ISSN: 1996-2207
Affiliations: University of Johannesburg
Source: Tydskrif vir die Suid-Afrikaanse Reg, Issue 4, 2024, p. 850-851
https://doi.org/10.47348/TSAR/2024/i4a17
None
ISSN: 2219-1585
Affiliations: Senior Consultant, Bowmans Attorneys
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 1 – 8
This article deals with the obligation of trustees to submit an electronic register of the beneficial owners of a trust to the Master of the High Court. The article explores the aim of these disclosure requirements and considers the application of the beneficial ownership definition in the Trust Property Control Act to employee share ownership plan trusts. The writer laments the fact that share ownership plans are not excluded from these disclosure obligations, taking into account the comprehensive tax reporting obligations of a share ownership plan.
ISSN: 2219-1585
Affiliations: Honorary Member, Cape Bar; Member, Cape Bar
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 9 – 22
A director owes duties to the company of which he or she is director. These include, in the main, a fiduciary duty and a duty to exercise reasonable care, skill and diligence. This is the position at common law, as well as under the Companies Act. Sections 77 and 162 of the Companies Act contain the two principal remedies for breach of these duties. Section 77 provides for the director concerned to be liable for loss sustained by the company as a consequence of the breach. Section 162 provides for the director to be declared delinquent or under probation. Both sections have time-barring provisions. In terms of the existing section 77(7), proceedings by the company concerned to recover loss from the director may not be commenced more than three years after the act or omission that gave rise to the liability — i e irrespective of when the company did, or could have, acquired knowledge of the act or omission in question. In terms of the existing section 162(2)(a), stakeholders in a particular company wishing to bring delinquency proceedings against an individual who was, but no longer is, a director of the company, are required to do so within 24 months of the date on which the individual ceased to be a director — i e, even if the stakeholder concerned did not have knowledge of the delinquent conduct, and could not reasonably have acquired it, within the stipulated 24-month period. These time-barring provisions have the potential to operate harshly — and so it has been contended, unconstitutionally. In light thereof, and following recommendations by the Zondo Commission, the time-periods have been revisited, and substantially ameliorated, in the recently enacted Companies Second Amendment Act. As part of these amendments, a discretion is now conferred on the court, in the context of both remedies, to extend the relevant time-period on good cause shown. The article analyses the existing time-barring regime (i e, that are currently in place and which will remain in place until the Companies Second Amendment Act comes into operation); identifies the deficiencies in that regime and the likely rationale for amendment thereof; and explores the pros and cons of the more flexible time-barring regime introduced by the Companies Second Amendment Act.
ISSN: 2219-1585
Affiliations: Independent Consultant
Source: Business Tax & Company Law Quarterly, Volume 15 Issue 3, 2024, p. 23 – 30
In the previous edition of this journal, the writer dealt with the substantive issue that was required to be addressed by the Constitutional Court in Capitec Bank Ltd v Commissioner for the South African Revenue Service, namely whether Capitec Bank Ltd was entitled to claim a deduction under section 16(3)(c) of the Value-Added Tax Act, 1991, in respect of amounts credited to borrowers accounts under a loan cover arrangement on the happening of specified events, namely the death or retrenchment of the borrower. Capitec had essentially undertaken to apply the claim proceeds derived by it under a credit life policy entered into with an insurer against the indebtedness of the borrower on his or her death or retrenchment. No consideration was payable for the loan cover by Capitec. This Part of the article address the remaining issues dealt with in this seminal case, namely apportionment, capitalisation and supplies for no consideration. It is, with respect, submitted that the court addressed these related issues succinctly and appropriately. As regards apportionment, the court held that while section 16(3)(c) did not deal specifically with apportionment, it would in essence be fair and reasonable to do so given that the loan cover related to the bank’s taxable and exempt activities. As noted by the writer, the court’s dicta is apposite as regards supplies that fall to be dealt with under section 8(15). Section 8(15) provides that where a single supply of goods or services would, if separate considerations had been payable, been standard rated and zero rated, each part of the single supply is deemed to be a separate supply. However, there are no rules as to how the consideration related to each notional separate supply is to be determined. Rogers J in Capitec Bank provides a practical answer — apportionment under general principals. As regards capitalisation, Rogers J held that the components of the borrowers’ accounts retain their character of interest (exempt) and fees (taxable) and fell to be dealt as such for VAT purposes. While the writer acknowledges the correctness of the analysis and conclusion arrived at by the court, he notes that this approach gives rise to issues where a trust makes distributions to a beneficiary after many years out of capitalised trust capital and is required to apply Binding General Ruiling No 16 (‘BGR 16’) in relation to that distribution. BGR 16 provides for a mandatory apportionment methodology, the so-called turnover-based method. The writer suggest this is something that needs to be considered by SARS. The final issue relates to supplies made for no consideration. The court confirmed that a supply for no consideration does not per se mean that the underlying supply is not an ‘enterprise’ (taxable) supply in every circumstance. Rather, it must be considered to what extent the free supply is a part of the enterprise (taxable) activities carried on by the vendor. Where for example, a vendor gives a free giveaway to encourage the purchase of the vendor’s wares, the supply of the giveaways for no consideration is still in the course or furtherance of the vendor’s enterprise, albeit for nil consideration (section 10(23)). In the context of the Capitec Bank case, the court had accepted that the supply of the loan cover related to both taxable and non-taxable supplies.
ISSN: 2413-9874
Affiliations: Senior Counsel, Johannesburg Bar (Sandton); Adjunct Professor of Law, Nelson Mandela University
Source: Industrial Law Journal, Volume 45 Issue 3, 2024, p. 1377 – 1394
https://doi.org/10.47348/ILJ/v45/i3a1
Reasonableness reviews in the Labour Court are something of a lottery because different judges have different thresholds for unreasonableness. This article discusses three things that the labour courts can do with a view to achieving a measure of consistency in decision-making: firstly, by determining the intensity with which reasonableness reviews should be undertaken, particularly in relation to dismissal for misconduct awards; secondly, by setting uniform standards for the threshold for unreasonableness; and, thirdly, by adopting a uniform approach to the methodology involved in testing for reasonableness on review.
ISSN: 2413-9874
Affiliations: Professor, Faculty of Law, University of Cape Town; PhD candidate, Faculty of Law, University of Cape Town
Source: Industrial Law Journal, Volume 45 Issue 3, 2024, p. 1395 – 1423
https://doi.org/10.47348/ILJ/v45/i3a2
The retrenchment and severance pay provisions in the Labour Relations Act 66 of 1995 (LRA) cannot be reviewed without analysing the supporting provisions of s 41 of the Basic Conditions of Employment Act 75 of 1997 (BCEA), specifically the relationship between s 41(4) and s 84(2) of the BCEA and the jurisprudence on these provisions to date. Ultimately, the courts’ reasoning is that s 41(4) of the BCEA ensures employment security by deterring employers from retrenching employees by paying severance pay, and conversely by ensuring that employees do not unreasonably refuse alternative employment in an effort to frustrate the retrenchment process or to secure a severance payment instead. Further focal discussion points in this article are the determination of the reasonableness of rejecting alternative employment, the length of the interruption(s) in the employment period, and the calculation of severance pay that is due to affected employees (taking into account any prior payments already made to the employees). Additionally, the impact of contractually agreed severance pay on the BCEA statutory provisions is considered and recent jurisprudence in this regard is critiqued.
ISSN: 2413-9874
Affiliations: LLB (KwaZulu-Natal), LLM (KwaZulu-Natal); Senior Lecturer in Law, University of KwaZulu-Natal, LLB (KwaZulu-Natal), MA (University of Sussex), PhD (KwaZulu-Natal)
Source: Industrial Law Journal, Volume 45 Issue 3, 2024, p. 1424 – 1453
https://doi.org/10.47348/ILJ/v45/i3a3
The notion of menstrual leave as a workplace leave entitlement has begun gaining global traction, with Spain recently becoming the first European country to implement a specific menstrual leave policy. South Africa’s labour law does not include a provision entitling female employees to menstrual leave. Consequently, women are forced to utilise their sick leave if they are unable to attend work due to menstrual pain and discomfort. Should the South African government respond to calls for the inclusion of menstrual leave in labour law, there are several factors which lawmakers and employers in South Africa would need to consider. This article examines relevant South African labour legislation and state obligations in terms of international, regional and constitutional law with a view to the introduction of menstrual leave in South Africa. It further assesses global best practice and provides an analysis of possible policy measures, practical implementation considerations and legislative amendments to the Basic Conditions of Employment Act 75 of 1997, while also examining the application of existing provisions within the Employment Equity Act 55 of 1998 in order to contribute to this discourse.
ISSN: 2413-9874
Affiliations: Professor, University of the Western Cape
Source: Industrial Law Journal, Volume 45 Issue 3, 2024, p. 1453 – 1474
https://doi.org/10.47348/ILJ/v45/i3a4
Uganda ratified the International Labour Organisation (ILO) Termination of Employment Convention 1982 without reservations. Article 4 of the convention provides that ‘[t]he employment of a worker shall not be terminated unless there is a valid reason for such termination connected with the capacity or conduct of the worker or based on the operational requirements of the undertaking, establishment or service’. Uganda has not yet domesticated the whole convention and art 4 in particular. Section 65(1)(a) of the Employment Act 2006 provides that termination of a contract of employment or service is deemed to take place ‘where the contract or service is ended by the employer with notice’. It is silent on whether the employer has to give reasons for the termination. There are many cases in which the Industrial Court has relied on art 4 of the convention to hold that s 65(1)(a) of the Act requires an employer to give reasons for the termination of employment. However, these decisions have been set aside by the Court of Appeal on the grounds that s 65(1)(a) does not require an employer to give reasons and that art 4 has not been domesticated. In this article, the author relies on the drafting history of the Employment Act to argue that it was an oversight on the part of Parliament to omit the requirement for an employer to give reasons for terminating employment under s 65(1)(a). It is also argued, inter alia, that s 65(1)(a), as interpreted by the Court of Appeal, is unconstitutional and contrary to Uganda’s international treaty obligations. The conclusion of this article is that s 65(1)(a) should be interpreted as requiring an employer to give reasons for termination of employment. Reliance may be placed on legislation from countries such as Ghana, Malawi, the Seychelles and Zambia to suggest ways in which Uganda could expressly domesticate art 4 of the convention. The author also argues that the Supreme Court’s decision in DFCU Bank Ltd v Kamuli (2020) to the effect that the Court of Appeal is the apex court in labour matters is contrary to the drafting history of the Constitution.
ISSN: 2413-9874
Affiliations: Advocate, Cape Bar; Senior Counsel, Johannesburg Bar
Source: Industrial Law Journal, Volume 45 Issue 3, 2024, p. 1475 – 1490
https://doi.org/10.47348/ILJ/v45/i3a5
This judgment is important for two main reasons. Firstly, it highlights that systemic delays in the determination of review applications remain the norm, and it is a case study in the Labour Appeal Court (LAC) attempting to combat the consequences by way of creative decision‑making. Secondly, it is another example of the LAC having engaged in a high-intensity penalty review, but arguably having gone too far and not having applied the test for reasonableness correctly.
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
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.