b) amended by s. 16 (b) of Act 90 of 1964, by s. 31 (b) of Act 85 of 1974, by s. 24 of Act 121 of 1984 and by s. 59 (1) (b) of Act 7 of 2010 and substituted by s. 58 (b) of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
240
s 38
INCOME TAX ACT 58 OF 1962
Prelex
Wording of para. (b) in force until date of promulgation of Taxation Laws Amendment Act, 2015
(b) any other company, not being a private company
as de ned in section 1 of the Companies Act, 2008 (Act 71 of 2008), nor a close corporation, in respect of which the Commissioner is satis ed—
(i) that the general public was throughout the year of assessment in question interested either directly as shareholders in the company or indirectly as shareholders in any other company, in more than fty per cent of every class of equity shares issued by the company; and
(ii) that the business of the company is conducted and its pro ts are distributed in such a manner that no person enjoys or receives or is entitled to enjoy or receive, by reason of shareholding, participation in the management or otherwise, any advantage which would not be enjoyed or received by him if the company had been under the control of a board of directors acting in the best interests of all its shareholders and had been one which could have been recognized as a public company under paragraph (a);
(c) any company which has been approved as a public bene t organisation in terms of the provisions of section 30 (3);
(d)
[Para. (c) substituted by s. 43 (1) of Act 60 of 2001.]
any co-operative;
[Para. (d) substituted by s. 28 of Act 89 of 1969, by s. 27 of Act 94 of 1983 and by s. 30 (1) of Act 8 of 2007.]
(e) any insurance society or company subject to assessment in terms of section 28, 29 or 29A;
[Para. (e) substituted by s. 32 (c) of Act 53 of 1999.]
(f) any public utility company, established by or under a
special Act of Parliament;
(g) any company the sole or principal business of which
in the Republic is mining for gold or diamonds; and
(h) any company to which the provisions of section
thirty-three apply.
(i) .. .
[Para. (i) added by s. 21 of Act 90 of 1962, substituted by s. 36 (1) of Act 30 of 2000 and by s. 33 of Act 74 of 2002 and deleted by s. 45 (1) of Act 17 of 2009.]
(3) A company which is not recognized as a public company shall be recognized as a private company.
[Sub-s. (3) amended by s. 16 (c) of Act 90 of 1964.] (4) For the purposes of this section—
(a) the general public in relation to any company (in this paragraph referred to as the company) shall be deemed not to include—
(i) any director of the company; or
(ii) any relative of any director of the company,
unless such relative, if he is not the spouse or minor child of such director, has at all relevant times exercised his rights as a shareholder in the company or in any other company through which such relative is interested in the shares of the company, independently of such director; or
[Sub-para. (ii) substituted by s. 58 (c) of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
SAIT CompendIum oF TAx LegISLATIon VoLume 1