Business judgment rule to directors against personal liability for breaches of some of their duties

Business judgment rule to directors against personal liability for breaches of some of their duties

Author: Xolisa Beja

ISSN: 2521-2575
Affiliations: LLM candidate, University of Witwatersrand
Source: Journal of Corporate and Commercial Law & Practice, Volume 7 Issue 1, 2021, p. 1 – 35
https://doi.org/10.47348/JCCL/V7/i1a1

Abstract

This article examines the extent to which s 76(4)(a) of the Companies Act 71 of 2008 protects directors against personal liability for breaches of their duties to act in the company’s best interests, with due care, skill and diligence. The essential substantive elements of s 76(4)(a) create (as a minimum) a business judgment rule. Generally, that rule provides a director with a defence against liability for a breach of his duty of care, skill and diligence if, when he acted (or omitted to act), he did so reasonably, honestly, with no self-interest and in the interests of the company. In analysing s 76(4)(a) as an embodiment of features of a traditional business judgment rule, this article briefly discusses how a similar rule in Australia is drafted and applied in practice by their courts. The article concludes that s 76(4) (a) creates protection for directors that is more than the protection that is provided by a traditional business judgment rule. This conclusion is based on the extensive nature and scope of authority and powers which s 66(1) of the Act grants to directors. In the same breath, however, s 76(4)(a) manages to make directors appropriately accountable to the company’s stakeholders, in keeping with some of the fundamental objectives and purposes of the Act.

Guarding against retirement funds’ arbitrary discretion when allocating death benefits: The urgent need for statutory guidelines

Guarding against retirement funds’ arbitrary discretion when allocating death benefits: The urgent need for statutory guidelines

Author: Motseotsile Clement Marumoagae

ISSN: 2521-2575
Affiliations: Associate Professor, School of Law, University of the Witwatersrand and Visiting Associate Professor, Faculty of Law, National University of Lesotho
Source: Journal of Corporate and Commercial Law & Practice, Volume 7 Issue 1, 2021, p. 36 – 62
https://doi.org/10.47348/JCCL/V7/i1a2

Abstract

This article discusses the enormous power enjoyed by retirement funds’ boards to implement or reject deceased members’ clearly expressed wishes in their nomination forms or wills when distributing their death benefits. It demonstrates that boards are vested with wide discretion to apportion death benefits which, at times, is difficult to justify. Further, this leads boards to make incorrect allocations of death benefits by paying some beneficiaries less than others, completely excluding some from the distribution or allocating the entire benefit to one beneficiary. It argues that apart from requiring boards to honestly, rationally and reasonably allocate death benefits in line with the material facts placed before them, there is a need for legislative guidance that can effectively guide discretion exercised by boards of retirement funds when allocating death benefits.

Tax obligation and state legitimacy: A critique of the disconnect between state demands and people’s desiderata

Tax obligation and state legitimacy: A critique of the disconnect between state demands and people’s desiderata

Author: Kareem Adedokun

ISSN: 2521-2575
Affiliations: Associate Professor, Department of Business and Private Law, Kwara State University, Malete, Kwara, Nigeria
Source: Journal of Corporate and Commercial Law & Practice, Volume 7 Issue 1, 2021, p. 63 – 79
https://doi.org/10.47348/JCCL/V7/i1a3

Abstract

The payment of taxes is one of the obligations recognised under any civil rule system. This informs why Nigeria, in its practice of constitutional democracy, emphasises prompt payment of tax as a basic duty of citizens to foster development, economic growth, and building. There is a fiscal contract through which citizens accept and comply with taxes in exchange for government’s effective services, the rule of law and accountability. It is a mutually beneficial process whereby citizens will receive improved governance while the government receives larger, more predictable, and more easily collected tax revenues. However, there is an obvious reversal of the fundamental obligations of the government, resulting in the sharp contrast between the state demands and people’s needs. This work, using doctrinal and survey sampling methods, critically examines the accountability and responsiveness of the government in its fiscal contract with the people, by embarking on a review of the correlation between the government’s obligations of good governance and the citizens’ civic duties of prompt payment of taxes. The review finds that the Nigerian tax system does not have a positive effect on nation-building as there is an apparent infrastructural deficit that impugns the taxpayers’ and investors’ confidence in the integrity of the tax system. Besides, there is no state machinery for an effective inclusive tax dialogue. Consequently, the initiation of the process of constructive engagements with the government is suggested to achieve an inclusive tax bargain which it is hoped will usher in a regime of responsive governance for sustainable development.

The need to address the challenges regarding the transfer of assets between occupational retirement funds operating in the municipal sector

The need to address the challenges regarding the transfer of assets between occupational retirement funds operating in the municipal sector

Author: Tshepiso Tshiamo Rasetlola

ISSN: 2521-2575
Affiliations: Associate at Fasken (incorporated in South Africa as Bell Dewar Inc)
Source: Journal of Corporate and Commercial Law & Practice, Volume 7 Issue 1, 2021, p. 80 – 103
https://doi.org/10.47348/JCCL/V7/i1a4

Abstract

There are several industries where employers participate in more than one retirement fund, such as the municipal sector. Retirement funds that operate in such industries continually try to increase their membership leading to fierce competition for members. They often use their rules to attract new members while ensuring that they do not lose members who are currently paying contributions to them. These rules usually link membership of funds with the tenure of employment with participating employers. This article examines the legal framework that regulates the rivalry between retirement funds that operate within the same sector or are linked to the same employer. It assesses whether employees’ rights to freely associate with the retirement fund of their own is limited by retirement funds’ rules that ‘lock’ them into retirement funds that they joined upon their employment. This article highlights that the current legislation does not adequately deal with the voluntary transfer of assets between rival funds at the instance of the member. This article argues for the establishment of a legal framework that will adequately regulate the rivalry relating to retirement funds’ membership in sectors where the employer can participate in more than one retirement fund.

No reflective loss: The English approach reconsidered

No reflective loss: The English approach reconsidered

Author: Ataollah Rahmani

ISSN: 2521-2575
Affiliations: Lecturer in Commercial Law, Al-Maktoum College of Higher Education Dundee, Scotland, UK
Source: Journal of Corporate and Commercial Law & Practice, Volume 6 Issue 2, 2020, p. 1 – 48
https://doi.org/10.47348/JCCL/V6/i2a1

Abstract

A company shareholder should have no difficulty in commencing a claim to recover the loss suffered due to a wrong done to their personal property. The right to the protection of property is a fundamental human right in English law. A wronged person whose property right is infringed will have the right to commence legal proceedings against wrongdoers. However, in the company context, the exercise of a shareholder’s right of action may conflict with the company’s right of action where the loss sought is reflective. The English company law’s arrangement has been that a shareholder’s action is exceptional beyond which it will routinely be barred through the principle of the ‘no reflective loss’. Where company’s loss and the shareholders’ loss are reflectively linked, then the company’s action prevails against the shareholder action. This paper argues that the two actions should swap places in law. Shareholder action should be recognised as a general principle of law while it is barred exceptionally in circumstances where stronger policy considerations such as the observation of the corporate autonomy are to be prioritised. This article refers to company law in the UK.