The philosophy of business rescue law

The philosophy of business rescue law

Authors Owen Mokoena

ISSN: 2521-2575
Affiliations: PhD Candidate, School of Law, University of the Witwatersrand, Johannesburg
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 1, 2019, p. 1 – 41

Abstract

It is a requirement that business rescue must provide for the efficient rescue and recovery of financially distressed companies in a manner that balances the rights and interests of all the relevant stakeholders or affected persons. However, is it necessary to balance the interests of all affected persons in order to achieve the objectives of business rescue? Moreover, is it possible to balance the interests of all affected persons during business rescue? To answer these questions, this article specifically evaluates the meaning and the purpose of business rescue. It analyses various theories that set out the philosophy of corporate rescue law and chooses the creditors’ bargain theory and risk-sharing theory. Based on both theories this articles establishes that, given the purpose of business rescue, it is not necessary to balance the conflicting rights and interests of various stakeholders to achieve the objectives of business rescue.

Obliged to release a solvent spouse’s assets during sequestration proceedings?

Obliged to release a solvent spouse’s assets during sequestration proceedings?

Authors Clement Marumoagae

ISSN: 2521-2575
Affiliations: Senior Lecturer, School of Law, University of the Witwatersrand
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 1, 2019, p. 42 – 58

Abstract

This article reflects on the interaction between section 21(1) and section 21(2) of the South African Insolvency Act. Section 21(1) has been subject to controversy relating to whether it enables the trustee to acquire ownership of the assets that constitute the solvent spouse’s estate where spouses married out of community of property have colluded to defraud the insolvent spouse’s creditors. Section 21(2) seems to be intended to ensure that the trustee does not permanently take control of the solvent spouse’s property if the solvent spouse can prove that there was no collusion between the spouses and that he or she has valid title to any property that vested in the trustee due to the sequestration of the insolvent spouse. Through selected cases, this article demonstrates that the trustees of an insolvent spouses’ estates, in their quest to maximise the benefits, that should be derived by the insolvent spouses’ creditors, usually refuse to release assets that belong to the solvent spouses on the basis that spouses married out of community of property have colluded. This article interrogates the concept of collusion when the solvent spouses’ assets have vested in the trustees of the insolvent spouses’ estate. Furthermore, it argues that solvent spouse who has benefited from the financial assistance of his or her insolvent spouse, at the time when the insolvent spouse had not been insolvent, should not be punished for that assistance when the insolvent spouse is later sequestrated.

The obligation imposed on the board of directors of a company in respect of the solvency and liquidity test under section 4 of the companies act 71 of 2008

The obligation imposed on the board of directors of a company in respect of the solvency and liquidity test under section 4 of the companies act 71 of 2008

Authors Simphiwe S Bidie

ISSN: 2521-2575
Affiliations: Lecturer, Nelson R Mandela School of Law, University of Fort Hare
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 1, 2019, p. 59– 102

Abstract

The solvency and liquidity test in section 4 of the 2008 Companies Act of South Africa is the foundation upon which the entire Act is structured. It sets the threshold against which the ability of a company to distribute its money or property to its shareholders should be assessed. The introduction of the test places the 2008 Act among some of the most progressive and liberal legislative frameworks in the world. The test caters for various interests rather than the orthodox approach of the capital protection principle. The inclusion of the test into South African company law signifies a shift away from the traditional capital maintenance doctrine and recognises other factors that play a role in the economy of the country. From a policy perspective, replacing the capital protection rules with the solvency and liquidity test was a commendable step. The nature and extent of the obligation imposed on directors as a result of the incorporation of the test into the 2008 Act is enormous. The solvency and liquidity test is assessed alongside the duties to which directors must adhere. The discussion of the test and its constituent elements indicates the appropriate standard expected, and the interpretation and application of the test as contemplated in the Act.

The inevitable need for continuous corporate law improvements

The inevitable need for continuous corporate law improvements

Authors James J Hanks, JR

ISSN: 2521-2575
Affiliations: Partner: Venable LLP, Baltimore, USA; Distinguished Visiting Professor from Practice, University of Maryland School of Law; Former Member of the International Reference Team for Corporate Law Reform in South Africa
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 1, 2019, p. 103 – 114

Abstract

None

The national treatment rule and the regulation of public procurement under the east african community common market protocol

The national treatment rule and the regulation of public procurement under the east african community common market protocol

Authors Joseph Agutu Omolo, Eurallyah J Akinyi

ISSN: 2521-2575
Affiliations: Lecturer, Kabarak University School of Law; LLM Candidate, University of Pretoria
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 1, 2019, p. 115 – 139

Abstract

Public procurement constitutes a significant socio-political and economic tool in the hands of governments as regulators and major consumers. Through it, a government may achieve both national and international goals. Governments, therefore, tend to have a strong incentive to adopt inward-looking policies on public procurement for the benefit of local suppliers, products and services. To mitigate this, the East African Community (EAC) Common Market Protocol makes provision for non-discrimination by prohibiting discrimination against suppliers, products or services from other partner states in public procurement. This article looks at the law and practice in the East African Community and among the partner states relating to the application of the non-discrimination rule in public procurement under article 35 of the EAC Common Market Protocol. From the discussion, it is apparent that both the EAC and the partner states are yet to eliminate discrimination in public procurement through their laws and policies.