Section 228 of the Companies Act has been amended to ensure that a Company does not sell the whole or the greater part of the Company’s assets without a special resolution by all shareholders of the Company being passed and registered with the Registrar of Companies. Prior to this amendment it was only necessary that an ordinary resolution be passed and this resolution need to have been registered with the Registrar of Companies. Although a sale agreement signed by a Director of the Company in contravention of Section 228 will not be void it will be unenforceable if the sale agreement is not ratified by a special resolution by all shareholders within a reasonable period of time from the date of sale and the special resolution be registered with the Registrar of Companies.

It is imperative to ensure that this special resolution has been passed and registered where a Company is selling the whole or greater part of it’s assets to prevent any unnecessary delays in the registration process.

We advise that the following clause be added to all our client’s agreements of sale:

“Should the Seller be a company and is hereby selling the whole or the greater part of the Company’s assets then this agreement is subject to the shareholders of the Seller passing a special resolution ratifying the sale within 30 (THIRTY) days from date hereof and the subsequent registration of the special resolution by the Registrar of Companies as soon as reasonably possible thereafter. The Seller warrants that the special resolution will be passed and registered within the time frames herein mentioned and before date of registration of transfer.”