Section 45 Resolution Template: Board Approvals, Shareholder & Union Notices, and the Section 45(2A) Exemption

Last reviewed: 11 August 2026

Every South African company that lends money to a director, guarantees debt for a related entity, or provides any other form of financial assistance to a related or inter-related person must comply with Section 45 of the Companies Act 71 of 2008. Getting the paperwork wrong, or skipping a step entirely, can render the transaction void and expose directors to personal liability.

This guide provides a complete, practice-ready section 45 resolution template pack, walks through the board and shareholder approval process step by step, explains the section 45 notice requirements for shareholders and trade unions, and sets out exactly how the new Section 45(2A) intra-group exemption, inserted by the Companies Amendment Act 16 of 2024 and effective 27 December 2024, changes the compliance picture for subsidiary-level assistance.

Quick Compliance Decision: Can You Use This Section 45 Resolution Template?

A Section 45 resolution is the formal board (and, where required, shareholder) approval that authorises a company to provide financial assistance to directors, prescribed officers, or related and inter-related companies and persons. If your company is about to lend funds, issue a guarantee, grant security, or provide an indemnity to any such party, you need a valid Section 45 resolution before the assistance is provided.

Use the quick checklist below to confirm your starting position:

• Identify the recipient. Is the recipient a director, prescribed officer, related person, or inter-related company? If yes, Section 45 applies.
• Check for the 45(2A) exemption. Is the assistance being provided by a subsidiary to its holding company (or a fellow subsidiary within the same group)? If so, the new Section 45(2A) carve-out may exempt the transaction, see the dedicated section below.
• Prepare the solvency and liquidity evidence. The board must be satisfied that the company will satisfy the solvency and liquidity test immediately after providing the assistance.
• Draft and pass the board resolution. Use the directors’ resolution template included in this guide.
• Issue statutory notices. Within 10 business days of the board resolution, deliver notice to shareholders and (where applicable) registered trade unions.
• Determine whether shareholder approval is required. If the company’s Memorandum of Incorporation (MOI) requires it, or if Section 45(6) is triggered, a special resolution of shareholders must also be obtained.

What Section 45 of the Companies Act South Africa Covers

Section 45 of the Companies Act regulates financial assistance provided by a company to directors, prescribed officers, and related or inter-related companies and persons. Its purpose is to protect creditors and minority shareholders by ensuring that outflows of company resources to insiders are transparent, solvent, and properly authorised.

Statutory Text Summary

Section 45(2) provides that a company may provide direct or indirect financial assistance to a director or prescribed officer of the company (or of a related or inter-related company), or to a related or inter-related company or corporation, only if the board is satisfied that the solvency and liquidity test set out in Section 4 of the Act will be met immediately after the assistance is given, and if the board has adopted a resolution authorising the assistance. The provision applies regardless of whether the company receives fair value in return.

Types of Financial Assistance Under Section 45

Section 45 Companies Act financial assistance encompasses a broad range of transactions. Courts have consistently interpreted the phrase widely to capture arrangements that might otherwise escape scrutiny:

• Loans. Direct advances of money to a director, related person, or inter-related company.
• Guarantees. Guaranteeing the obligations of a related or inter-related party to a third-party lender.
• Security. Pledging company assets or providing a mortgage bond to secure another party’s obligations.
• Indemnities. Contractual commitments to hold a director or related party harmless against loss.
• Indirect assistance. Any arrangement, including the assumption of liabilities, subordination agreements, or beneficial pricing, that has the economic effect of providing support to an insider, even where money does not change hands directly.

The scope of “indirect financial assistance” has been tested repeatedly in South African courts. Industry observers note that boards should err on the side of compliance whenever any transaction confers a financial benefit on a related person, regardless of how the arrangement is structured.

Section 45 Resolution Template: Downloadable Pack

The following template documents have been drafted for immediate use. Each document should be reviewed against the company’s MOI and adapted to the specific transaction before execution.

Each template in the section 45 resolution template pack is designed to be used together. The directors’ resolution references the evidence checklist; the shareholder notice cross-refers to the resolution; and the minutes extract records the factual foundation the board relied on.

Board Approval Flow: Corporate Steps and the Directors’ Resolution Template

The board resolution is the centrepiece of Section 45 compliance. Without a valid resolution, the financial assistance is void, and each director who voted in favour may face personal liability. The following step-by-step process should be followed at every board meeting at which financial assistance is considered.

1. Confirm authority. Verify that the company’s MOI does not restrict or prohibit the proposed financial assistance. Check whether the MOI imposes additional requirements (e.g., an independent fairness opinion or prior shareholder approval).
2. Disclose conflicts. Every director with a personal financial interest in the proposed assistance must declare the interest before the board deliberates. Conflicted directors may not vote and generally should not be present during the deliberation.
3. Table the evidence pack. The company secretary or CFO should present the solvency and liquidity evidence (see checklist below) to the board before the resolution is put.
4. Deliberate and resolve. The board must apply its mind to the evidence and satisfy itself, on reasonable grounds, that the company will meet the solvency and liquidity test immediately after the assistance is given. A bare rubber-stamp resolution is insufficient.
5. Execute the resolution. The resolution must be signed by all non-conflicted directors who voted in favour. File the signed resolution in the company’s statutory records.
6. Issue notices. Within 10 business days of the resolution, deliver the section 45 notice to shareholders and, where applicable, trade unions.

Prepare the Section 45 Solvency and Liquidity Evidence Pack

The solvency and liquidity test under Section 4 of the Companies Act requires the board to be satisfied that (a) the assets of the company, fairly valued, equal or exceed its liabilities, fairly valued (the solvency limb) and (b) the company will be able to pay its debts as they become due in the ordinary course of business for the 12 months following the provision of the assistance (the liquidity limb).

The evidence pack should include:

• Signed management accounts dated no more than 30 days before the board meeting.
• Statement of assets and liabilities reflecting fair values (not just book values).
• Cash-flow forecast covering at least 12 months post-assistance.
• Working capital projection that models the impact of the proposed assistance on operating liquidity.
• Independent review or auditor letter (recommended but not mandatory) supporting the fair-value assumptions used.
• Board minutes from any prior meeting that approved the budget or business plan on which forecasts are based.

Directors’ Resolution Template, Required Wording and Execution

The following is a shortened extract showing the essential operative clauses of a directors’ resolution for Section 45 financial assistance. The full version is available in the downloadable pack above.

Sample extract (key clauses):

“IT IS RESOLVED THAT:

1. The board has considered the attached solvency and liquidity evidence pack, including management accounts dated [DATE], the cash-flow forecast for the period [DATE] to [DATE], and the statement of assets and liabilities prepared by [NAME/FIRM].

2. The board is satisfied, on reasonable grounds, that immediately after providing the financial assistance described in Annexure A hereto, the Company will satisfy the solvency and liquidity test as contemplated in Section 4 of the Companies Act 71 of 2008.

3. The Company is hereby authorised to provide the following financial assistance in terms of Section 45(2) of the Act: [describe nature, amount, recipient, duration, interest rate, security, and any conditions].

4. The company secretary is directed to deliver the notices required by Section 45(5) to all shareholders and to any recognised trade union within 10 business days of the date of this resolution.”

Each non-conflicted director who voted in favour should sign the resolution. The company secretary should record the outcome in the board minutes and note any abstentions or conflict declarations.

Shareholder Approval and Section 45 Notice Requirements

Not every Section 45 transaction requires shareholder approval. The default position is that the board resolution alone suffices, provided the statutory notices are delivered. However, shareholder approval becomes mandatory in two situations.

First, Section 45(6) requires a special resolution of shareholders (adopted within the previous two years) if the total financial assistance provided to a particular recipient, or a category of recipients, exceeds the thresholds or limits set out in the company’s MOI. Second, even absent a specific threshold, many MOIs contain express provisions requiring shareholder approval for intercompany loans or guarantees above a stated rand value.

A special resolution requires support from at least 75 per cent of the voting rights exercised at a properly convened shareholders’ meeting (unless the MOI prescribes a different percentage, which may not be lower than the statutory minimum). The notice convening the meeting must include full particulars of the proposed financial assistance, including the identity of the recipient, the nature and value of the assistance, and the terms on which it will be provided.

The section 45 notice to shareholders, which must be delivered within 10 business days of the board resolution, must set out the same particulars. This notice is required regardless of whether shareholder approval is also needed. It is an information right, not an approval mechanism.

Notice to Trade Unions and Employee Representatives

Section 45(5)(b) requires the company to deliver a copy of the board resolution, together with a written notice setting out the particulars of the financial assistance, to any registered trade union that represents employees of the company. If no trade union is registered, the notice must be given to any employee representative body recognised in terms of the company’s employment arrangements.

The notice period is the same: within 10 business days of the board resolution. The wording should mirror the shareholder notice in substance. A sample union notice is included in the downloadable template pack. Failure to issue the trade union notice does not automatically invalidate the assistance, but it may expose the company to regulatory challenge and reputational risk, and courts have treated procedural non-compliance as a factor weighing against the validity of the resolution.

The New Section 45(2A) of the Companies Act: When Intra-Group Assistance Is Exempt

The Companies Amendment Act 16 of 2024 inserted Section 45(2A) into the Companies Act, with effect from 27 December 2024. This provision exempts certain forms of intra-group financial assistance from the full Section 45 approval process. Specifically, Section 45(2A) provides that the requirements of Section 45(2) do not apply to financial assistance provided by a subsidiary to its holding company, or between subsidiaries within the same group of companies, where the assistance is provided in the ordinary course of the group’s business.

The practical effect is significant: where the exemption applies, the subsidiary providing the assistance is not required to pass a separate board resolution under Section 45(2), perform the solvency and liquidity test, or issue the statutory notices to shareholders and trade unions. However, the likely practical effect of the exemption will be that prudent boards continue to document the solvency position internally, even where the formal requirements are disapplied, particularly because the exemption is untested in the courts and the boundaries of “ordinary course of the group’s business” remain unclear.

To rely on Section 45(2A), the board should confirm and document three things:

• Group relationship. The provider is a subsidiary (as defined in Section 3 of the Act) of the recipient’s holding company, or the recipient is the holding company itself.
• Ordinary course. The assistance is provided in the ordinary course of the group’s integrated business operations, for example, intercompany treasury sweeps, centralised funding facilities, or standard management fee arrangements.
• MOI compliance. The MOI of the subsidiary does not override or restrict the exemption.

Example Memo Proving Intra-Group Relationship

Where a company intends to rely on Section 45(2A), it is advisable to prepare a short internal memorandum that sets out the factual basis for the exemption. The memo should attach:

• A group structure chart showing the shareholding chain between provider and recipient.
• Confirmation that the provider is a “subsidiary” as defined in Section 3 of the Companies Act.
• A description of the financial assistance and how it falls within the ordinary course of the group’s business.
• Extracts from the provider’s MOI confirming no conflicting restriction.

This memorandum does not need to be filed with the CIPC, but it should be kept in the company’s statutory records as evidence that the section 45 resolution template requirements were considered and that the exemption was properly applied.

When Assistance Is Invalid: Risks, Remedies, and Case Law

South African courts have repeatedly demonstrated that Section 45 has real teeth. Where the required resolution or solvency test is absent, the financial assistance may be declared void, and directors face personal liability for any loss suffered by the company or its creditors. The table below summarises key judicial findings that shape current compliance practice.

Practical risk mitigants include: obtaining external legal or financial advice before providing material assistance; inserting express Section 45 authority clauses in the MOI; conducting annual board reviews of all outstanding intercompany loans and guarantees; and issuing post-approval written confirmations to recipients recording the terms and conditions of the assistance.

Comparison Table: Section 44 vs Section 45 vs Section 45(2A)

Understanding the difference between Section 44 and Section 45 of the Companies Act is essential for choosing the correct approval pathway and section 45 resolution template. The table below sets out the key distinctions at a glance.

Practical Templates and Sample Timeline

The following six-step timeline shows where each template from the downloadable section 45 resolution template pack is used in sequence.

1. Day 0, Board meeting. Table the solvency and liquidity evidence pack. Deliberate and pass the directors’ resolution. Record the outcome in the board minutes extract. (Templates used: Directors’ resolution, Solvency and liquidity evidence checklist, Board minutes extract.)
2. Day 1–2, Conflict confirmations. Obtain written conflict-of-interest declarations from all attending directors.
3. Day 1–10, Shareholder notice. Deliver the section 45 notice to shareholders within 10 business days. (Template used: Notice to shareholders.)
4. Day 1–10, Trade union notice. Deliver the notice to any registered trade union or employee representative within the same 10 business day window. (Template used: Notice to trade unions.)
5. Day 10–25, Shareholder meeting (if required). Convene a shareholders’ meeting and pass a special resolution if the MOI or Section 45(6) requires shareholder approval. (Template used: Shareholders’ special resolution.)
6. Day 25–30, Execution and filing. Execute the financial assistance agreement. File the signed resolution and notices in the company’s statutory records. Retain the solvency evidence pack for at least seven years.

Next Steps

A valid section 45 resolution template is only the starting point. Every resolution must be tailored to the company’s MOI, the specific transaction, and the financial evidence available at the time. Where the new Section 45(2A) exemption is relied on, the intra-group relationship and ordinary-course status should be formally documented and kept on file. Boards providing material financial assistance, particularly cross-border guarantees, subordination agreements, or large intercompany loans, should obtain independent legal and financial advice before resolving.

For assistance with Section 45 compliance, resolution drafting, or navigating the 45(2A) exemption, consult a qualified commercial transactions practitioner through the Global Law Experts lawyer directory.

Sources

1. Companies Amendment Act 16 of 2024, Government Gazette
2. Companies Act 71 of 2008, Government of South Africa
3. Consolidated Companies Act 71 of 2008, SAFLII
4. CIPC, Compliance and Guidance Notices
5. Constantia Insurance Co Ltd v The Master, SAFLII (ZASCA 2022)
6. Trevo Capital Ltd v Steinhoff International Holdings, SAFLII (ZAWCHC 2021)
7. University of Cape Town, Academic Paper on Financial Assistance under the Companies Act