The capital maintenance doctrine presupposes that a company’s capital must not be returned to its shareholders. The doctrine was anchored on three rules, one of which was that a company cannot acquire its own shares as this amounted to a diversion of capital to the shareholders whose shares were acquired. This rule was partly rationalized as protecting the interests of shareholders. In South Africa the rule was embodied in s 85 of the Companies Act 61 of 1973. However, it was amended by s 9 of the subsequent Companies Amendment Act 37 of 1999 to provide that a company can acquire its own shares if certain substantive and procedural requirements were satisfied. Upon the enactment of Companies Act 71 of 2008, the requirements have not been substantially altered. They are partly geared towards protecting shareholders by ensuring that shareholders are treated equally and fairly. Moreover, the Johannesburg Securities Exchange Limited (hence the JSE Limited) was empowered by the Companies Act 61 of 1973 to promulgate requirements to be met when a company wishes to acquire its own shares. The Companies Act 71 of 2008 does not in express terms empower the JSE Limited to develop requirements to be met when a company wishes to acquire its own shares. However, the Act expressly requires that a listed company wishing to acquire its own shares must also comply with the requirements of the relevant exchange. Such requirements can therefore be deemed to subsist even amidst the new Act as an internal regulation of the JSE Limited. The said requirements are also partly aimed at protecting shareholders, largely by ensuring that adequate information is availed to shareholders to empower them to make informed decisions. / Private Law / LL. M. (Company Law)

The Companies Act 71 of 2008 (“2008 Companies Act”) will have far reaching effects on the manner in which a company is formed and operated under South African company law and in particular entrenches the procedure that must be followed by a company when acquiring its own shares. The radical amendment of the capital maintenance rules by the introduction of the solvency and liquidity tests to the Companies Act 61 of 1973 has been carried forward under the 2008 Companies Act. These tests impose an obligation on a company to ensure that the company is both solvent and liquid at the time of the acquisition of its own shares and for a stated period thereafter. The 2008 Companies Act further brings the duties and liabilities of the directors in line with their current fiduciary duties in terms of common law. / Mercantile Law / LLM

Whenever legal disciplines overlap interesting scenarios occur and differences in opinions create intellectual tension. One such interesting scenario occurs when employees’ rights are affected during a company’s liquidation or business rescue. The employees of a company are normally the last persons to find out that a company is struggling financially. They are also the only stakeholders who are in no position to negotiate their risk should the company be liquidated. It is therefore necessary to evaluate the rights given to employees during a company’s liquidation and business rescue. The fundamental ideologies of company law, insolvency law and labour law are challenged and examined to attempt a harmonizing result that respects the core of each discipline. It is crucial to determine whether an appropriate balance is struck between the interests of all the stakeholders of the company during these procedures. The aim of this thesis is to evaluate whether South Africa manages to strike this balance. If employee rights are protected whilst a company is restructured back to solvency and success, this balance will be struck. An evaluation will also be made whether employees are always better protected during business rescue than in liquidation. The study analyses employee rights in a company’s liquidation and during a company’s restructuring process. The comparative study of employee rights in liquidation and rescue is done with the jurisdictions of Australia and England – countries with similar procedures. Important conclusions show that South Africa protects employee rights during business rescue procedures the best. An appropriate balance is indeed struck between the interests of all stakeholders of a company during business rescue procedures and employees are most of the time better off after a restructuring than in a liquidation. Should the recommendations for law reform be implemented in our legislation, South Africa will overcome the few obstacles currently in its way to be seen as a world leader where employee rights are concerned in liquidation proceedings as well as business rescue. / Mercantile Law / LL. D.

The Companies Act 71 of 2008 (“2008 Companies Act”) will have far reaching effects on the manner in which a company is formed and operated under South African company law and in particular entrenches the procedure that must be followed by a company when acquiring its own shares. The radical amendment of the capital maintenance rules by the introduction of the solvency and liquidity tests to the Companies Act 61 of 1973 has been carried forward under the 2008 Companies Act. These tests impose an obligation on a company to ensure that the company is both solvent and liquid at the time of the acquisition of its own shares and for a stated period thereafter. The 2008 Companies Act further brings the duties and liabilities of the directors in line with their current fiduciary duties in terms of common law. / Mercantile Law / LLM