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A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act

dc.contributor.authorDippenaar, Marelien_ZA
dc.date.accessioned2018-05-14T07:33:21Z
dc.date.available2018-05-14T07:33:21Z
dc.date.issued2018
dc.identifier.citationDippenaar, M. 2018. A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act. South African Journal of Economic and Management Sciences, 21(1), a1985, doi:10.4102/sajems.v21i1.1985
dc.identifier.issn2222-3436 (online)
dc.identifier.issn1015-8812 (print)
dc.identifier.otherdoi:10.4102/sajems.v21i1.1985
dc.identifier.urihttp://hdl.handle.net/10019.1/103997
dc.descriptionCITATION: Dippenaar, M. 2018. A critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Act. South African Journal of Economic and Management Sciences, 21(1), a1985, doi:10.4102/sajems.v21i1.1985.
dc.descriptionThe original publication is available at https://sajems.org
dc.descriptionPublication of this article was funded by the Stellenbosch University Open Access Fund.
dc.description.abstractBackground: Sections 30(4) and 30(5) of the Companies Act 71 of 2008 (the Act) require, inter alia, disclosure of the remuneration received by each director in a company’s annual financial statements. Section 30(6) defines the term ‘remuneration’, which includes, inter alia, in Section 30(6)(e) the ‘value’ of any option or right granted to a director, as contemplated in Section 42, which deals with options for the allotment or subscription of securities or shares of a company. It is uncertain what the intended meaning of the term ‘value’ is in this context and it is interpreted differently by different companies in practice. Aim: The objective of this study was to understand the meaning of the term ‘value’ in Section 30(6)(e) of the Act (including the date of measurement thereof), as intended by the legislature. Setting: This article examined existing literature in a South African corporate and legislative environment. Method: A non-empirical study of existing literature was conducted by performing a historical analysis within a South African context. A doctrinal research approach was followed. Results: Possible interpretations of the term ‘value’ include the grant date fair value of the rights, the fair value at reporting date, the fair value on vesting date, the expense calculated in terms of the International Financial Reporting Standard on share-based payments, the gain on exercise of the rights and the intrinsic value on reporting date. It is submitted that the most likely meaning is the grant date fair value. Conclusion: It was found that the meaning of the term ‘value’, for purposes of Section 30(6)(e) of the Act, is unclear and interpreted differently by different companies. It is, therefore, recommended that the wording of Section 30(6)(e) is amended to reflect the meaning intended by the legislature.en_ZA
dc.description.urihttps://sajems.org/index.php/sajems/article/view/1985
dc.format.extent9 pages
dc.language.isoen_ZAen_ZA
dc.publisherAOSIS Publishing
dc.subjectShare-based incentivesen_ZA
dc.titleA critical analysis of the meaning of the term ‘value’ in Section 30(6)(e) of the Companies Acten_ZA
dc.typeArticleen_ZA
dc.description.versionPublisher's version
dc.rights.holderAuthor retains copyright


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