Section 45 of the Companies Act 71 of 2008 prohibits a
company from providing financial assistance (which includes guaranteeing or
securing a debt) to:
(a) a director of the company,
(b) a related or inter-related company;
(c) a director or shareholder of a related or inter-related
company.; or
(d) any person related to such related or inter-related
company, director or shareholder, unless certain requirements are satisfied.
In principle, those requirements are that resolutions
should be provided by each of the shareholders and of the board of the company
providing the suretyship/guarantee. Because the consequence of a failure to
comply with the technical requirements of this section is that the
suretyship/guarantee provided by the company will be void, it is recommended
that you consult with your attorneys when a company is to stand surety or
provide a guarantee for any other person. However, the one notable exception to
this rule is that there are no special requirements for a holding company to
provide a suretyship or guarantee for one of its subsidiaries.