Category Archives: Finance

INTEREST FREE LOANS TO DIRECTORS

It is very often the case that a company extends an interest free or low interest loan to a director. This manifests either as a true incentive or benefit to that director (mostly the case in larger corporate environments) or … Continue reading

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INTEREST FREE LOANS WITH COMPANIES

The latest annual nation budget presented in Parliament proposed the dividends tax rate to be increased with almost immediate effect from 15% to 20%. The increased rate brings into renewed focus what anti-avoidance measures exist in the Income Tax Act[1] … Continue reading

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BUDGET 2017

Following the annual national budget speech delivered by Finance Minister Pravin Gordhan on 22 February, we highlight some of the most significant matters arising below: A new tax bracket will be introduced targeting the wealthy as well as trusts. It … Continue reading

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THE COMPANIES ACT’S SOLVENCY AND LIQUIDITY TEST

A company would satisfy the solvency and liquidity test if, considering all reasonably foreseeable financial circumstances of the company at that time: (a) the fair value of the assets of the company equal or exceed the fair value of its liabilities; … Continue reading

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FINANCIAL ASSISTANCE BY COMPANIES TO ISSUE SHARES

Section 38 of the Companies Act, 61 of 1973 (now repealed) contained a prohibition against companies issuing shares to prospective shareholders on loan account. This was identified as one of the hurdles in the way of BEE empowerment deals specifically … Continue reading

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BUDGETS: ARE THEY WORTH THE EFFORT?

A lot of small businesses are managed by the owner, especially in the early years of a business’s existence. As the owner is intimately involved in the day to day operations of the business, it is easy to keep control … Continue reading

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FINANCIAL ASSISTANCE AND THE COMPANIES ACT

One of the more significant changes that the “new” Companies Act, 71 of 2008, brought about was that a company may now provide financial assistance to prospective shareholders to subscribe for shares in that company. In other words, it may … Continue reading

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DO YOU USE A MONTHLY FINANCIAL CHECKLIST? IF NOT, YOU MIGHT MISS SOMETHING IMPORTANT

The primary purpose of business is to generate positive cash flow and make a profit, both of which are determined by two factors: money coming into the business and money going out of the business. As long as the money … Continue reading

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