PDSnet Glossary

Term

Categories

Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

Versions

Name	synonyms = 1, variations = 2, abbreviations = 3

Publish: (0 = no, 1 = yes)

Definition

Section 2 of the Companies Act (71 of 2008) says, "a person controls a juristic person, or its business, if:
 (a) in the case of a juristic person that is a company— (i) that juristic person is a subsidiary of that first person, as determined in accordance with section 3(1)(a); or (ii) that first person together with any related or inter-related person, is— (aa) directly or indirectly able to exercise or control the exercise of a majority of the voting rights associated with securities of that company, whether pursuant to a shareholder agreement or otherwise; or (bb) has the right to appoint or elect, or control the appointment or election of, directors of that company who control a majority of the votes at a meeting of the board;"
From this definition you can see that control is not simply a case of owning 50% plus one share but can also take the form of controlling the majority of the voting rights or the appointment of the board of directors. In general, the control of a company has a value above the value of its shares which is expressed in the "control premium" or "cost of control" on acquisition.

Edit Glossary Term