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Under the new Companies Act there are a number of ways minority shareholders can oppose fundamental transactions. 

"It's a relatively easy process for disgruntled shareholders to disrupt a deal, since just 15% need to vote against it and then any one of them need only serve notice on the company for the transaction to end up in court," said Teichner.

"The responsibility then lies with the company to get court approval for the transaction."

Any individual shareholder who votes against the transaction, may within ten business of the vote, approach a court to be granted leave to apply to court to review the transaction.

"This route is more difficult for shareholders since they must apply to court, but it is another channel for them to object to a deal." 

The new act also introduces appraisal rights for shareholders.  These allow dissatisfied shareholders to give written notice before a vote is taken on a transaction and demand that the company buy their shares.

"Shareholders who don't like the price they are being offered in a takeover situation, for example, could ask the company to buy them out at fair value using their appraisal rights," noted Teichner.  "If they are not happy with the offer from the company, they can go to court and ask the court to determine the fair value."

He advises companies to consider inserting conditions into their transactions that discourage shareholders from exercising their appraisal rights. 

Examples could include conditions which provide the offeror the right to withdraw if more than a specified percentage of shareholders serve notice that they intend exercising their appraisal rights.

"The idea behind these conditions would be to make shareholders aware that by exercising their appraisal rights, they may actually kill the transaction all together and therefore have no possibility of benefiting from it," said Teichner.

He noted, however, that ensuring deal certainty is a critical consideration for target companies in takeover situations.

"Deal structures shouldn't make the appraisal rights threshold so low that the offeror has the option of using that condition to withdraw from the deal."

Because appraisal rights are a new concept in SA, it is uncertain how long minority shareholders exercising them could delay transactions.  In the US, typical contested appraisal rights proceedings cost about $1m and can take between one and two years to conclude.  Companies, rather than the disgruntled shareholders, often foot the legal bill. 

Teichner added that in SA, the court will decide who will bear the costs of any legal battle related to appraisal rights, while local courts will also need to grapple with determining a fair value for shares.

He added that some companies may choose to avoid the risk of appraisal rights by making a general offer to shareholders as opposed to using a scheme of arrangement or merger.

"Appraisal rights are not available in a general offer and therefore the risk is mitigated," he concluded.