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Category: Business Law

IS YOUR BUSINESS BEING LIQUIDATED?

IS YOUR BUSINESS BEING LIQUIDATED?

Many businesses fail and consequently have to face financial crises that few recover from and in most instances, results in business owners shutting doors for good. If your business has no assets or liabilities, the more simpler process of deregistration takes place. The liquidation process needs to be followed if your business has assets, liabilities or both.

The Liquidation of Your Business

Liquidation is the process by which your company or close corporation effectively declares itself insolvent. Your business can undergo voluntary liquidation, where you choose to voluntarily liquidate it, or when you undergo compulsory liquidation through action by your creditors.

Once your business has been placed under liquidation, it will stop all its business activities in so far as may be required for the “winding-up”, i.e. the process of selling all the assets of your business, paying off your creditors, distributing any remaining assets to the partners or shareholders and then dissolving your business. A liquidator will be appointed to perform all these tasks.

The Consequences of Liquidation

When your business gets liquidated, all contracts concluded with the business remain in effect. The liquidator has to make the decision whether or not he/she intends to abide by the contract or to terminate it, which will depend on what would be the most beneficial decision to the creditors. However, if the liquidator chooses to terminate the contract, the other contracting parties have a monetary claim against the insolvent estate as a concurrent creditor, i.e. creditors who do not hold any security.

If you are a director and/or shareholder of your business, then you should be especially cautious when your business gets liquidated, because you will still be liable for debt for which you have signed surety, i.e. taking responsibility for another’s performance of an undertaking. If a director acted negligent or fraudulent in his/her capacity as the director, he/she can also be rendered personally liable.

The liquidation of your business does not terminate employment contracts; it is up to the liquidator to decide whether to do so or not, and this decision must be in line with the Labour Relations Act 66 of 1995, Basic Conditions of Employment Act 75 of 1997, and the Insolvency Act 24 of 1936. However, employment contracts are suspended upon liquidation of the employer; during this suspension period, the employee is not obliged to render any services to the employer, and he/she is not entitled to receive any payment or employment benefits that arise from the contract. An employee whose services have been terminated because of liquidation, is entitled to claim losses suffered from the employer’s liquidated estate.

Dealing with Your Taxes

SARS has a preferent claim in the business’s insolvent estate, meaning that SARS gets paid before the business’s concurrent creditors. If the business gets liquidated voluntary and there is still debt owed to SARS after the winding-up of the business, the shareholders may, in terms of the Tax Administration Act 28 of 2011, be held personally liable in certain circumstances. The Value Added Tax Act 89 of 1991 places you as a member or a director of the business, who has regularly partaken in the management of the company, in the position of a trustee of the government’s money and you will be held liable for the business’s VAT.

Other taxes are deemed to be civil debt, and money owed to SARS simply gets written off if SARS does not get a dividend from your business’s insolvent estate, or if your business is deregistered. However, SARS may issue criminal summons against business owners in this regard.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

References:

Smesouthafrica.co.za. (2017). When you have to liquidate your biz – 5 considerations you shouldn’t overlook. [online] Available at: http://www.smesouthafrica.co.za/16586/When-you-have-to-liquidate-your-biz-5-considerations-you-shouldnt-overlook/ [Accessed 23 Jun. 2017].

Investopedia Staff. (2017). Winding Up. [online] Investopedia. Available at: http://www.investopedia.com/terms/w/windingup.asp [Accessed 23 Jun. 2017].

IS YOUR BUSINESS LEGALLY COMPLIANT?

IS YOUR BUSINESS LEGALLY COMPLIANT?

Compliance refers to a company obeying all of the legal laws and regulations regarding how they manage the business, their staff, and their treatment towards their consumers. The point of compliance is to make sure that corporations act responsibly.

Is compliance for every business the same?

Certain businesses may be required by law to register with an industry association. For instance, if you want to practice as a public auditor and issue an opinion on assurance engagements, you must be registered with the South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board of Auditors (IRBA). Compliance in this regard would depend on the type of business involved.

What are general requirements for all businesses:

Tax compliance (SARS, VAT Act) – First and foremost, the business enterprise must be registered with SARS for tax purposes (to be taxed on the income that it makes), secondly, if the business is an employer it must register itself as such and as an agent of government required to deduct employees’ tax from the earnings of employees and pay the amounts deducted over to SARS on a monthly basis. Thirdly, if applicable, a business may register for VAT in terms of the VAT Act.

The Occupational Health and Safety Act – The government requires businesses that employ people to provide a work environment that is safe and without risk to the health of employees.

Skills Development Levy (SDL) – Employers must pay 1 percent of their workers’ pay to the skills development levy every month. The money goes to Sector Education and Training Authorities (SETAs) and the Skills Development Fund to pay for training.

The Compensation for Occupational Injuries and Diseases Act (COIDA) – This Act seeks to ensure that employers are duly covered to provide compensation for disablement caused by occupational injuries or diseases sustained by employees in the course of their employment, or for death resulting from such injuries or diseases.

Unemployment Insurance Fund (UIF) – Employers must register with the Department of Labour to ensure that their employees are appropriately covered when out of employment.

Auditing requirements – Depending on the type of company you register, it may be required to be audited on an annual basis.

Financial Intelligence Centre Act (FICA) – If your company will be engaged with financial services, estate agencies, insurance, etc. you are required to comply with this Act in order to combat money laundering.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

References:

http://www.bonaman.co.za/business-compliance-101-for-entrepreneurs/

https://bizconnect.standardbank.co.za/manage/operations-compliance/reference-documents/legislation-business-compliance.aspx

DIFFERENCES BETWEEN LIQUIDATION AND SEQUESTRATION PROCESS

DIFFERENCES BETWEEN LIQUIDATION AND SEQUESTRATION PROCESS

A2bThe application for liquidation and sequestration processes are often confused. Many people think that the processes are the same. However, there is a big difference between these two processes.

A simple way to describe liquidation is that liquidation is the winding up of a firm by selling off its free (un-pledged) assets to convert them into cash to pay the firm’s unsecured creditors. Before a liquidation application can be issued in court, a founding affidavit needs to be drafted. This affidavit will include all the details of the Applicant and / or Respondent. The Applicant is the person who wants to liquidate the company and the Respondent is the company. In the case where the Applicant is the company, there will be no Respondent. The affidavit will also include any details of the company, employees and creditors. A bond of security also needs to be signed for the purpose of the Master of the High Court.

Once the application is issued, the only people who receive this notice is the South African Revenue Services (SARS), the Master of the High Court, employees of the company and any trade unions. As soon as this is done, a Master’s certificate is obtained verifying the application, and a provisional liquidation order is granted.  A return date is then set, and all creditors are notified of the provisional liquidation through registered post and by placing the provisional order in two local newspapers. Should the Applicant’s attorneys receive no notice of intention to defend the matter, a final liquidation order is granted. The order together with the application is sent to the Master of the High Court and a liquidator will be appointed.

Sequestration is the preferred option for the individual who has exhausted all other options of resolution, and is now in a position where even if all their assets are sold, they would be left with such a high shortfall that it would be unreasonable to expect them to recover from this loss. A sequestration involves a little more administration work before a court date can be obtained. Before the Notice of Motion and Founding Affidavit are drafted, a valuer needs to be appointed in order to value the Applicant or Respondent’s estate. This needs to be done in order to ascertain whether the debtor is indeed over-indebted, and whether he / she has enough assets to provide a benefit for all creditors involved.

In the matter of a voluntary sequestration, the Applicant will be the party whose estate is to be sequestrated. The valuer needs to value the property of the Applicant on a forced sale scale. This will be calculated by subtracting 20% of the actual value of the property.

As soon as the valuer has made an estimate for the Applicant / Respondent’s estate, a Statement of Debtor’s Affairs needs to be handed in to the Master of the High Court for inspection by all creditors. This needs to be done no less than 14 or more than 30 days before the court date. A Notice of Surrender needs to be sent through registered post to all creditors to inform them that the Statement of Debtor’s Affairs is available for inspection.

The Notice of Surrender needs to be posted in two local newspapers and the Government Gazette no less than 14, or more than 30 days before the court date. Once all of the above-mentioned requirement has been adhered to, the notice of surrender can be annexed to the Founding Affidavit and can be heard by the court, no Bond of Security is needed at this point. A sequestration can only be heard by the High Court, whereas a liquidation can be heard either by a Magistrate’s Court or by the High Court, depending on the merits of the case.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

VERSKIL TUSSEN LIKWIDASIE EN SEKWESTRASIEPROSES

VERSKIL TUSSEN LIKWIDASIE EN SEKWESTRASIEPROSES

A2bDie aansoek prosedures vir likwidasie of sekwestrasie word dikwels met mekaar verwar, en baie mense dink dat die prosesse dieselfde is. Daar is egter ‘n groot verskil tussen die twee.

‘n Eenvoudige definisie van likwidasie is die proses waardeur ’n maatskappy sy vry (onbeswaarde) bates verkoop, om sodoende die bates te omskep in kontant wat gebruik kan word om die firma se gesekureerde skuldeisers te betaal. Voordat ‘n aansoek om likwidasie deur die hof uitgereik kan word, moet ‘n beëdigde verklaring opgestel word. Hierdie verklaring sal alle besonderhede van die Applikant en / of Respondent insluit. Die Applikant verwys na die persoon wat die maatskappy wil likwideer en die Respondent is die maatskappy wat gelikwideer word. In die geval waar die Applikant die maatskappy self is, sal daar geen Respondent wees nie. Die beëdigde verklaring sal ook besonderhede van die maatskappy, werknemers en die krediteure insluit. ’n Sekerheidstelling moet ook vir die doel van die Meester van die Hooggeregshof onderteken word.

Sodra die aansoek uitgereik word, sal die balju afskrifte van die aansoek aan die Suid-Afrikaanse Inkomstediens (SAID), die Meester van die Hooggeregshof, werknemers van die maatskappy en enige vakbonde beteken. Sodra dit gedoen is, word ‘n meestersertifikaat verkry vir die verifikasie van die aansoek, en ‘n voorlopige likwidasiebevel word toegestaan. ‘n Keerdatum word dan vasgestel, en al die krediteure word in kennis gestel van die voorlopige likwidasie deur geregistreerde pos sowel as deur die plasing van die voorlopige bevel in twee plaaslike koerante. Indien die Applikant se prokureurs nie verdediging ontvang nie, sal ‘n finale likwidasiebevel toegestaan word. Die bevel tesame met die aansoek word na die Meester van die Hooggeregshof gestuur en ‘n likwidateur sal aangestel word.

Individu wat reeds alle ander opsies om hulle skulde te vereffen uitgeput het, sal gesekwestreer word, aangesien hulle hulself nou in ‘n posisie bevind waar,  selfs as al hul bates verkoop word, sou hulle steeds te veel uitstaande geld hê, en dit sou onredelik wees om te verwag dat hulle van die verlies herstel. ʼn Sekwestrasie behels meer administratiewe werk alvorens ‘n hof datum verkry kan word. Voordat die kennisgewing van die mosie en beëdigde verklaring opgestel word, moet ‘n waardeerder aangestel word om die Applikant of die Respondent se boedel te waardeer. Daar moet bepaal word of die skuldenaar inderdaad oorbelas is, en of hy/sy oor genoegsame bates beskik om  die skuld te kan delg.

In die geval van ‘n vrywillige sekwestrasie sal die Applikant die party wees wie se boedel gesekwestreer word. Die waardeerder moet die eiendom van die Applikant op ‘n gedwonge verkoopskaal  waardeer. Om dit te bereken word 20% vanaf die werklike waarde van die eiendom afgetrek.

Sodra ‘n beraming deur ‘n waardeerder gemaak is van die Applikant/Respondent se boedel, moet ‘n verklaring van die skuldenaar se sake aan die Meester van die Hooggeregshof oorhandig word. Dit moet nie minder as 14 of meer as 30 dae voor die hof datum gedoen word nie. ‘n Kennisgewing van oorgawe moet ook aan alle skuldeisers gestuur word, deur middel van geregistreerde pos, om hulle van die bogenoemde in kennis te stel.

Die kennisgewing van oorgawe moet in twee plaaslike koerante, sowel as in die Staatskoerant geplaas word,  nie minder as 14 of meer as 30 dae voor die hof datum. Sodra al die bogenoemde gedoen is, kan dit by die beëdigde verklaring aangeheg word en deur die hof aangehoor word. Geen sekerheidstelling is nodig nie.  ʼn Sekwestrasie kan slegs aangehoor word deur die Hooggeregshof, terwyl ‘n likwidasie deur ‘n Landdroshof of die Hooggeregshof aangehoor kan word, afhangende van die meriete van die saak.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

IS ‘N HANDELSBEPERKINGSKLOUSULE ALTYD GELDIG EN AFDWINGBAAR?

IS ‘N HANDELSBEPERKINGSKLOUSULE ALTYD GELDIG EN AFDWINGBAAR?

MHI_A2blIn die verlede was handelsbeperkingsooreenkomste ongeldig en onafdwingbaar, tensy die werkgewer kon bewys dat die ooreenkoms billik is. Gelukkig vir werkgewers het hierdie situasie verander. 

Wat is ‘n handelsbeperking?

‘n Ooreenkoms wat ‘n party se reg om te handel of ‘n besigheid of beroep te bedryf, beperk op sodanige manier of met sodanige partye as wat hy/sy goeddink, is ‘n handelsbeperking.

‘n Werkgewer sal tipies in die dienskontrak of ‘n aparte ooreenkoms ‘n handelsbeperkingsklousule insluit wat gewoonlik van krag word wanneer die kontrak getermineer of die besigheid of praktyk verkoop word. 

Hoekom is hierdie tipe klousule omstrede?

Dit is omstrede omdat daar ‘n botsing van fundamentele waardes is: aan die een kant is daar ‘n algemene kontrakteursvryheid wat daarop staatmaak dat partye by hul kontrakte gehou moet word, en aan die ander kant is daar handelsvryheid wat ‘n erkende reg volgens die grondwet is.

Soos ander ooreenkomste is handelsbeperkings prima facie geldig en afdwingbaar. Voorheen het die werkgewer die bewyslas gehad om te bewys dat die implementering van die handelsbeperkingsklousule billik en in openbare belang is. Die situasie is nou omgekeerd en die werknemer het nou die bewyslas om te bewys dat afdwinging van die beperking teen openbare belang sal indruis.

‘n Onredelike beperking sal teen die openbare belang wees en dus onafdwingbaar. Die redelikheid van ‘n handelsbeperkingsklousule word beoordeel op die basis van breë belange van die gemeenskap en die belange van die individu self.

Redelikheid inter partes hang van verskeie faktore af:

  • Het die werkgewer ‘n beskermingswaardige belang?
  • Geografiese omvang en tydperk van die handelsbeperking (moontlikheid van gedeeltelike afdwinging)
  • Toegewing deur die werknemer in die kontrak dat die beperking redelik is, en ongelyke bedingingsvermoë van die verskillende partye (hierdie faktore dra min gewig)

Voorbeelde van beskermingswaardige belange is vertroulike inligting, handelsgeheime, kliëntverhoudings en -lyste, en die welwillendheid van die besigheid. Dit sluit egter nie planne om die kompetisie te elimineer en die belegging van tyd en kapitaal in die opleiding van die werknemer in nie.

Dit is nie genoeg dat vertroulike inligting net as sulks beskou word nie. Vir inligting om as vertroulik beskou te word, moet dit kommersieel nuttig wees, met ander woorde dit moet toegepas kan word in die industrie, ekonomiese waarde hê vir die persoon wat dit wil beskerm, en slegs bekend wees aan ‘n beperkte aantal persone.

Die bewys van handelsverbintenisse sal slegs relevant wees indien die werknemer toegang het tot die werkgewer se kliënte en sodanige verhouding met die werkgewer se kliënte het dat dit hom/haar in staat sou stel om so ‘n invloed oor hulle te hê dat die kliënte hom/haar sal volg indien hy/sy die diens van die werkgewer verlaat. Die volgende faktore is hier van belang:

  • die pligte van die werknemer;
  • die persoonlikheid van die werknemer;
  • die frekwensie en tydsduur van die werknemer se kontak met die kliënte;
  • sy/haar invloed or die kliënte;
  • aard van sy/haar verhouding met die klënte (mate van aanhang, omvang van hul vertroue in hom/haar);
  • vlak van kompetisie tussen die mededingende besighede;
  • die tipe produk wat verkoop word; en
  • bewyse dat kliënte verloor is as gevolg van die werknemer se vertrek.

Met verwysing tot die bogenoemde moet die volgende vrae gevra word:

  1. Is daar ‘n belang van party A wat waardig is om beskerm te word?
  2. Word daardie belang benadeel deur party B?
  3. Indien wel, weeg die belang van party A kwalitatief en kwantitatief meer teenoor die belang van party B, wat sal inhou dat daardie party ekonomies onaktief en onproduktief sal wees?
  4. Is daar enige openbare beleid wat vereis dat die handelsbeperking gehandhaaf of van die hand gewys word?

Al is die handelingsbeperkingsooreenkoms billik inter partes, mag dit nog steeds beslis word dat dit nie in openbare belang afgedwing moet word nie.

Bronnelys:

Basson v Chilwan & Others 1993 (3) SA 742 (A)

Sunshine Records (Pty) Ltd v Flohing & Others 1990 (4) SA 782 (A)

Magna Alloys & Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A)

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

ARE RESTRAINT OF TRADE AGREEMENTS ALWAYS VALID AND ENFORCEABLE?

ARE RESTRAINT OF TRADE AGREEMENTS ALWAYS VALID AND ENFORCEABLE?

MHI_A2blHistorically restraint of trade agreements were void and unenforceable unless the employer could prove that it was a reasonable agreement entered into between the parties. Fortunately for employers the position in our law has changed.

What are restraint of trade agreements?         

An agreement that seeks to restrict a party’s right to carry on a trade, business or profession in such manner or with such persons as he/she sees fit, is restraint of trade.

Restraint of trade clauses are most commonly found in employment and partnership contracts, which usually takes effect after termination of the contract, or in sale of a business or practice.

Why are they controversial?

They are controversial because there is a clash of fundamental values: on the one hand there is freedom or sanctity of contract which relies on agreements being honoured, and on the other hand there is freedom of trade which is a constitutionally recognised right.

As with other contracts, restraint of trade agreements are presumed to be prima facie valid and enforceable. Whereas the onus had earlier been on the employer to prove that implementation of restraint of trade was fair and in public interest, the onus is now on the employee to show why enforcement in the particular circumstances would be against the public interest.

An unreasonable restraint is contrary to the public interest and hence unenforceable. The reasonableness of a restraint of trade clause or agreement is judged on two bases: broad interests of community, and interests of the parties themselves.

Reasonableness inter partes depends on a variety of factors:

  • Does the employer have a protectable interest?
  • Area and duration of restraint (possibility of partial enforcement)
  • Concession by the employee in the contract that restraint is reasonable, and inequality of bargaining power of parties (these factors carry little weight)

Examples of protectable interests are confidential information, trade secrets, customer connections and lists, and goodwill of the business. However, it does not include interest in the elimination of competition, and the investment of time and capital in the training of the employee.

It is not sufficient simply to label confidential information as such. In order to be confidential the information must be commercially useful, in other words capable of application in trade or industry, have economic value to the person seeking to protect it, and be known only to a restricted number of people.

With regards to trade connections, it will only be relevant when the employee has close working relations with the customers, to such an extent that there is a danger of him/her taking them with him/her when he/she leaves the business. Relevant factors here include the following:

  • duties of the employee;
  • his/her personality;
  • frequency and duration of the contact with the customers;
  • his/her influence over them;
  • nature of his/her relationship with them (degree of attachment, extent of their reliance on him/her);
  • level of competition between the rival businesses;
  • type of product sold; and
  • evidence that customers were lost when he/she left the business.

With reference to the above the following questions must be asked:

  1. Does party A have an interest deserving of protection?
  2. Is such interest being prejudiced by party B?
  3. If so, how does A’s interest weigh up qualitatively and quantitatively against B’s interest in not being economically inactive and unproductive?
  4. Is there some broader facet of public policy that requires the enforcement or rejection of the restraint?

If restraint of trade agreement is reasonable inter partes, it may still be unenforceable if it is damaging to the public interest for a reason not peculiar to the parties.

Sources:

Basson v Chilwan & Others [1993] 3 SA 742

Sunshine Records (Pty) Ltd v Flohing & Others 1990 (4) SA 782 (A)

Magna Alloys & Research (SA) (Pty) Ltd v Ellis 1984 (4) SA 874 (A)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

WHAT HAPPENED TO CC’S?

WHAT HAPPENED TO CC’S?

A1blYou are a member of a Close Corporation (“CC”) in whose name you are running a business, or in whose name one or more properties are registered.

You were informed that the incorporation of the new Companies Act 71 of 2008 (“the Act”) on 1 May 2011 caused various amendments to the current operation of a CC, as well as the future of CC’s in it’s entirety.  What is the impact of this?

With the incorporation of the Act 71 of 2008 the old Companies Act of 1973 was repealed and certain amendments to the current Close Corporations Act, Act 69 of 1984, were also effected.  The Close Corporations Act in it’s amended form remains in existence together with the new Act.

The coming of existence of the Act has the following legal consequences of which all CC members must be aware of:

The Act makes provision for the continued existence of currently registered CC’s but negates the registration of any new CC’s after 1 May 2011.  Current shelf CC’s that were duly incorporated and which is normally bought by a small business entrepreneur for utilization in a future business venture, will remain to exist as these CC’s were already incorporated on the date that the Act came into existence.  The incorporation of new CC’s are prohibited, and accordingly it will also no longer be possible to create any new shelf CC’s.

The Companies and Intellectual Property Registration Office (“CIPRO”) was the statutory body responsible for the registration of all new CC’s and companies prior to the Act coming into operation.  This function has simultaneously been inherited by a new statutory body namely, the Companies Intellectual Property Commission (“CIPC”).  Lastmentioned body provides a complete historic database and record of administration of all existing CC’s and companies.  Any amendments to CC’s after the incorporation of the Act will be registered at CIPC and will duly be reflected on their database.

The Act does not force CC’s to convert to private companies.  However, this is encouraged due to simplified legislation, reduction of regulatory burden and the simplicity of formation of companies that the Act offers.  Under the said Act the CC is mainly being replaced by the private company as the preferred vehicle for small and medium businesses in the sense that a private company can be formed by only one person, and that said company does not need to have more than one director.

Current CC’s are being assisted in the process of conversion to a private company by the Act.  In lastmentioned instance all that is needed is the official notice of conversion, a certified copy of the special resolutions to authorise the conversion, the Memorandum of Incorporation and payment of the prescribed fee.  Current companies are prohibited to convert to CC’s.

The Act and the current Close Corporations Act will find application concurrently to each other, as mentioned earlier in this article.  The Act furthermore requires that CC’s comply with all the stipulations of the Act.  This means for example that all the stipulations relating to the so-called business rescue procedures will mutatis mutandis be applicable to CC’s, as well as certain stipulations relating to financial statements. CC’s (depending on its size), can be statutory compelled to provide audited financial statements in certain instances.

Depending on the current use of your CC, as well as your future plans with said legal person, we would advise that you obtain the opinion of your bookkeeper or auditor, in conjunction with your lawyer to ensure that you comply with the provisions of the Act, as well as whether you need to consider the conversion of your CC to a private company.  This will provide you with a realistic idea whether you are currently utilizing your CC to it’s maximum benefit. 

Compiled by: Marcelle Strydom

REFERENCE LIST: 

  1. The Future of Close Corporations – issued by CIPRO
  2. New Companies Act’s Effects on Close Corporation – issued by Trademar 24

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

WAT HET VAN BK’S GEWORD?

WAT HET VAN BK’S GEWORD?

A1blU is lid van ‘n Beslote Korporasie (“BK”) in wie se naam ‘n besigheid bedryf word, of waarin een of meer eiendomme geregistreer is.

U het gehoor dat die inwerkingtreding van die nuwe Maatskappywet 71 van 2008 (“die Wet”) op 1 Mei 2011 bepaalde wysigings op die bestaande werking van ‘n BK, sowel as die toekoms van BK’s in geheel meebring.  Hoe nou gemaak?

Met die inwerkingtreding van die Wet is die ou Maatskappywet van 1973 herroep en het dit ook sekere wysigings aan die bestaande Wet op Beslote Korporasies, Wet 69 van 1984 meegebring.  Die Wet op Beslote Korporasies in sy gewysigde vorm bly egter voortbestaan tesame met die nuwe Wet.

Die totstandkoming van die nuwe Wet het die volgende regsgevolge waarvan elke BK-lid bewus moet wees:

Dit maak voorsiening vir die voortbestaan van reeds bestaande, geregistreerde BK’s maar verhoed die registrasie van enige nuwe BK’s na 1 Mei 2011.  So ook sal bestaande rak BK’s wat reeds geinkorporeer is en gewoonlik deur ‘n klein besigheids entrepreneur gekoop is vir gebruik in ‘n toekomstige beplande onderneming, bly voortbestaan. Die inkorporasie van nuwe BK’s na inwerkingtreding van die Wet is ontoelaatbaar, en die skep van enige nuwe rak BK’s dus ook nie langer moontlik nie.

Die “Companies and Intellectual Property Registration Office” (“CIPRO”) is die statutêre liggaam wat verantwoordelik was vir die registrasie van alle nuwe BK’s en maatskappye voor die totstandkoming van die Wet.  Hierdie funksie is gelyktydig oorgeneem deur die nuwe statutêre liggaam, “Companies Intellectual Property Commission” (“CIPC”).  Laasgenoemde liggaam beskik oor ‘n volledige databasis en geskiedkundige administratiewe rekord van alle  bestaande BK’s en Maatskappye.  Enige wysigings aan BK’s wat na die Wet se inwerkingtreding deur CIPC hanteer is, sal dienooreenkomstig op hulle databasis geregistreer wees.

Alhoewel die Wet nie BK’s verplig om na maatskappye om te skakel nie, word dit egter stilswyend daarin aangemoedig deurdat die wetgewing vereenvoudig is, die reguleerbare laste op maatskappy verminder is en die registrasieproses vir ‘n maatskappy ook vereenvoudig is.  Onder die nuwe Wet vervang die private maatskappy grotendeels die BK as die voorkeur voertuig vir klein en medium grootte besighede in dié sin dat ‘n private maatskappy slegs deur een persoon gevorm kan word, en dat dit nie meer as een direkteur hoef te hê nie.

Die Wet ondersteun bestaande BK’s in die proses van omskakeling van ‘n BK na ‘n private maatskappy.  Om so ‘n omskakeling te bewerkstellig, word ‘n amptelike kennisgewing van omskakeling, ‘n gesertifiseerde afskrif van die spesiale resolusies om die omskakeling te magtig, ‘n nuwe Memorandum van Inkorporasie sowel as die voorgeskrewe fooi vir omskakeling, benodig.  Bykomend hiertoe word bestaande private maatskappye nie meer toegelaat word om na BK’s om te skakel nie.

Soos reeds voorheen in die artikel genoem, sal die Wet en die bestaande Wet op Beslote Korporasies gelyklopend met mekaar toepassing vind.  Die Wet vereis dat BK’s moet voldoen aan alle nuwe bepalings daarvan. ‘n Voorbeeld hiervan is die bepalings verbonde aan sogenaamde “business rescue” prosedures asook sekere vereistes rakende finansiële state.  ‘n BK (afhangende van sy grootte) kan dus moontlik ingevolge die Wet statutêr verplig  word om geouditeerde finansiële state op te stel.

Afhangende van die bestaande gebruik van u BK, asook wat u toekomsplanne met sodanige regspersoon sou wees, word u aangeraai om die nodige advies van u rekenmeester of ouditeur, in samewerking met u prokureur in te win ten einde seker te maak dat u voldoen aan al die vereistes van die Wet, asook of u ‘n moontlike omskakeling na ‘n privaat maatskappy moet oorweeg.  Dit sal ook aan u ‘n realistiese idee gee of u die maksimum voordele haal uit u huidige BK as regspersoon.

Saamgestel deur: Marcelle Strydom

BRONNELYS:

  1. The Future of Close Corporations – issued by CIPRO
  2. New Companies Act’s Effects on Close Corporation – issued by Trademar 24

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

HERSIENING VAN DIREKTEURE SE BESLUITE

HERSIENING VAN DIREKTEURE SE BESLUITE

Article 3_B‘n Vorige artikel het gehandel oor die “informele” besluite geneem deur direkteure, en is die optrede en besluite deur direkteure wat as “informele” besluite deur direkteure beskou kan word, behandel. Die presedente geskep deur die howe is bespreek, welke presedente oorweeg word wanneer die afdwingbaarheid en geldigheid van sodanige “toestemmings” deur die howe beslis moet word. Direkteure van huiseienaarsverenigings is gewaarsku om waaksaam en versigtig te wees wanneer hulle in informele gesprekke met ander lede tree, veral wanneer hierdie lede lugkastele bou en beplande aanbouings met die direkteur bespreek. Direkteure is gemaan om hul opinies eerder te lug wanneer die direksie die formele aansoek deur die lid debatteer, veral wat betref lede se beplande aanbouings of ander boubedrywighede. Die reëls van die huiseienaarsvereniging wat betref die estetiese en ander vereistes neem voorrang in hierdie formele besluitnemingsproses.

Maar hoe gemaak as die lid wel aan die formele voorgeskrewe vereistes van die huiseienaarsvereniging voldoen het, en die direksie wys die aansoek van die hand?  Waar laat dit die lid en die direksie?

Die howe sal nie sommer inmeng met die besluite geneem deur ‘n huiseienaarsvereniging nie, behalwe in gevalle waar die erkende gronde van regterlike hersiening wel van toepassing is, soos toegepas op vrywillige verenigings wie se lede hulself verbind het aan die vereniging se reëls, en waar welke reëls die raad van verkose direkteure beklee met besluitnemingsbevoegheid (Turner vs Jockey Club of South Africa 1974 (3) SA; SA Medical & Dental Council vs McLoughlin 1948 (2) SA 355 (AD) and Marlin vs Durban Turf Club & Others 1942 AD 112). 

Die gronde van regterlike hersiening word egter beperk tot of die tribunaal bevoeg was om die besluit te neem en of die tribunaal beide prosedureel en substansieel regverdig en billik was.  Effektiewelik word die hersiening dus beperk tot die vraag of die besluit of proses enigsins wederregtelik of onreëlmatig was – onregverdigheid per se is nie voldoende gronde nie (Bel Porto School Governing Body & Others vs Premier, Western Cape & Another 2002 (3) SA). 

In die tradisionele gemenereg hersieningsgronde vir ‘n vrywillige vereniging word wederregtelikheid, prosedurele onregverdigheid en irrasionaliteit ingesluit. Voor die inwerkingtreding van die grondwet is die reikwydte van vrywillige verenigings in gesagdraende uitsprake gevestig. Die Promotion of Administrative Justice Wet, Wet 3 of 2000 (PAJA) is van toepassing op enige administratiewe optrede geneem deur ‘n staatsliggaam of ‘n regspersoon in die afdwinging van ‘n openbare bevoegdheid of die uitvoering van ‘n openbare funksie.  Gevolglik val direkteure van huiseienaarsverenigings nie binne die reikwydte van PAJA nie.  Aan die ander kant, Artikel 39(2) van die Grondwet verplig howe, in die ontwikkeling van die gemenereg, om die gees, bedoeling en oogmerke  van die Handves van Menseregte in ag te neem.

Die beslissing in die aangeleentheid van Theron en Andere vs Ring van Wellington van die NG Sending Kerk in Suid-Afrika en Andere 1976 (2) SA 1 (A) het reeds bevestig dat ‘n redelikheids-toets gebaseer op rasionaliteit ‘n geoorloofde grond in die gemeneregtelike bevoegdhede van die howe daarstel om besluite van vrywillige verenigings te hersien. Die hof sal derhalwe ‘n hersieningsaansoek oorweeg wat gronde van onredelikheid insluit, in dat die besluit deur die direksie nie redelik gestaaf word deur die getuienis nie. Daar blyk geen verskil te wees in beginsel, vir doeleindes van hierdie skrywe, tussen gemeneregtelike hersieningsgronde van toepassing op vrywillige verenigings en die hersieningsgronde soos voorsien deur PAJA nie.

Verskeie uitsprake bevestig dat ‘n hof net sal ingryp met ‘n besluit deur direkteure van ‘n vrywillige vereniging waar die vereniging nie die beginsels van natuurlike geregtigheid, te wete wettigheid, prosedurele regverdigheid en redelikheid toegepas het nie. Laasgenoemde in die sin van ‘n rasionele nexus tussen die feite soos voorgelê en die oorwegings wat toegepas is in die neem van die besluit.

Waar die Memorandum van Inkorporasie of die reëls van die huiseienaarsvereniging ‘n formele proses voorskryf vir die verkryging van toestemming of instemming vir byvoorbeeld ‘n bouprojek, sal enige lid wie nie sodanige voorgeskrewe aansoek indien en aan die voorgeskrewe proses voldoen nie, selfs al is dit net vir die oprigting van ‘n heining, en wie nie die voorgeskewe goedkeuring voor die oprigting van die heining ontvang het nie, se sodanige opgerigte heining as “onwettig” beskou word.

Die Raad van Direkteure van enige huiseienaarsvereniging het ‘n verpligting om die Memorandum van Assosiasie of Memorandum van Inkorporasie en die reëls van die vereniging af te dwing en moet sodanig optree in belang van die landgoed en al die lede daarvan.

Enige bouprojek waarmee daar reeds aanvang geneem is of selfs afgehandel is sonder dat die formele voorgeskrewe proses gevolg is deur die huiseienaar, of dit aan die estetiese vereistes van die huiseienaarsvereniging soos voorgeskryf in die huiseienaarsvereniging se reëls voldoen al dan nie, is “onwettig” in dat die lid gebou het sonder om formeel aan die vereistes van die huiseienaarsvereniging te voldoen. Direkteure moet omsigtig ieder en elke sodanige bouprojek binne die jurisdiksie van die landgoed identifiseer, en in belang van al die lede van die huiseienaarsvereniging, lede wat geraak word nooi vir ‘n informele, vriendelike gesprek oor die verwydering of verdere toevoegings van die gebou of bouprojek, selfs al is dit net ‘n heining, en die tydperke vir sodanige optrede. Dit is belangrik om daarop te let dat sulke lede steeds verplig is om die formele vereistes soos voorgeskryf deur die vereniging, na te kom. Sodanige aansoeke moet voorgelê word vir beslegting en terugwerkende goedkeuring deur die raad van direkteure, volgens die voorgeskrewe formele vereistes van die vereniging op voorwaarde dat alle voorgeskrewe vereistes ten volle nagekom is, selfs al is dit bloot esteties.

Hierdie is ‘n algemene inligtingstuk en moet gevolglik nie as regs- of ander professionele advies benut word nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of enige skade of verlies wat volg uit die gebruik van enige inligting hierin vervat nie. Kontak altyd u regsadviseur vir spesifieke en toegepaste advies.

Kliek hier om die volledige vrywaring te sien

 

REVIEW OF DIRECTORS’ DECISIONS

REVIEW OF DIRECTORS’ DECISIONS

Article 3_BIn the previous article regarding “informal” decisions by directors, we considered what acts or decisions may be considered as informal decisions by directors. The precedents established by the courts were discussed, which precedents are considered regarding the enforceability of these “consents” and the validity of informal decisions by directors. Directors of homeowners’ associations have been forewarned to be diligent and carefully choose their words in conversations with other members, especially when these members paint pictures of proposed building projects. And more specifically, directors are to keep their opinion for the debate of the properly tabled application, especially concerning additions and alterations to the property of the member. The rules of the homeowners’ association regarding aesthetics and other such requirements should be paramount in the decision-making process.

But what if the member did comply with the prescribed formal requirements and the board of directors did not approve the request? Where does that leave the directors and the member?

The courts will not interfere with the decision made by a homeowners’ association save on recognised grounds of judicial review as applied to voluntary associations whose members have bound themselves to its rules, which include the conferring of decision–making functions of elected body of directors (Turner vs Jockey Club of South Africa 1974 (3) SA; SA Medical & Dental Council vs McLoughlin 1948 (2) SA 355 (AD) and Marlin vs Durban Turf Club & Others 1942 AD 112). 

The grounds of judicial review are restricted to whether the tribunal was competent to make the decision and whether it complied with the requirements of procedural and substantive fairness which effectively is limited to whether the procedure or decision taken was tainted by irregularity or illegality – unfairness per se is not enough (Bel Porto School Governing Body & Others vs Premier, Western Cape & Another 2002 (3) SA). 

The traditional common law grounds of review of a voluntary association tribunal include illegality, procedural unfairness and irrationality. Prior to the constitutional dispensation, the ambit of the voluntary associations had been settled in case law. The Promotion of Administrative Justice Act, Act 3 of 2000 (PAJA) applies to administrative action on the part of an organ of state or a juristic person exercising a public power or performing a public function.  Accordingly, directors of homeowners’ associations do not fall within the scope of the PAJA.  Section 39(2) of the Constitution on the other hand, requires a court, when developing the common law, to promote the spirit, purport and objectives of the Bill of Rights.

The judgement in the matter of Theron and Andere vs Ring van Wellington van die NG Sending Kerk in Suid-Afrika en Andere 1976 (2) SA 1 (A) has already confirmed that a reasonableness test based on rationality was a competent basis under the common law powers to review decisions of voluntary associations. The court will therefore consider a ground of review that included unreasonableness in the sense that the decision could not reasonably be supported by evidence. There appears to be no difference in principle for present purposes between common law grounds of review in relation to voluntary associations and the grounds of review provided for by PAJA.

Various case laws confirm that a court will only interfere with the decision of the directors of a homeowners’ association where that body has failed to comply with the natural justice requirements of legality, procedural fairness and reasonableness, the latter in the sense of a rational connection existing between the facts presented and the considerations that were applied in reaching the conclusion.

If the Memorandum of Incorporation or rules of the homeowners’ association prescribe a formal procedure to follow for permission or consent to be obtained regarding any alteration or other building projects, any member who did not submit a formal request for the building project, even if it is only the erection of a fence and did not include the detail of the fence to be erected for approval prior to the erection thereof, then the fence is “illegal”.

The board of directors of any homeowners’ association has an obligation to enforce the Memorandum of Association and/or the Memorandum of Incorporation and the rules of the association, and should do so in the interests of the whole of the estate and all its members.

Any building project which has been embarked on or even finished without proper procedures followed by the homeowner, and which does not comply with the aesthetical requirements of the homeowners’ association as is prescribed in the rules, are “illegal” in that the member erected the building without formally complying with the requirements of the homeowners’ association.   Directors should carefully consider each and every such building project within the jurisdiction of the association and, in the best interest of all members of the association, invite such members affected for an informal, amicable discussion regarding the removal or further alteration of the building or building project, even if it is only a fence and the time periods to do so. It is important to note that such members should still be obliged to comply with the formal requirements as prescribed by the association. These applications can be tabled in terms of the formal procedures prescribed with consideration to formally consent thereto retrospectively by the board of directors on condition that all prescriptive requirements have been fully met, even if it is merely aesthetically.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.

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