Contracting out of a Promoter’s Personal Liability under s 21(2) of the Companies Act 71 of 2008: A purposive and comparative analysis

Contracting out of a Promoter’s Personal Liability under s 21(2) of the Companies Act 71 of 2008: A purposive and comparative analysis

Authors: Etienne Olivier, Shane Hull & Amy Williams

ISSN: 1996-2185
Affiliations: Senior Lecturer, Faculty of Law, University of the Western Cape; Lecturer, Faculty of Law, University of the Western Cape; Candidate Legal Practitioner, Edward Nathan Sonnenbergs Inc. (ENSafrica)
Source: South African Mercantile Law Journal, Volume 37 Issue 1, 2025, p. 48 – 66
https://doi.org/10.47348/SAMLJ/v37/i1a3

 Abstract

Section 21 of the Companies Act 71 of 2008 (the Act) allows a person (a promoter) to conclude a contract on behalf of a company that does not exist. Section 21(2) of the Act imposes personal liability on the promoter through a statutory warranty. The promoter is liable for the obligations arising from the pre-incorporation contract in the event that the company is never incorporated, or if it rejects the contract upon incorporation. However, it is unclear whether the Act allows for a promoter to contract out of his liability imposed by s 21(2) of the Act, as the section does not expressly address the issue. In this article, a purposive interpretation of the relevant section is conducted and the enforceability of exemption clauses are discussed to determine the correct interpretation of s 21(2) in respect of exemption clauses. It is submitted that the validity of a contractual clause excluding statutory liability will depend on the wording of the relevant statute and on the unique content and circumstances of the particular exemption clause. The article points out that the flexible nature of the public policy standard creates further uncertainty as to whether a contractual exemption clause will be valid or not. In respect of exemptions to a promoter’s liability under s 21(2) of the Act, it is argued that the anti-avoidance provision in s 6(1) of the Act, is not applicable to such clauses. Finally, the article argues that s 21(2) should be interpreted to allow for an exemption to the promoter’s liability. The article concludes by recommending some legislative amendment to promote legal certainty.

The regulation of cryptocurrencies to combat money laundering: A South African perspective

The regulation of cryptocurrencies to combat money laundering: A South African perspective

Authors: Darren Subramanien, Rabia Hussain & Legodi Thutse

ISSN: 1996-2185
Affiliations: Associate Professor of Law, University of KwaZulu Natal; Post Graduate Student, University of KwaZulu Natal; Lecturer, Department of Private Law, University of Pretoria
Source: South African Mercantile Law Journal, Volume 37 Issue 1, 2025, p. 67 – 104
https://doi.org/10.47348/SAMLJ/v37/i1a4

 Abstract

Cryptocurrencies are not wholly regulated or recognised as legal tender in South Africa. This makes South Africa a prime breeding ground for criminals to launder money using cryptocurrencies. In February 2023, South Africa was grey listed by the Financial Action Task Force for not fully complying with their anti-money laundering standards. It is likely that the unregulated use of cryptocurrencies, which carry significant money laundering risks, could have contributed to the grey listing of South Africa. South Africa recently took steps towards regulating cryptocurrencies to combat money laundering as crypto assets were declared financial products for the purposes of the Financial Advisory and Intermediary Services Act 37 of 2002, and Crypto Asset Service Providers (CASPs) were included as accountable institutions for the purposes of the Financial Intelligence Centre Act 38 of 2001.

That resignation is not retractable or is irreversible: What is the prejudice? Monareng v Dr J S Moroka Municipality [2022] 43 IJL 1855 (LC)

That resignation is not retractable or is irreversible: What is the prejudice? Monareng v Dr J S Moroka Municipality [2022] 43 IJL 1855 (LC)

Authors: Ndifelani Arthur Munarini & Lux Kwena Kubjana

ISSN: 1996-2185
Affiliations: LLM graduate, University of South Africa; Senior Lecturer, Department of Mercantile Law, University of South Africa
Source: South African Mercantile Law Journal, Volume 37 Issue 1, 2025, p. 105 – 114
https://doi.org/10.47348/SAMLJ/v37/i1a5

 Abstract

None

A commentary on overturning the MAFR Rule in East Rand Member District of Chartered Accountants v Independent Regulatory Board For Auditors (2023): A missed opportunity for the transformation of the Audit Industry in South Africa?

A commentary on overturning the MAFR Rule in East Rand Member District of Chartered Accountants v Independent Regulatory Board For Auditors (2023): A missed opportunity for the transformation of the Audit Industry in South Africa?

Authors: Bokang M ‘Nyane & Hoolo ‘Nyane

ISSN: 1996-2185
Affiliations: Graduate of Turfloop Graduate School of Leadership (TGSL), University of Limpopo; Associate Professor, School of Law, University of Limpopo
Source: South African Mercantile Law Journal, Volume 37 Issue 1, 2025, p. 115 – 125
https://doi.org/10.47348/SAMLJ/v37/i1a6

 Abstract

None

Beyond punishment: Context and correctional supervision as a restorative sentence — An analysis of S v Mphahlele

Note

Beyond punishment: Context and correctional supervision as a restorative sentence — An analysis of S v Mphahlele

Author: Amanda Spies

ISSN: 1996-2177
Affiliations: Associate Professor, Department of Public Law, Nelson Mandela University
Source: South African Law Journal, Volume 142 Issue 3, p. 439-454
https://doi.org/10.47348/SALJ/v142/i3a1

Abstract

This note examines correctional supervision as a sentencing option for serious crimes by analysing the Mphahlele judgment, and explores whether correctional supervision incorporates (or should incorporate) elements of restorative justice. It critically assesses whether such an approach risks distorting traditional restorative justice principles and underscores the need to engage with justice as a transformative process — one that shifts the focus from individualised notions of crime and punishment to the structural inequalities that underpin criminal behaviour. Additionally, the note adopts a feminist perspective to interrogate the role of gender in sentencing, considering in particular whether identifying the accused as a mother and primary caregiver in Mphahlele reinforces harmful stereotypes.

Thorndike’s law of effect and its influence on legal practitioners’ ethics: Lembore v Minister of Home Affairs

Note

Thorndike’s law of effect and its influence on legal practitioners’ ethics: Lembore v Minister of Home Affairs

Authors: Michele van Eck & Helen Kruuse

ISSN: 1996-2177
Affiliations: Associate Professor, School of Law, University of the Witwatersrand, Johannesburg; Associate Professor, Faculty of Law, Rhodes University
Source: South African Law Journal, Volume 142 Issue 3, p. 455-466
https://doi.org/10.47348/SALJ/v142/i3a2

Abstract

The Lembore v Minister of Home Affairs case highlights the unethical practice of recycling affidavits in court applications, a practice that the courts repeatedly condemn. Legal practitioners continue this misconduct despite clear judicial instructions not to do so. To understand this persistence, we turn to behavioural theory by examining Thorndike’s law of effect. By doing so, we suggest that sanctions alone are insufficient to curb unethical conduct; instead, a dual approach is needed. This dual approach comprises external adjustments that include eliminating situational opportunities, enhancing regulatory oversight, and ensuring swift enforcement of sanctions. It also includes internal adjustments which require a mindset shift, where legal practitioners prioritise justice over profit. Without these reforms, unethical practices will persist, and cases such as Lembore will continue to emerge. Breaking this cycle demands both systemic change and professional introspection to restore ethical integrity in the legal profession.

The use of a trade mark as a trade mark in an expressive-work context: The Jack Daniel’s judgment

Note

The use of a trade mark as a trade mark in an expressive-work context: The Jack Daniel’s judgment

Author: Wim Alberts

ISSN: 1996-2177
Affiliations: Professor of Mercantile Law, University of Johannesburg
Source: South African Law Journal, Volume 142 Issue 3, p. 467-481
https://doi.org/10.47348/SALJ/v142/i3a3

Abstract

This contribution deals primarily with the issue of the use of a trade mark as a trade mark — in other words, use to indicate origin. The focus is the United States Supreme Court’s Jack Daniel’s decision, which involved a dog toy as a parody of a famous whisky bottle. Before the Jack Daniel’s decision, the previous Rogers ruling had found that an expressive work had First Amendment protection if its use of the mark was artistically relevant and not misleading. The Supreme Court, however, decided that if a trade mark is used as a trade mark, then the Rogers judgment did not apply. Then the parody is subject to a likelihood-of-confusion analysis. There is no automatic protection for use of a trade mark with an expressive message, for a trade mark often has an expressive message, and too much emphasis on the message will leave the door wide open. Where a particular form of use has an expressive message in addition to use as a trade mark, liability could still follow. In cases of conventional infringement, parody is but one of various factors to be considered, along with the similarity of the goods, the proximity of the marks and the marketing channels. No liability would follow where there is an expressive message only, and not trade mark use, such as with the BARBIE song.

A curate’s egg: A misunderstanding of financial assistance in section 45 of the Companies Act

Note

A curate’s egg: A misunderstanding of financial assistance in section 45 of the Companies Act

Author: Maleka Femida Cassim

ISSN: 1996-2177
Affiliations: Professor, Mercantile Law, University of South Africa
Source: South African Law Journal, Volume 142 Issue 3, p. 482-497
https://doi.org/10.47348/SALJ/v142/i3a4

Abstract

In Constantia Insurance Co Ltd v Master, Johannesburg High Court 2023 (5) SA 88 (SCA), the Supreme Court of Appeal considered the prohibition against giving financial assistance to directors and related companies, as provided for in s 45 of the Companies Act 71 of 2008. The term ‘financial assistance’ is at the heart of s 45. Controversially, the Supreme Court of Appeal asserted that the list of three financial-assistance transactions referred to in s 45(1)(a) is exhaustive of the meaning of ‘financial assistance’. This note submits that by misconstruing the concept of ‘financial assistance’, the Constantia judgment imprudently truncates the scope of the prohibition in s 45 and frustrates the fundamentally important objectives that it is designed to achieve. Serious practical ramifications may be expected to arise. The Constantia judgment does, however, sound a timely warning to innocent third parties who deal with companies in transactions connected with the giving of financial assistance.

Reunifying administrative law: The Promotion of Administrative Justice Act as a source of requirements for the validity of administrative action

ARTICLE

Reunifying administrative law: The Promotion of Administrative Justice Act as a source of requirements for the validity of administrative action

Authors: Glenn Penfold & Cora Hoexter

ISSN: 1996-2177
Affiliations: Partner, Webber Wentzel; Visiting Adjunct Professor, School of Law, University of the Witwatersrand, Johannesburg; Part-time Professor, School of Law, University of the Witwatersrand, Johannesburg
Source: South African Law Journal, Volume 142 Issue 3, p. 498-527
https://doi.org/10.47348/SALJ/v142/i3a5

Abstract

The scheme of s 33 of the Constitution of the Republic of South Africa, 1996 has been undermined by the courts’ treating the principle of legality, and not solely the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’), as a basis for the review of administrative action. This article argues that the key to the reunification of administrative law is to give effect to the proposition that PAJA, including s 6(2), reflects the requirements for the validity of administrative action. The logical consequence of this proposition is that where administrative action is the target, classical collateral challenge and self-review ought to be adjudicated based on PAJA’s grounds of invalidity. The same is true of internal review by a functionary or tribunal where the enabling legislation does not provide for more specific grounds of review. In the case of self-review and internal review, this direct approach would, however, require certain rulings of the Constitutional Court to be revisited. Failing that, a more indirect and thus less satisfactory solution would be for PAJA’s review grounds to be applied under the umbrella of legality review.

Privacy, public interest, and the purposes of the internet

Privacy, public interest, and the purposes of the internet

ARTICLE

Privacy, public interest, and the purposes of the internet

Author: Leo Boonzaier

ISSN: 1996-2177
Affiliations: Associate Professor, Department of Private Law, Stellenbosch University
Source: South African Law Journal, Volume 142 Issue 3, p. 528-566
https://doi.org/10.47348/SALJ/v142/i3a6

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Cite this article

Leo Boonzaier
Privacy, public interest, and the purposes of the internet
SouthAfrican Law Journal, Volume 142 Issue 3, p. 528–566
https://doi.org/10.47348/SALJ/v142/i1a6

Abstract

This article analyses the Constitutional Court’s judgment in Botha v Smuts, which now ranks as our leading judgment on civil claims for the infringement of informational privacy. The case involved a condemnatory social media post in which the defendant publicised the plaintiff’s name and addresses, provoking threatening third-party responses. A majority of the court held the defendant’s post to be (in part) unlawful, because it unjustifiably infringed the plaintiff’s right to privacy. The article situates the Botha judgment historically and comparatively and critiques its various developments of the common law. In setting out the applicable framework, the court favours a flexible public interest defence, which is influenced by Anglo-American law and constitutional balancing tests. In applying its framework, the court does two notable things. First, it sharpens the distinction between purely business addresses and home addresses, giving the latter robust privacy protection. Secondly, and more remarkably, it holds that individuals may retain a reasonable expectation of privacy in information they themselves have chosen to publish widely. This finding suggests a new role for informational privacy claims and may, unless moderated, mark a newly tough regime for free expression on the Internet.