The turquand rule in South African company law: a(nother) suggested solution

The turquand rule in South African company law: a(nother) suggested solution

by | May 12, 2020 | JCCL, JCCL V5 I2

The turquand rule in South African company law: a(nother) suggested solution

Authors Etienne Aubrey Olivier

ISSN: 2521-2575
Affiliations: LLD candidate, University of the Western Cape
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 2, 2019, p. 1 – 28

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Abstract

The common-law Turquand rule in South African law protects persons from being affected by a company’s non-compliance with an internal formality pertaining to the authority of its representatives. The Turquand rule should not be regarded as an independent rule of South African company law, but as part of the law of agency, particularly the principles of agency by estoppel. Section 20(7) of the Companies Act 71 of 2008 attempts to protect bona fide third parties dealing with companies. However, this section is likely to create uncertainty as it fails to clarify its impact on other provisions in the Act that prescribe requirements for company decisions. It is argued that s 20(7) of the Act is unnecessary and potentially dangerous, and should be repealed.

A ‘fair and reasonable proposal’ by the board may still amount to a breach of duty to exercise directors’ powers for a proper purpose

by | May 12, 2020 | JCCL, JCCL V5 I2

A ‘fair and reasonable proposal’ by the board may still amount to a breach of duty to exercise directors’ powers for a proper purpose

Authors Tshepo H Mongalo

ISSN: 2521-2575
Affiliations: Associate Professor University of the Witwatersrand, Johannesburg
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 2, 2019, p. 29 – 43

Abstract

Following the welcome abandonment of the proposal by Africa’s biggest retail chain, Shoprite Holdings Ltd, to buy out Christo Wiese’s high-voting deferred shares at a cost of about R3.3 billion because the proposal received more than 15 per cent of the minority shareholders’ disapproval, the real possibility of breach of duty by the company’s directors if the deal had proceeded has become moot. Using a long-standing legal authority — in the form of the judicial decision in the case of Howard Smith v Ampol Petroleum Ltd [1974] AC 821, and the more recent UK Supreme Court’s judgment in Eclairs Group Ltd v JKX Oil & Gas PLC [2015] UKSC 71 — this article argues that the directors would have found themselves in breach of their fiduciary duty had the deal materialised. This is regardless of the fact that the proposal had ‘allegedly’ been determined as ‘fair and reasonable’ by the auditing and accounting firm of Ernst & Young. Keywords: directors’ duties; proper purpose; fair and reasonable proposal; collateral purpose; multiplicity of purpose; substantial purpose; chairman’s influence.

The role of a legal system in the improvement of a country’s economy in relation to foreign investment

by | May 12, 2020 | JCCL, JCCL V5 I2

The role of a legal system in the improvement of a country’s economy in relation to foreign investment

Authors Princess Pat. Ada Ajudua

ISSN: 2521-2575
Affiliations: Legislator, Delta State House of Assembly, Asaba, Nigeria
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 2, 2019, p. 44 – 56

Abstract

This paper examines the role of a legal system in the improvement of a country’s economy in relation to foreign investment. The study has adopted a descriptive and analytical design, using a doctrinal methodology. It analyses the thematic problem of the investment climate issue in Nigeria, improvement in the mechanism for the resolution of investment arbitrations in Nigeria, and the expropriation in foreign investment and the settlement of investment disputes in Nigeria. Finally, the paper argues that the current wave of globalisation sweeping through the world has intensified the competition for FDI among developing countries. Consequently, concerted efforts are needed at national, regional, and international levels in order to attract significant investment flows to Nigeria and improve the prospects for sustained growth and development.

SARS’s application of the additional medical scheme fees tax credit for prescribed expenditure: a rule of Law violation?

by | May 12, 2020 | JCCL, JCCL V5 I2

SARS’s application of the additional medical scheme fees tax credit for prescribed expenditure: a rule of Law violation?

Authors Fareed Moosa

ISSN: 2521-2575
Affiliations: Head of Department (Mercantile and Labour Law) University of the Western Cape
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 2, 2019, p. 57 – 78

Abstract

Tax administration by the South African Revenue Service (SARS) is subject to constitutional control. As such, all SARS’s administrative processes must adhere to the rule of law, a founding constitutional value. This article argues that certainty, fairness, legality and rationality are basic principles of this value that must underpin SARS’s application of the rules governing the assessment of a taxpayer’s claim to benefit from the additional medical scheme fees tax credit provided for in s 6B(2) of the Income Tax Act 58 of 1962. This article shows that, in practice, SARS uses its examples of ‘qualifying medical expenses’ as legal yardsticks for determining whether a tax credit ought to be granted. The nub of this article is its hypothesis that this practice is antithetical to the principles engrained in the rule of law and, as such, does not pass muster. Consequently, the key contention made here is that any disallowance of a rebate on the basis that a taxpayer failed to satisfy any requirement in a listed example is justifiable grounds for an objection and appeal to be lodged under the Tax Administration Act 28 of 2011. Finally, this article argues further that a taxpayer is entitled to a rebate under s 6B(2) read with para (c) of the definition of ‘qualifying medical expenses’ in s 6B(1) of the Income Tax Act if the following two-legged test is met: First, the expense must be ‘prescribed’ by the Commissioner of SARS. Secondly, the expense must be ‘necessarily incurred and paid’ by the taxpayer ‘in consequence of any physical impairment or disability’ that is suffered by the taxpayer personally or by any person qualifying as a ‘dependant’ of the taxpayer.

Taxation, an equitable system and constitutional core values for efficient financial stability in Nigeria

by | May 12, 2020 | JCCL, JCCL V5 I2

Taxation, an equitable system and constitutional core values for efficient financial stability in Nigeria

Authors Kareem Adedokun

ISSN: 2521-2575
Affiliations: Senior Lecturer Kwara State University, Malete
Source: Journal of Corporate and Commercial Law & Practice, Volume 5 Issue 2, 2019, p. 79 – 94

Abstract

Nigeria is a federation consisting of 36 states and a Federal Capital Territory. Each state needs adequate revenue for sustainability and has autonomy to initiate and implement any policy that may promote steady, internally generated revenue within its sphere. But such a policy must align with the overall political objective of the nation, enshrined in the Constitution. The Constitution advocates national integration, residence right and adequate provision for facilities to all citizens, believing that if a system is fair and equal, taxpayers will be more willing to cooperate with it. However, some states of the federation are implementing policies, particularly in education and politics, marred by deep inequalities which affect revenue generation and financial capability of the states. The author, using doctrinal and survey sampling methods, critiques these discriminatory policies and the way in which they interfere with the civic duty of tax obligation. The paper finds that discriminatory practices do not only whittle down revenue generation but also impair national integration. Consequently, it is suggested that various state governments in Nigeria should introduce a tax system that aims at catching many types of income, and ensure judicious application of the tax proceeds for the general and equal benefit of citizens regardless of their places of birth. The suggestion, if accepted and utilised, will enhance revenue generation, promote national integration and ensure delivery of the dividends of democracy to the citizens.