The Companies Act No. 71 of 2008 : Inter group loans – the saga continues

There has been a lot of debate on the application of the Companies Act on inter company loans.

Section 45 of the Companies Act No. 71 of 2008 (“Act“) is the section which, inter alia, deals with inter company loans. We must admit that the title of section 45 “Loans or other financial assistance to directors” is misleading as no reference is made to inter company loans in the title.

A firm of attorneys approached the Companies and Intellectual Property Commission (“CIPC“) for an non binding opinion on the application of Section 45 of the Act on inter company loans (please see the link below).

Non Binding opinion by CIPC

Except for the title which is misleading the wording of section 45 of the Act was not amended or subject to any material changes  since the final Bill before amendments.

With regards to the “solvency and liquidity” regime, and to ensure solvency and liquidity it is important that inter company loans be properly approved however the practical implications of compliance is a challenge to manage.


18 August 2011