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 Misuse and Abuse of Section 80J of the Income Tax Act: Time to get back to the basics

by | May 14, 2023 | BTCLQ, BTCLQ V14 I1

The Misuse and Abuse of Section 80J of the Income Tax Act: Time to get back to the basics

Author: Ed Liptak

ISSN: 2219-1585
Affiliations: Independent Tax Person Extraordinaire
Source: Business Tax & Company Law Quarterly, Volume 14 Issue 1, 2023, p. 1 – 12

Abstract

Section 80J of the Income Tax Act was introduced in 2006 as part of the then new General Anti-Avoidance Rule (GAAR). This section requires the Commissioner to notify a taxpayer at the point in an audit when he/she first comes to believe that the GAAR may be applicable to an arrangement entered into or carried out by the taxpayer. It was enacted in response to concerns that the new GAAR might be automatically relied upon by SARS as a ‘catch-all’ section of last resort without due and proper consideration. Commentators also expressed concerns about conduct of audits under former s 103, particularly with respect to delays they encountered and the time and expensed they incurred. Section 80J attempted to address these concerns by providing a logical framework for the timeous conduct of audits under the new GAAR. Subsection (1) requires the Commissioner to notify the taxpayer if he/she believes the GAAR may be applicable to an arrangement and state his/her reasons therefor; sub-s (2) gives the taxpayer an opportunity to respond to that notice; sub-s (3) requires the Commissioner to take further action within a specific statutory time frame; and sub-s (4) permits the Commissioner to revise or modify his reasons for applying the GAAR in light of any additional information that may come to his knowledge. Two recent judgments have raised concerns about the current approach being taken to s 80J by taxpayers and, to a certain extent, SARS itself. In particular, taxpayers appear to be taking the position that section 80J(1), read together with the statutory definition of ‘arrangement’, have imposed a burden upon the Commissioner to identify and describe a transaction, operation or scheme with an exacting degree of precision never before required under the former s 103 or its predecessors. This approach cannot be support by a textual, contextual and purposive interpretation of the provisions involved, and, in fact, would severely frustrate both the overriding purpose of the current GAAR and the specific purposes of s 80J itself.