The value of the market price in contracts of sale: an analysis

by | Nov 4, 2023 | JCCL, JCCL V9 I1

The value of the market price in contracts of sale: an analysis

Author: Paul Nkoane

ISSN: 2521-2575
Affiliations: BCom LLB (Unisa) LLM (UCT)
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 1, 2023, p. 1 – 24
https://doi.org/10.47348/JCCL/V9/i1a1

Abstract

Every rule should be valuable to the law. More so if the rule affects the commercial interest of society. A rule may be adopted or formulated to regulate commercial transactions, particularly to support the efficiency of the market. The market price rule is formulated to measure the degree of damages a contract defaulter should pay. The rule should indeed be applied consistently and reasonably to avoid uncertainty and unfairness. It follows that the market value as a rule and measure of commercial liability should not escape analysis to determine its limitations and value in contracts of sale. Thus, this article aims to provide a thorough discourse on the market price rule and how it should be applied in contracts of sale. The purpose of this article is to provide a comprehensive exposition of what informs the market price and how the market price affects the determination of damages in contracts of sale.

Abusing business rescue proceedings by a director and its impact on King IV™ ethics of good corporate governance

by | Nov 4, 2023 | JCCL, JCCL V9 I1

Abusing business rescue proceedings by a director and its impact on King IV™ ethics of good corporate governance

Author: Simphiwe P Phungula

ISSN: 2521-2575
Affiliations: LLB, LLM, PhD (UKZN)
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 1, 2023, p. 25 – 42
https://doi.org/10.47348/JCCL/V9/i1a2

Abstract

In the past few years, the impact of COVID-19 in South Africa has given rise to the need for business rescue proceedings for financially distressed businesses. Moreover, the looting, unrest, and floods in certain parts of South Africa have exacerbated businesses’ financial stress. To help financially distressed companies in South Africa, the Companies Act 71 of 2008 has introduced a business rescue procedure aimed at helping these ailing companies. This mechanism aims to rehabilitate financially distressed companies so that they become solvent again and, if that is not possible, yield a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company. Unfortunately, since the introduction of business rescue, evidence has shown that sometimes companies resort to business rescue proceedings to seek refuge from creditors even if the facts do not justify that the company should commence business rescue. In most cases, the abuse of business rescue is done by directors who pass a resolution that the company should embark on business rescue even if evidence shows that the company should not commence the proceedings. This is done notwithstanding the principles of the King IV Report on Corporate Governance™ (King IV™), which requires ethics and good governance on the part of directors. This article demonstrates how the abuse of business rescue can impact the principles of good governance and ethics of King IV™. It argues that directors should rethink their corporate practices and ethical standards when passing a resolution to commence business rescue proceedings.

Reimagining a new world of South African Insolvency Law: Advantage to creditors and section 39(2) of the constitution

by | Nov 4, 2023 | JCCL, JCCL V9 I1

Reimagining a new world of South African Insolvency Law: Advantage to creditors and section 39(2) of the constitution

Author: Alastair Smith

ISSN: 2521-2575
Affiliations: BA LLB (Rhodes), PhD (Edin)
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 1, 2023, p. 43 – 91
https://doi.org/10.47348/JCCL/V9/i1a3

Abstract

A recent judgment in an application for a final order of compulsory sequestration provided startling justification for granting the order even if the debtor’s estate has no assets that would provide a pecuniary benefit and prospect of a dividend for creditors by relying in part on s 39(2) of the Constitution of the Republic of South Africa, 1996 and extensive quotations from two Constitutional Court decisions on other topics. The connections between the scope, purport and objects mentioned in s 39(2) and the subject matter of the case were not stated by the court but left to the reader to imagine and construct. Possible lines of justification are ventured in this article. The judgment’s vision of radically reimagining the South African law of insolvency is based on misapplying s 12(1)(c) of the Insolvency Act 24 of 1936. In possible moves towards reforming South African insolvency law by abandoning the requirement of advantage to creditors in a new statute, it would be essential for the legislature to canvass detailed, well-informed, carefully considered research and guidance by experts on South African social, economic and financial policy in the current circumstances.

The independent non-executive director: Origins, regulation and persistent challenges

by | Nov 4, 2023 | JCCL, JCCL V9 I1

The independent non-executive director: Origins, regulation and persistent challenges

Author: Helena Stoop-Koornhof

ISSN: 2521-2575
Affiliations: LLB (Cum Laude) (Pretoria), LLM (Stellenbosch), PhD (Durham)
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 1, 2023, p. 68 – 91
https://doi.org/10.47348/JCCL/V9/i1a4

Abstract

The premise that non-executive directors acting independently from management is essential to the integrity of the company board has driven much of the corporate governance agenda for decades. This is the case, despite conflicting empirical evidence of the value or contribution of independent non-executives. In addition, the exact meaning of ‘independence’ in the context of the corporate board remains opaque, and expectations regarding the role and remit of the office are far from settled. This article elaborates on some of these themes. The discussion will introduce the reader to the salient concepts and offer an overview of the most prominent discourse and recent developments with reference to approaches in the United States, the United Kingdom, the European Union and other jurisdictions. Ultimately, the paper contributes to the ongoing debate surrounding the efficacy of the independent non-executive director as a critical oversight mechanism in good corporate governance and the extent to which regulation can and should scaffold the office.

Practice Note: Supreme Court of Maryland overrules prior distinction between director’s managerial and non-managerial duties and reaffirms that the MGCL is the ‘sole source’ of director duties to the corporation and its stockholders

by | Nov 4, 2023 | JCCL, JCCL V9 I1

Practice Note: Supreme Court of Maryland overrules prior distinction between director’s managerial and non-managerial duties and reaffirms
that the MGCL is the ‘sole source’ of director duties to the corporation and its stockholders

Authors: James J Hanks Jr, Hirsh M Ament, Judah L Rosenblatt

ISSN: 2521-2575
Affiliations: Senior Partner, Venable LLP, Baltimore, MD; Partner, Venable LLP, Baltimore, MD; Associate, Venable LLP, Baltimore, MD
Source: Journal of Corporate and Commercial Law & Practice, Volume 9 Issue 1, 2023, p. 92 – 94
https://doi.org/10.47348/JCCL/V9/i1a5

Abstract

None

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.