Personal cost orders: protecting the public purse

by | Aug 9, 2020 | SLR, SLR V31 I1

Personal cost orders: protecting the public purse

Author Wesley Vos

ISSN: 1996-2193
Affiliations: BCom LLB cum laude, Candidate Attorney: Bowmans
Source: Stellenbosch Law Review, Volume 31 Issue 1, 2020, p. 138 – 157

Abstract

South African courts are employing a novel instrument in the fight against corruption, such instrument being the imposition of a personal costs order against state officials. This article briefly discusses corruption and accountability in state institutions and argues that ordering personal cost orders against state officials is a promising prospect in the fight against corruption. Personal cost orders are then analysed by addressing eight concerns that arise when such orders are imposed. These concerns are: what the legal basis is for being held personally liable for costs; whether there is a uniform test to be applied when considering a personal cost order; whether such an order can be made on a punitive scale; the joinder of affected parties; whether it can be imposed without the matter being heard in open court; the power of courts to impose such an order; whether it infringes on the separation of powers doctrine; and lastly, whether it could lead to an ineffective system of public administration. The article concludes by finding that there is no legislative deficit in the fight against corruption and finds that until officials are held personally accountable for their misfeasance, they will continue to exploit their position as they are protected by their public office. This “protection” and inclination to misappropriate public funds might fall away if officials are ordered to pay legal costs in their personal capacity.

Unfettered discretion is paramount: the governance relationship between the private equity firm and the underlying portfolio investee company

by | Aug 9, 2020 | SLR, SLR V31 I1

Unfettered discretion is paramount: the governance relationship between the private equity firm and the underlying portfolio investee company

Author Wentzel Oaker

ISSN: 1996-2193
Affiliations: BA LLB LLM LLD Post-Doctoral Law Fellow, Stellenbosch University, Visiting Post-Doctoral Law Fellow, Duke University
Source: Stellenbosch Law Review, Volume 31 Issue 1, 2020, p. 158 – 176

Abstract

One of the features of private equity investing is the private equity firm appointing individual(s) to serve on the board of directors of the underlying portfolio investee companies to manage the interest of the private equity fund and ultimately to act in the best interests of the fund’s investors. This article discusses the statutory and common-law duties of a director, including the specific issues related to the interrelation between private equity firms and the portfolio companies in which they invest. However, in the context of a private equity fund, this expectation can often be problematic because directors must exercise their duties with unfettered discretion. Directors cannot, without the consent of the company, fetter their discretion in relation to the exercise of their powers, and cannot bind themselves to vote in a particular way at future board meetings. Therefore, a director who is appointed to represent certain shareholders (albeit a private equity fund(s)), is still obliged to exercise his or her discretion and must act positively to protect the interests of the company even if they conflict with those of the people who elected him or her.