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Month: October 2019

Shareholders’ agreements 101

Shareholders’ agreements 101

A shareholders’ agreement sets out how a private company should be operated and regulates the various shareholders’ rights and obligations. It is therefore important that a shareholders’ agreement be concluded at the beginning of the relationship to prevent disputes later on.

The Companies Act No. 71 of 2008 (“the Act”) expressly recognises shareholders’ agreements. Section 15(7) of the Act states that shareholders of a company may enter into any agreement with one another in respect to any matter relating to the company. It is, therefore, possible that a shareholders’ agreement may contain a vast array of provisions, but there are certain general provisions that should be considered.

  1. Duties and obligations of the shareholders: It may be that certain or all of the shareholders are not part of the day-to-day business of the company, in an employee capacity or even as a director, but may have other responsibilities towards the company and/or the other shareholders.
  2. Decision-making: It is important to determine how decisions will be made on a shareholder level – this may be regarding anything from how directors will be appointed to dividends that may be declared.
  3. Funding of the company: In a new start-up company, it is highly unlikely that there will be no funding from shareholders. A shareholders’ agreement may address existing shareholder funding as well as future funding by shareholders, whether there is a duty to provide funding, and also how shareholders may reclaim the funding from the company.
  4. Exiting of shareholders: When the time comes where a shareholder wishes to exit, there should be no uncertainty as to the process to be followed by the parties. A shareholders’ agreement may regulate the notice that should be given to other shareholders, the pre-emptive rights, the protection of minority shareholders should the exiting shareholder sell his or her shares to a third party, and also how the shareholding will be valued.
  5. Dispute resolution: It is inevitable that disputes will arise in any business relationship. A shareholders’ agreement may set out the procedure that the parties can turn to in times of dispute.

The advantage of a shareholders’ agreement is that the document constitutes a private document between the parties, which is not open for inspection by the public, as it is not filed with the Companies and Intellectual Property Commission (“CIPC”). Secondly, the shareholders’ agreement creates a binding and enforceable agreement between the parties.

On the other hand, the shareholders’ agreement only binds the shareholders that are parties to the agreement unless the new shareholders’ consent to be bound to the shareholders’ agreement. The shareholders’ agreement may also only be amended with the consent of the shareholders.

Section 15(7) of the Act furthermore states that a shareholders’agreement must be consistent with the Act as well the company’s memorandum of incorporation. Any provision in a shareholders’ agreement that is inconsistent with the Act and/or the company’s memorandum of incorporation will be void.

A shareholders’ agreement can be a vital tool to plan and operate your business, but it is important that a shareholders’ agreement be tailored to the needs of your business.

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)

What is a Living Will?

What is a Living Will?

A Living Will is a document regarding healthcare at the end of your life. It states that any treatment that would otherwise lengthen your life should be withheld in specific circumstances, such as being in a permanent vegetative state, irreversibly unconscious or terminally ill. Through a Living Will, you express the desire to die a natural death, free from having your life extended artificially in any form such as a life support machine, tube feeding, or medication. In other words, by way of a Living Will you tell your family and your doctor that you do not consent to being kept alive artificially.

A Living Will would typically read as follows: “Should I no longer be capable of making decisions and should my physical and/or mental condition deteriorate to such an extent that there is no reasonable prospect of my recovery from physical illness or impairment which is expected to cause me severe distress or to render me incapable of rational existence, I request that I be allowed to die. I further request that no systems be used in order to keep me alive in circumstances where, but for the use of such systems, I would have died”.

A Living Will usually does not withhold any necessary and adequate pain management, even if the moment of death is hastened. A typical clause in a Living Will regarding medication would read as follows: “I request that I be given whatever quantity of drugs and/or medicine and/or intravenous fluids as may be required to keep me comfortable and free from pain or distress even if the moment of death is hastened”.

A Living Will provides peace of mind as it enables you to express your choice of medical care should you be unable to communicate. A Living Will can also assist in settling disagreements amongst family members and medical professionals regarding appropriate treatment. A Living Will can also assist in containing the cost of dying. Most people would prefer to pass away rather than live on life support which can lead to astronomical medical bills which may jeopardise the financial security of their family. It is very difficult for a family member to request the withdrawal of medical treatment based on affordability.

Many people think that a Living Will is not something they need unless they have reached an advanced age. Young adults are however far more likely than the elderly to be involved in fatal or near-fatal accidents, and they must ensure that they have a Living Will to cover such a situation. Many people are under the mistaken impression that a general power of attorney will suffice if they are mentally incapacitated or in a coma following an accident. Unfortunately, a power of attorney becomes invalid the moment the person that gave the power of attorney can no longer exercise his or her judgement.

Drawing up a Living Will need not be expensive or time-consuming and, while you can do it yourself, it is better to have an attorney assist you with preparing a Living Will. The Living Will should be accessible, so it is advisable to inform your family of the location of the Living Will and to provide your medical practitioner with a copy. A Living Will should be a separate document from your Last Will and Testament because it serves a different purpose. A Last Will and Testament takes effect after your death, whereas a Living Will comes in to play while you are still alive but in an incapacitated state.

It is all about peace of mind and knowing that your loved ones aren’t put in a position to make difficult decisions. Together with a Last Will and Testament, having a Living Will in place might be one of the final acts of love you show your family.

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)

Who is liable for injuries in a Sectional Title Scheme?

Who is liable for injuries in a Sectional Title Scheme?

The case of Du Plooy and The Cascades Body Corporate and Another deals with a slip-and-fall incident by one of the owners in the scheme and member of the body corporate who was subsequently entrusted by the owners with the duty of the cleaning and gardening services.

Mr. Du Plooy, as Plaintiff, slipped and fell in the common area of the scheme and initiated action against the managing agent and the body corporate for damages, in that both the managing agent and the body corporate failed in keeping the property in a safe condition for ordinary use, and as a result of this failure he suffered damages.

The functions of the body corporate are contained in Sections 3 of the Sectional Titles Scheme Act, 2011 (hereinafter “the Act”) and reads as follows: A body corporate must perform the functions entrusted to it by or under this Act or the rules. Such functions include establishing and maintaining an administrative fund that is sufficient to cover the estimated annual operating costs regarding the repair, maintenance, management and administration of the property (including reasonable provision for the future maintenance and repairs). The court in the Du Plooy matter found that the body corporate is in practically the same position as a landlord, hotel owner or shopkeeper, who by virtue of his or her control over the property, has a legal duty to take reasonable steps in respect of maintenance and supervision to ensure that the property is in a safe condition for ordinary use.

The most important issue between Mr Du Plooy and the body corporate was whether the body corporate negligently failed to discharge the legal duty which it owed to Mr Du Plooy. The body corporate did not delegate its duty to maintain the common property to ensure it is safe and based on this, the body corporate will still be liable to maintain the property, as provided for in the Act. As a legal entity, the body corporate could not in itself discharge the duty and had to take reasonable steps to have the duty discharged.

Mr Du Plooy was a competent and capable person that could ensure that the property was safe for ordinary use and the body corporate trusted that he would report any safety hazards that needs to be addressed. Although this may not have amounted to a delegation of the body corporate’s legal duty to Plaintiff, it meant that Mr Du Plooy was contractually obliged to execute the duty on behalf of the body corporate.

With regards to the duty of the managing agent, the court found that the duties of the managing agents are of an administrative nature and that it would be unusual to burden the managing agents with the positive legal duty to ensure the property remains safe for ordinary use. There is no statutory duty cast upon the managing agent to be responsible for the common property or for the safety of those who may use the property for development. It is the duties of the trustees to run the day to day affairs of the body corporate and instruct the managing agent as needed. By virtue of these duties being performed by a managing agent, there is no need for regular visits to the developments. In these circumstances, it becomes the legal duty of the managing agent to physically monitor the maintenance and repair of work to be done at these developments.

The court found that the incident was caused due to sole negligence. Mr Du Plooy contractually undertook to keep the common property clean. The action instituted by Mr Du Plooy was dismissed.

Reference List:

  • l Sectional Titles Schemes Management Act, 2011
  • l Du Plooy v The Cascades Body Corporate and Another (275/10) (2013) ZAWCHC 62 (12 March 2013)

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)

Keep left to stay on the right

Keep left to stay on the right

Duties of a reasonable driver:

Among the duties of a motorist are: to keep a proper look-out, drive at a reasonable speed, observe the rule of the road (keep to the left), allow for lateral movement, follow another vehicle at a safe distance and maintain his vehicle in a roadworthy condition.[1] These duties may seem obvious to the reader, but the high amount of accidents on the South African roads are an indication that a lot of motorists don’t go to the trouble of adhering to the most basic requirements a motorist is expected to follow.

The rule of the road:

Because the observance of the rule of the road – which requires traffic to keep to the left of the centre of the road – is of such importance, a motorist keeping to his side of the road is entitled to assume that approaching traffic will do likewise. Even when an approaching vehicle is on its incorrect side of the road, a driver on his correct side should assume that the former will return timeously to its correct side of the road. A driver who becomes aware of a dangerous situation must however still do everything in his/her power to avoid an accident, and if it is possible to avoid an accident by swerving to the opposite side of the road, given that there is no traffic coming from the opposite direction, must do it. However, very rarely, will a driver be acting unreasonably by remaining on his correct side of the road.[2]

A large number of accidents do, however, occur due to one vehicle overtaking another when it is not safe to do so. When the driver of a vehicle is about to overtake and pass another vehicle, it is the duty of the driver to keep a proper lookout to establish whether he/she can safely overtake.[3] If a driver overtakes another vehicle when it is not safe to do so, the onus cannot possibly be placed on traffic coming from the opposite direction to avoid an accident. It remains the duty of the overtaking vehicle to ensure that it is safe to do so, and should it come to the driver’s attention that he/she will not be able to overtake without colliding with traffic from the opposite direction, he/she must apply his/her brakes and get back in the lane in which he/she was originally driving as soon as possible.

Duties of a reasonable driver in a sudden emergency:

In deciding what the reasonable driver would have done in the position of a driver who is faced with a sudden emergency, allowance must be made for the inevitable time lag between observation and reaction, as affected by the agony of the moment, the element of surprise, and the likelihood of momentary indecision.[4] The standard of care which a reasonable driver ought to exercise when driving in the ordinary course of events is, therefore, lowered when the driver is faced with a sudden emergency.

Where a Plaintiff is put in jeopardy by the unexpected and patently wrongful conduct of the defendant, it seems to be irrational to examine his/her conduct under a microscope and to try to envision what steps the Plaintiff could have taken to avoid an accident. To do so would be to ignore the penal element in actions on delict and to punish a possible error of judgement as severely as, if not more severely than, the most blatant disregard of the safety of others by the Defendant in overtaking a vehicle when it is not safe to do so.[5]

What constitutes prima facie proof of negligence?

When a motor vehicle drove on the incorrect side of the road and collided with an approaching vehicle, it has been held that negligence can be inferred from the nature of the accident, because the only reasonable inference was that the defendant’s driving on to the incorrect side of the road at the moment of the accident was due to his failure to exercise proper care. Proof that a vehicle was on the incorrect side of the road at the time of the collision is prima facie proof of the driver’s negligence.[6]

Lack of evidence by Defendant with regards to negligence:

If the Defendant fails to produce evidence to negate the inference of negligence, his failure to do so tilts the scale in the claimant’s favour and the latter is entitled to succeed against the Defendant. A driver’s inability to give an explanation because he is suffering from amnesia cannot operate in his favour and to the Plaintiff’s detriment. If there is no evidence to rebut the evidence led by the Plaintiff as to the Defendant’s negligence, the Plaintiff’s version must stand.

Conclusion

A large number of accidents would be avoided if motorists stuck to the rule of the road, and only overtook other vehicles when it was safe to do so. All motorists should be held to a high standard of care when driving. However, such a standard would be lowered if a driver was faced with a sudden emergency, caused by another driver’s negligent driving. A vehicle driving on the wrong side of the road, who causes an accident, can be held to be prima facie negligent. Should a party who was in an accident not be able to remember the accident, the other party to the accident’s version must stand. Hopefully, the dire consequences of causing an accident, will dawn on more people, and encourage them to exercise more patience when driving.

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)