A conceptual framework for the legitimate elimination of the developmental mandate by state-owned companies in South Africa

by | May 20, 2023 | JCCL, JCCL V8 I2

A conceptual framework for the legitimate elimination of the developmental mandate by state-owned companies in South Africa

Author: Genevieve Paige Wagener

ISSN: 2521-2575
Affiliations: Attorney of the High Court of South Africa
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2022, p. 1 – 28
https://doi.org/10.47348/JCCL/V8/i2a1

Abstract

The Republic of South Africa has adopted developmental ideals as part of the principles governing its public administration, including using state-owned companies (SOCs) as a mechanism for executing the developmental mandate. However, in terms of s 195(1)(b) of the Constitution of the Republic of South Africa, 1996, these principles must be balanced with the principle of promoting ‘[e]fficient, economic and effective use of resources’. South Africa’s state-owned entities currently face numerous challenges affecting their efficiency, effectiveness and viability. This article focuses on SOCs as legal entities and considers structural changes to the legislative framework within which these entities function to address these challenges. The proposed statutory amendments set out in this article aim to utilise the existing tested and functioning framework of the Companies Act 71 of 2008 to align the definitional requirements in the Public Finance Management Act 1 of 1999 that certain state-owned entities pursue purely commercial mandates with the requirement that a ‘state-owned company’ (as defined in the Companies Act) is a profit company which must operate for the financial gain of its shareholders. The article also proposes the introduction of a ‘stateowned enterprise’ into the Companies Act to accommodate the developmental mandate in a legislative structure which fosters more sustainability and accountability than the current legislative regime.

The role of beneficial ownership reporting obligations and the reckless trading provision to prevent front companies in terms of the Companies Act 71 of 2008

by | May 20, 2023 | JCCL, JCCL V8 I2

The role of beneficial ownership reporting obligations and the reckless trading provision to prevent front companies in terms of the Companies Act 71 of 2008

Author: Neha Dhana

ISSN: 2521-2575
Affiliations: LLM candidate, University of Witwatersrand
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2022, p. 29 – 54
https://doi.org/10.47348/JCCL/V8/i2a2

Abstract

The corporate form has the potential to be abused by natural persons. A front company is an example of such abuse. A front company is an incorporated company that is used as a vehicle to conduct illegal activities. The natural persons that control this front company and ultimately benefit from proceeds derived from the illicit conduct conceal their identity by hiding behind the company’s separate legal personality to escape civil and criminal liability. A report indicates that billions of rands are obtained through illegal activities perpetrated against the corporate form in South Africa. This means that natural persons can successfully misuse the corporate form as a front. For this reason, it is imperative that a legal framework is in place to circumvent the formation and operation of front companies. Foreign jurisdictions such as the United States of America and Kenya deter front companies by recognising beneficial ownership and placing a reporting obligation on beneficial owners to reveal themselves to a regulatory body. The abuse of the corporate form as a front is a company law issue and ought to be regulated by the South African Companies Act 71 of 2008 (Companies Act). However, the Companies Act does not recognise beneficial ownership per se. The Companies Act recognises beneficial interest only in relation to persons that exercise a legal right held in securities. It is argued that to prevent front companies in South Africa, the Companies Act should be amended to fully recognise beneficial ownership and place a report obligation on these persons to reveal themselves to the Companies and Intellectual Property Commission. It is further argued that the statutory remedy, the reckless trading provision, should be expanded to apply to beneficial owners to act as an instrument to prevent the operation of front companies.

Revisiting class action litigations against corporations in Nigeria: Lessons from the US experience

by | May 20, 2023 | JCCL, JCCL V8 I2

Revisiting class action litigations against corporations in Nigeria: Lessons from the US experience

Author: Kalu Kingsley Anele

ISSN: 2521-2575
Affiliations: Lecturer: Pusan National University, Busan, South Korea
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2022, p. 55 – 83
https://doi.org/10.47348/JCCL/V8/i2a3

Abstract

Class actions remain one of the most plausible mechanisms to aggregate and ventilate corporate grievances in court effectively. Despite its advantages, including recurrent corporate malfeasance, the class action procedure in Nigeria is limited in scope. This article uses a comparative analysis methodology and the class action regime in the United States (US), which is general in nature under Rule 23, to interrogate the application of the procedure in Nigeria. It argues that Nigeria’s extant class action legal framework is limited in scope since it focuses only on intellectual property infringements. By comparatively analysing the application of Rule 23 in the US in bankruptcy, competition, securities, and human rights cases, the article submits that introducing a general class action framework is imperative in Nigeria. Consequently, this article suggests using legislation, courts, public enlightenment strategy, and guidelines for attorney fees to introduce, strengthen, and implement a general class action regime in Nigeria. This would engender corporate behavioural change, encourage policy regulation, bolster the use of class action by legal practitioners, and facilitate access to court.

Practice Note: Responding to stockholder proposals, director elections and say-on-pay votes

by | May 20, 2023 | JCCL, JCCL V8 I2

Practice Note: Responding to stockholder proposals, director elections and say-on-pay votes

Authors: James J. Hanks Jr., Michael D. Schiffer, Michael F. Sheehan

ISSN: 2521-2575
Affiliations: Partner, Venable LLP, Baltimore, MD; Partner, Venable LLP, Baltimore, MD; Partner, Venable LLP, Baltimore, MD
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2022, p. 84 – 89
https://doi.org/10.47348/JCCL/V8/i2a4

Abstract

As boards of directors of public companies prepare for their 2023 annual meetings and, relatedly, consider the voting results from 2022 annual meetings, we are being asked for advice concerning (I) the duties of directors of Maryland corporations and (II) the policies and current practices of the proxy advisory services relating to stockholder proposals, director elections, and Say-On-Pay votes.

Book Review: Corporate Law and Corporate Governance – A Global Picture of Business Undertakings in South Africa, 2 ed

by | May 20, 2023 | JCCL, JCCL V8 I2

Book Review: Corporate Law and Corporate Governance – A Global Picture of Business Undertakings in South Africa, 2ed

Authors: Tshepo Mongalo and Tshepiso Scott

ISSN: 2521-2575
Affiliations: N/A
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2022, p. 90 – 94
https://doi.org/10.47348/JCCL/V8/i2a5

Abstract

None

The myth of a central role by institutional shareholders in corporate governance

by | Nov 19, 2022 | JCCL, JCCL V8 I1

The myth of a central role by institutional shareholders in corporate governance

Author: Ntombizodwa Lucia Zikhali

ISSN: 2521-2575
Affiliations: Candidate Legal Practitioner, Gildenhuys Malatji Inc
Source: Journal of Corporate and Commercial Law & Practice, Volume 8 Issue 2, 2021, p. 1 – 20
https://doi.org/10.47348/JCCL/V8/i1a1

Abstract

The need for transparent and high standards of corporate governance is expressly highlighted in s 7 of the Companies Act 71 of 2008. There has been a wide call by those concerned with corporate governance for institutional investors to take a central role in ensuring corporate governance reform is successfully achieved. A number of concerns are highlighted that stand in contrast with this expectation of institutional investors taking on such a lead role. These concerns relate to competition in the investment market, performance incentives, short-termism, unwarranted interference with director authority, lack of expertise, the burden of investment and existing statutory mechanisms making this expectation unrealistic and a potential for more problems rather than a solution.