The risk of personal liability for money damages under the South African Companies Act, 2008 and the possible impact on nonexecutive directors

by | Oct 16, 2024 | JCCL, JCCL V9 I2

The risk of personal liability for money damages under the South African Companies Act, 2008 and the possible impact on nonexecutive directors

Author: Amukelani Baloyi

ISSN: 2521-2575
Affiliations: Legal Commercial Manager, Rand Water
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 1 – 15
https://doi.org/10.47348/JCCL/V9/i2a1

Abstract

This article considers, critically, the risks associated with imposing personal liability for money damages under the South African Companies Act and the risks of willingness by non-executive directors to serve on the board of companies due to risks associated thereto. The article considers the legal position relating to liability as it is known under common law and as it was applied by the South African courts over the years. Further consideration is given to the legal positions of similar provisions in other jurisdictions practicing similar company law practices. The introduction of the provisions requiring imposition of monetary damages on directors in South Africa followed on a comparable practice globally, specifically, on those countries which share company law practices. However, it will be discussed what South African policymakers may possibly have not considered following the deliberations during the drafting stage – as was advised by the advisors who were appointed to carry out the drafting exercise. The impact of imposing money damages will be discussed and the use of other mechanisms to mitigate against the potential effect of the statutory provisions will be discussed. Through a detailed analysis of the rights associated with money damages, recommendations will be made on how to best deal with the effects of these provisions.

Exemption of disposals of all or greater part of the company’s assets or undertaking from shareholder approval within the corporate group context

by | Oct 16, 2024 | JCCL, JCCL V9 I2

Exemption of disposals of all or greater part of the company’s assets or undertaking from shareholder approval within the corporate group context

Author: Khathutshelo Neluheni

ISSN: 2521-2575
Affiliations: Director: Corporate Mergers & Acquisitions, Property Law and Real Estate, Werksmans Attorneys
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 16 – 34
https://doi.org/10.47348/JCCL/V9/i2a2

Abstract

Section 112(1) of the Companies Act 71 of 2008 exempts a whollyowned subsidiary of a company from obtaining shareholder approval from its holding company to authorise the disposal of all or the greater part of the subsidiary’s assets or undertakings. This exemption exposes the shareholder to abuses including the subsequent onward disposal of its newly acquired assets to a third party, which diminishes the value of the group as a whole, as well as the dilution of the holding company’s shareholding. In light of these threats, the shareholder vote exemption provisions of the Companies Act may need to be re-examined for purposes of guarding against the aforementioned abuses.

The bottle has popped – how the Companies Act 71 of 2008 has incorporated derivative actions for stakeholders in South African law

by | Oct 16, 2024 | JCCL, JCCL V9 I2

The bottle has popped – how the Companies Act 71 of 2008 has incorporated derivative actions for stakeholders in South African law

Author: Emshareed Botes

ISSN: 2521-2575
Affiliations: Admitted Advocate of the High Court of South Africa
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 35 – 56
https://doi.org/10.47348/JCCL/V9/i2a3

Abstract

The legal position established in the famous case of Foss v Harbottle (Foss v Harbottle) is no longer applicable under the new corporate legal framework of the Companies Act 71 of 2008 (‘the Act’). The principle in Foss v Harbottle, stated simply, is that where a wrong is done to a company, only the company may sue for damages caused to it. I argue that the derivative actions established through the Act, along with South Africa’s new corporate governance principles, negates the outdated notion that a company alone may sue for damages caused to it. Through the assessment of the case of Hlumisa Investment Holdings (RF) and Another v Kirkinis and Others (‘Hlumisa’), along with ss 218(2), 165, 157, 20(4) and 162(2) of the Act, it will be established that stakeholders of a company have the intrinsic legal standing to institute derivate actions on behalf of companies, in South African Company Law.

The sustainability of the proper plaintiff principle under the Companies Act 71 of 2008

by | Oct 16, 2024 | JCCL, JCCL V9 I2

The sustainability of the proper plaintiff principle under the Companies Act 71 of 2008

Author: Siphokazi Walaza

ISSN: 2521-2575
Affiliations: Candidate Attorney at Mdyesha Ndema Attorneys
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 57 – 70
https://doi.org/10.47348/JCCL/V9/i2a4

Abstract

The proper plaintiff principle was developed under common law in recognition of the separate personality of a company as one of the fundamental rules of company law. However, the concentration of the decision-making power in shareholding groups and the directors of the company eventually led to the realisation that the unconditional application of the principle threatened the rights of minority shareholders, creditors and the company itself. Corporate governance policies placing greater focus on the enlightened shareholder approach, have resulted in a corporate legal enforcement framework in the Companies Act 71 of 2008 that provides remedies extending legal standing to a larger class of persons. The inclusion of these remedies appears to put the proper plaintiff principle at risk as its relevance under the Act has now been put into question. This article examines the proper plaintiff principle and the remedies now available in the Companies Act. It also considers the reasoning behind the court’s interpretation of the proper plaintiff principle and certain remedies regarding claims for reflective loss in Hlumisa Investment Holdings (RF) Ltd v Kirkinis, to illustrate that the principle remains relevant despite the inclusion of the corporate legal enforcement framework that is now embodied in the Companies Act 74 of 2008.

Changes to Maryland General Corporation Law and Maryland Reit Law effective October 1, 2024

by | Oct 14, 2024 | JCCL, JCCL V9 I2

Changes to Maryland General Corporation Law and Maryland Reit Law effective October 1, 2024

Authors: James J Hanks Jr, Patsy McGowan, Michael A Leber

ISSN: 2521-2575
Affiliations: Partner, Venable LLP
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 71 – 74
https://doi.org/10.47348/JCCL/V9/i2a5

Abstract

During its 2024 session, the General Assembly of Maryland approved Senate Bill 400 and House Bill 749, amending several provisions of the Maryland General Corporation Law (the ‘MGCL’) and the Maryland REIT Law (the ‘MRL’), which are now codified as Chapters 609 and 608 of the Laws of Maryland 2024, respectively. The General Assembly also approved House Bill 888 and Senate Bill 544, amending certain provisions of Title 2, Subtitle 7, of the MGCL relating to the ratification of defective corporate acts, which are now codified as Chapters 605 and 604 of the Laws of Maryland 2024, respectively. The legislation will take effect on 1 October 2024. Here are the key provisions (all section references are to the MGCL unless otherwise noted).

A legal conspectus of selected challenges affecting financial inclusion for the poor and low-income earners in South Africa – Professorial inaugural lecture presented by Howard Chitimira, research professor at the North-West University, Mahikeng Campus, held on 21 October 2022

by | Oct 14, 2024 | JCCL, JCCL V9 I2

Oration Speech: A legal conspectus of selected challenges affecting financial inclusion for the poor and low-income earners in South Africa – Professorial inaugural lecture presented by Howard Chitimira, research professor at the North-West University, Mahikeng Campus, held on 21 October 2022

Author: Phemelo Magua

ISSN: 2521-2575
Affiliations: University of Pretoria
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 75 – 77
https://doi.org/10.47348/JCCL/V9/i2a6

Abstract

None

Financial inclusion and digital transformation regulatory practices in selected SADC countries: South Africa, Namibia, Botswana and Zimbabwe. Howard Chitimira and Tapiwa Victor Warikandwa (Eds)

by | Oct 14, 2024 | JCCL, JCCL V9 I2

Book Review: Financial inclusion and digital transformation regulatory practices in selected SADC countries: South Africa, Namibia, Botswana and Zimbabwe. Howard Chitimira and Tapiwa Victor Warikandwa (Eds)

Author: Elfas Torerai

ISSN: 2521-2575
Affiliations: Postdoctoral Research Fellow, North West University
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 2, 2023, p. 78 – 83
https://doi.org/10.47348/JCCL/V9/i2a7

Abstract

None

The balancing act continues: Recommendations for reform of the National Credit Act 34 of 2005

by | Oct 13, 2024 | SAMLJ, SAMLJ V35 I3

The balancing act continues: Recommendations for reform of the National Credit Act 34 of 2005

Author: Bronwyn Le-Ann Batchelor

ISSN: 1996-2185
Affiliations: Head of Faculty: Law at the Independent Institute of Education
Source: South African Mercantile Law Journal, Volume 35 Issue 3, 2023, p. 241 – 272
https://doi.org/10.47348/SAMLJ/v35/i3a1

Abstract

Through the enactment of the National Credit Act 34 of 2005 (‘NCA’), the government has focused on the protection of consumers with regard to credit agreements. Legislative protection is necessary due to the parties’ unequal bargaining power at the agreement’s conclusion. Despite these endeavours, there is still the common occurrence of a breach of the agreement by consumers and the ensuing recovery process by credit providers. The equitable balancing of the rights and responsibilities of the parties is essential to the well-being of the parties, the credit industry and the economy. The pre-enforcement procedure is at the centre of the tug of war between the parties. Section 129 of the NCA encapsulates the pre-enforcement procedure and thus determines the balancing of the parties’ rights and responsibilities through its interpretation and application. The section falls short in a number of areas and has resulted in disputes, interpretations and two subsequent amendment acts. This article critically analyses section 129 and determines if the rights of both parties have been equally protected, with reference to the burden of bringing the section 129 notice to the consumer’s attention, based on two schools of thought. The article then contributes to the balanced interpretation of the section by way of amendment recommendations.

The application of the Compensation for Occupational Injuries and Diseases Act on impairment caused by sexual harassment

by | Oct 13, 2024 | SAMLJ, SAMLJ V35 I3

The application of the Compensation for Occupational Injuries and Diseases Act on impairment caused by sexual harassment

Author: Kamalesh Newaj

ISSN: 1996-2185
Affiliations: Associate Professor: University of Pretoria
Source: South African Mercantile Law Journal, Volume 35 Issue 3, 2023, p. 273 – 297
https://doi.org/10.47348/SAMLJ/v35/i3a2

Abstract

This article addresses the question of whether a sexually harassed employee has recourse to the Compensation for Occupational Injuries and Diseases Act 130 of 1993. This is dependent on whether injuries or diseases sustained as a result of sexual harassment can be regarded as injuries or diseases that arise out of and in the course of employment. A very restrictive test has been developed to answer this question, which is whether the act giving rise to the injury or disease, in this context sexual harassment, can be regarded as a risk inherent to the work performed by the employee. The test focuses on the duties performed by the employee and the risks that are ordinarily inherent in the performance of those duties. Sexual harassment will generally not be regarded as a risk inherent to the performance of a job and is therefore discounted as an occupational injury or occupational disease. However, the courts’ approach is criticised for failing to interpret important social security legislation in line with international standards and in a purposive manner that gives effect to the constitutional right afforded to everyone to access social security.

Evaluating South Africa’s maternity protection legal regime applicable to non-standard female workers’ compliance with the Maternity Protection Convention 183 of 2000

by | Oct 13, 2024 | SAMLJ, SAMLJ V35 I3

Evaluating South Africa’s maternity protection legal regime applicable to non-standard female workers’ compliance with the Maternity Protection Convention 183 of 2000

Authors: Mpho Mhlongo & Clarence Itumeleng Tshoose

ISSN: 1996-2185
Affiliations: Lecturer, School of Law, University of Limpopo; Professor of Labour and Social Security Law, School of Law, University of Limpopo
Source: South African Mercantile Law Journal, Volume 35 Issue 3, 2023, p. 298 – 326
https://doi.org/10.47348/SAMLJ/v35/i3a3

Abstract

This article scrutinises maternity protection for women engaged in non-standard employment relationships in South Africa. It examines the current employment laws that provide maternity protection to females engaged in non-standard work. It is submitted that the insufficient protection afforded to these employees means that they do not enjoy the four-month maternity leave afforded to female employees in terms of section 25(1) of the Basic Conditions of Employment Act 75 of 1997. To alleviate this challenge facing female non-standard workers, the International Labour Organization introduced the Maternity Convention 183 of 2000 (‘the Convention’). This Convention accommodates and protects females engaged in non-standard work. However, the challenge lies in the failure to ratify the Convention, which has resulted in the provisions of the Convention not being operationalised in South Africa. It is submitted that its ratification could enhance the maternity protection of workers engaged non-standard work. For example, Article 4 of the Convention provides for inclusive access to maternity leave for all women, regardless of their employment contract. This provision calls for access to maternity leave of at least 14 weeks, and a compulsory leave period of six weeks after childbirth should be made accessible to the mother, in order to give her sufficient time to rest and recover before going back to work.