A company acquires a legal personality upon incorporation and registration, before which it does not have the required capacity to enter into a valid contract. However, the promoter of a company may have to enter into an agreement on behalf of, or for the benefit of the company to be formed, either for the incorporation or for the future business of the company. Such a pre-incorporation contract often becomes a source of trouble and causes dispute over the validity or the legal consequences of the contract. Laws in common law jurisdictions and civil law jurisdictions make various provisions for pre-incorporation contracts. Ratification by the company, once formed, of the pre-incorporation contract made by the promoter, is possible in some jurisdictions but not in the others. Third parties that enter into the pre-incorporation contract also face different scenarios in different jurisdictions. This mini dissertation analyses the South African law that governs the pre-incorporation contracts, and compares it with the laws of a few common law and civil law jurisdictions, particularly that of China. The purpose of the study is to examine the effect and legal consequence of the pre-incorporation contract in South Africa and China, and to evaluate whether the law of South Africa provides sufficient certainty and protection to the parties involved in the pre-incorporation contract compared with that of China. / Mini Dissertation (LLM)--University of Pretoria, 2020. / Mercantile Law / LLM / Unrestricted

The appraisal remedy is contained in section 164 of the Act and is an exit mechanism for shareholders who feel that the actions or decisions of the company alter their interests in the company and, because of these fundamental changes, the company no longer meets their investment expectations. In other words, it prevents dissenting shareholders from being locked into a drastically changed or restructured company in defeat of their expectations. The obvious solution for dissenting shareholders, once majority rule prevails, is to sell their shares. However, there is not always a ready market and therefore minority shareholders are given the right to be bought out by their companies, if they disagree with resolutions approving certain fundamental changes. The shares are bought back at a price reflecting the fair value of the shares, which value may in certain instances be determined judicially. Therefore, dissenting shareholders may rely on the appraisal remedy to challenge and dispute the fairness of the price offered for their shares. There are, however, several requirements that have to be complied with in order for a shareholder to be entitled to have standing with regard to section 164. For shareholders to have standing in terms of the appraisal right, they have to be firstly a shareholder. Secondly, they would have to dissent against a resolution taken by the company. Thirdly, they need to be dissenting shareholders in a profit company and lastly, in terms only of the amendment of the Memorandum of Incorporation, they need to hold shares of a class that will be materially and adversely affected. The appraisal right is a no-fault remedy and allows dissatisfied or dissenting minority shareholders to withdraw their shares instead of being compelled to go along with the decisions of the majority. The appraisal right is thus a remedy that balances the rights and interests of minority shareholders with those of the majority. On one hand, it provides flexibility to the majority to fundamentally change or restructure the company and, on the other hand, to allow the minority shareholders to retain their investments together with their expectations thereof. It should be noted, however, that the appraisal procedure is an intricate procedure wherein all mandatory steps must be taken and each step must be ‘perfected’ as required by the Act in order for the dissenting shareholders to be entitled to institute such a proceeding and eventually to be paid the fair value of their shares. The appraisal procedure is complex and technical. / Dissertation (LLM)--University of Pretoria, 2019. / Mercantile Law / LLM / Unrestricted

The legal fiction known as separate legal personality is the foundation of company law and attracts natural persons to incorporate companies, appoint a board of directors and raise capital. In terms of s 66 of the Companies Act, 71 of 2008 (“the 2008 Act”), directors can now be regarded as the heart of a company and represent the body through which the company takes all actions within the economic sphere. As a default position, directors owe fiduciary duties and a duty of care and skill to the company itself and not its creditors. However, on its face, this default position is placed under threat by s 218(2) of the 2008 Act. This section potentially constitutes a general remedy for any interested person, including company creditors, to hold liable any person, including company directors, for any loss or damage suffered as a result of a contravention of any provision in the 2008 Act. The potential threat posed by s 218(2) becomes heightened if one considers the prohibition on reckless trading as codified in s 22(1) of the 2008 Act. This statutory prohibition against reckless trading, considered in light of a stringent solvency and liquidity test prescribed by s 4 of the 2008 Act, places a microscope on the conduct of a debtor company vis-à-vis its creditors. The question then arises, whether or not s 218(2) read with s 22(1), and any other interrelated provisions of the 2008 Act, represent a novel and effective remedy for creditors to pursue company directors personally as a result of reckless trading? Or is s 218(2) rather, in the words of the renowned playwright Shakespeare, much ado about nothing? In order to interpret the potential operation of s 218(2), it is important to consider existing remedies available to creditors for the purpose of holding directors personally liable under South African common law and in terms of s 424 of the Companies Act, 61 of 1973 (“the 1973 Act”). This study primarily focuses on s 218(2) and its interplay with s 22(1) and other interrelated provisions of the 2008 Act and whether it creates a legal remedy for creditors to hold company directors personally liable for the reckless trading of a debtor company. It is concluded that whilst s 218(2) is a novel general remedy, the ability of creditors to enforce s 218(2) for the purpose of holding directors personally liable is hamstrung by interpretive difficulties and adverse policy considerations. In the circumstances, the existing and recognised remedies available to creditors, appear to be better calibrated for the purpose of holding directors personally liable for the reckless trading of a debtor company. / Mini Dissertation (LLM)--University of Pretoria, 2020. / Mercantile Law / LLM / Unrestricted

First, the nature, ambit and effect of the director’s fiduciary duty to prevent conflict of interest (“the fiduciary duty”) as it is statutorily set out in the Companies Act 71 of 2008 (the “Companies Act” or “Act”) will be canvassed. Secondly, it will be demonstrated that a proper understanding of the common law concepts underpinning the Act is essential for both a proper understanding and effective application of the fiduciary duty as found in the Act. Thereafter, the paper will set out and consider the distinction between the “no profit” and the “corporate opportunity” rules. Further, the paper will examine whether and to what extent the distinction is applied and maintained by our courts. Also, this paper will explore the operation of the fiduciary duty post-resignation of directors and senior company officials. Next, consideration will be given to liability for breach of the fiduciary duty and the relevant remedies flowing therefrom. The research methodology employed throughout will be a non-empirical comparative analysis of existing case law, legislation, and academic writings on the topic to contextualize the fiduciary duty and attempt to capture its essential elements at the legislated and common law levels. The choice of English and Canadian Law for a comparative study is motivated by the fact that common law origins of the duty and subsequent approach to the continued application thereof by the aforementioned jurisdictions. / Mini Dissertation (LLM (Corporate Law))--University of Pretoria 2020. / Mercantile Law / LLM (Corporate Law) / Unrestricted

This study explored the effective application of corporate governance in Milk SA NPC. The study is made up of five chapters, starting with an introductory chapter one. The introductory chapter provides general overview and background on corporate governance in the South African context. It also sets out the research problem as well as the research questions of the study. Chapter two introduces the principles and practices of corporate governance recommended by the King IV report on Corporate Governance in South Africa for the non-profit organisations. Chapter three explores Milk SA’s mechanism of ensuring compliance and effective application of corporate governance and also address the research questions of the study. Chapter four compares the corporate governance principles and codes applicable to South African and Australian non-profits companies. Finally chapter five finalises the study findings and concludes the study with recommendations. / Mini Dissertation (LLM)--University of Pretoria, 2020. / Mercantile Law / LLM / Unrestricted

Includes bibliographical references / Corporate law developments concerning the empowerment of non-shareholder constituencies in Anglo-American jurisdictions of the United States of America and the United Kingdom since the 1980s have been of very limited utility. Available literature and legal authorities in both those jurisdictions clearly illustrate the obsession of policy makers and the judiciary with normative statements of directorial responsibilities to non-shareholder constituencies without introducing the necessary and complimentary right of action for those constituencies. The reluctance to introduce such right of action appears to be motivated by the exaggerated fear of the potential for 'floodgates' of litigation. This reluctance to extend corporate law remedies to non-shareholder constituencies, particularly in public companies, clearly overlooks the importance of the supervision of the use of corporate power to minimize or eradicate directorial self-serving misconduct, rather than the exclusive protection of shareholders, as the primary purpose of corporate law remedies. The introduction of an extended corporate legal enforcement framework under the South African Companies Act of 2008 may be indicative of the feasibility of the right of action for non-shareholder constituencies. Since the applicable enforcement regime in corporate law is a function of the applicable normative theory, a broadly inclusive corporate legal enforcement framework cannot be based on the conventional shareholder-oriented theories of 'Shareholder Primacy Norm and 'the Enlightened Shareholder Value Approach.' It is, therefore, argued that the South African Companies Act, 2008, introduces the Actionable Enlightened Shareholder Value Approach which invariably necessitates, among other things, the extended meaning of 'the best interests of the company' as provided for under s 76(3)(b) of the Act. The Actionable Enlightened Shareholder Value Approach recognises that the primary purpose of corporate law remedies is not the exclusive protection of shareholders, but the supervision of the use of corporate power to minimize or prohibit directorial self-serving misconduct, which purpose benefits a broad range of corporate constituencies. That is why the legal enforcement framework under the South African Companies Act facilitates the empowerment of corporate constituencies beyond just shareholders; ensures the availability of broad range of remedies; gives the opportunity for corporate constituencies to apply for remedies in the public interest, with leave of the court; recognises that the protection of the company's legal interests can be undertaken by a broad range of corporate constituencies and, also generally, with leave of the court; and facilitates the ability to hold any person liable for loss or damage suffered as a result of the contravention of any provision of the Act by that person.

This paper examines the Ontario Securities Commission's regulation of poison pills as well as several proposals to reform the current regulatory regime. In particular, the paper argues that regulation and reforms should be viewed within the context of two fundamental, normative questions that underlie much of corporate law: what is the purpose of the corporation, and who should determine whether these goals are being met. After outlining several competing theories, the paper explains why a corporate model based on the shareholder-centric, wealth maximization theory is best suited for hostile takeover situations. Additionally, the paper argues that a structural bid reform that would require hostile bidders to include minimum tender conditions and additional opportunities for target company shareholders to tender following a successful bid would provide the best way to incorporate this corporate model into Ontario securities regulation.

This paper examines the Ontario Securities Commission's regulation of poison pills as well as several proposals to reform the current regulatory regime. In particular, the paper argues that regulation and reforms should be viewed within the context of two fundamental, normative questions that underlie much of corporate law: what is the purpose of the corporation, and who should determine whether these goals are being met. After outlining several competing theories, the paper explains why a corporate model based on the shareholder-centric, wealth maximization theory is best suited for hostile takeover situations. Additionally, the paper argues that a structural bid reform that would require hostile bidders to include minimum tender conditions and additional opportunities for target company shareholders to tender following a successful bid would provide the best way to incorporate this corporate model into Ontario securities regulation.

As a result of the Supreme Court’s broad definition for ‘best interests of the corporation’ in recent decisions, the author examines to whom managers ought to owe their fiduciary duties normatively and what role managerial discretion has in this debate. The author argues that the lack of clarity offered by the judiciary, in this area of corporate law, has led to the adoption of a wide discretion being afforded to managers. An examination of several rationales fails to justify this continued adoption of a broad discretion. The author argues that granting managers with wide discretionary powers is problematic because the interests of constituencies will not be adequately protected. At the very least, statutory reform is necessary to protect the most vulnerable stakeholders. The author recommends that the law be amended to require that managers, in performing their fiduciary duties, regard the interests of employees and shareholders.

As a result of the Supreme Court’s broad definition for ‘best interests of the corporation’ in recent decisions, the author examines to whom managers ought to owe their fiduciary duties normatively and what role managerial discretion has in this debate. The author argues that the lack of clarity offered by the judiciary, in this area of corporate law, has led to the adoption of a wide discretion being afforded to managers. An examination of several rationales fails to justify this continued adoption of a broad discretion. The author argues that granting managers with wide discretionary powers is problematic because the interests of constituencies will not be adequately protected. At the very least, statutory reform is necessary to protect the most vulnerable stakeholders. The author recommends that the law be amended to require that managers, in performing their fiduciary duties, regard the interests of employees and shareholders.