Introduction

Question 1

Why was it necessary for a new Companies Act?

Answer 1

Generally accepted that the previous companies act of 1973 was old and needed major reform.
- There were two choices: Amend the old one OR get a new one

Question 2

Briefly list the process before the 2008 Act (6)

Answer 2

1. Policy paper published by DTI in May 2004 (with emphasis on social responsibility)
2. NEDLAC
3. Took 4 years and 2 draft acts
4. DTI drafted the Act with help from American, Canadian and Australian advisors. At a late stage, a small group of SA specialists were involved
5. Cut links with British model and case law from the past
6. Act signed in April 2009 but only came into effect on 01 May 2011 (with prescribed forms only made available on 28 April)

Question 3

Discuss the general features of the Act (8)

Answer 3

1. There are conflicting philosophies: Little sign of sop. social responsibility, with assumption that King III will deal with it.
2. Introduction of Chapter 6 (business rescue) with comprehensive workers’ protection
3. Company formation is now a right; not a privilege
4. Act has a number of CHANGEABLE and UNCHANGEABLE requirements (s1) which makes the MOI the key document
5. Due to American influence, powers of the Board are extended especially to minority shareholders
6. American emphasis on litigation as shareholder remedies rather than preventative agreement
7. More protection for company creditors
8. Important aspects are hidden away in the Regulations and Schedules

Question 4

What is the purpose and aims of the Act?

Answer 4

1. Compliance with the BoR
2. Promote economic development
3. Encourage transparency and high standard of corp. governance (King Report)
4. Promote innovation and investment
5. Balance rights and obligations of shareholders and directors
6. Provide for efficient rescue and recovery procedures
7. ADR
8. Section 7

Question 5

Shortly discuss the interpretation of the Act

Answer 5

• Section 5
• Interpretation of the Act must give effect to section 7
• If there is inconsistency between the Co Act and other legislation:
  a. Both apply concurrently if possible
  b. There are 8 acts that apply and the Co Act not
  c. In all other instances, the Co Act will apply

Question 6

Discuss the Co Act and the common law relationship

Answer 6

1. The Co Act is not a codification of SA company law;
2. Some of the rules and principles are not in legislation;
3. Where the Act is silent, the common law will apply;
4. The co. law common law is mostly English law with RD law in exceptional circumstances.

Question 7

Discuss the Co Act irt Human Rights

Answer 7

1. States are no longer the only threat to human rights. Cos have increasingly become a threat.
2. The economic might of some Cos has eroded the power of States to protect their citizens (especially in developing countries)
3. Cos exercise significant power over individuals in the most direct sense.
4. This supports the idea that human rights obligations should be regulated at Co level.
5. Prior to the 2008 Act, CSR was non-binding.
6. Section 7 of the Co Act now demands that Human Rights concerns are placed at the centre of policymaking within the Co and be embedded in the holistic function of the Co.

Question 8

Whenever the Co Act is interpreted it must be done in the light of which provision?

Answer 8

Section 7