MRL2601 - Study Notes - EXAM SUMMARIES

STUDY UNIT 1: The impact of the Constitution and Globalisation on Entrepreneurial law Importance of infusion of African leadership philosophies and Constitutional Values → Africanisation: Renewing the focus on Africa and ensuring that teaching is adapted to African values, realities and conditions. It aims to ensure that people in a particular context such as the community or family in the case of traditional African societies maintain sound relationships tailored on accommodating opposing views and conciliating competing interests. → An inclusive approach of joint decision-making in matters that affect the business is foundational to the ubuntu concept. → A more horizontal approach is promoted where not all decisions are made from the top. → Ubuntu means people are people through others and is an underlying concept of Africanism. → Ubuntu was given explicit application in our law in the highest court in S v Makwanyane 1995 in which case Madala J noted that ubuntu advocates social justice and fairness. → In Pharmaceutical Society of SA & Others v Tshabalala-Msimang and Another and New Clicks SA v Minister of Health & Another, the court describes ubuntu as a relationship of mutual respect. → In Koyabe and Others v Minister of Home Affairs and Others, the court associated ubuntu with a general obligation to treat people with respect and dignity, to avoid undue confrontation and to give reasons for administrative decisions. → The second report issued by the Institute of Directors of South Africa King Report on Corporate Governance, 2002 first canvassed the notion of introducing African business values to be applied in South Africa, which is now summarised as ‘ubuntu’. → The importance of ubuntu in the South African context is recognised where it states that ‘the common purpose of all human endeavours, individual or corporate, should be that of service to humanity’ [King Report on Corporate Governance, 2016]. → One of the rules of natural justice is the audi alteram partem-rule. This principle is firmly entrenched in our law. It basically means that before any judicial functionary takes a decision on a matter, both sides of the story must be heard. This principle is reflected in ubuntu. → Ubuntu ultimately dictates that one has to be fair in all one’s relationships, which will include being quick to listen compassionately to other people’s stories and slow to pass judgment. → In summary, the values of ubuntu are embodied in the following elements that apply in business (this list is not a closed list):  The ability to show compassion  Social justice and fairness  Harmony and humanity  Recognising the inter-connectedness of people and the accompanying responsibilities  Integrity and ethical behavior  Open channels of communications and transparency  Due process and sensitivity in dealings with one another Downloaded by Wayne Scholtz () lOMoARcPSD| Constitutional principles / values → S 8(2) of the Constitution provides that the Bill of Rights binds a natural or a juristic person (like a company or close corporation) to the extent that it is applicable, taking into account the nature of the right and the nature of any duty imposed by the right. → When applying a provision of the Bill or Rights to a natural or juristic person, in order to give effect to a right in the Bill of Rights, a court must apply, or, if necessary, develop the common law to the extent that legislation does not give effect to that right S 8(3). → A court may develop the rules of the common law to limit the right, provided that the limitation is in accordance with the limitation clause contained in s 36(1) of the Constitution. → The values of ubuntu are reflected in s 1 in the Constitution. Ubuntu underlies the building of our constitutional democracy and to develop African leadership values to be applied in corporations, therefore, is consistent with the constitutional values. → Examples of how the values of ubuntu are imbued in the law regulating different South African businesses:  It is a rule in all business enterprises that the chosen name should not be offensive, racist or impinge negatively on any individual / legal person’s right to dignity.  The values of ubuntu must inform the manner in which corporate decisions are taken by directors. Proper, constructive dialogue requires the infusion of the culture of ubuntu to promote social cohesion.  One of the purposes of the Companies Act is to promote compliance with the Bill of Rights in the application of company law. It enshrines the rights of all people and affirms the fundamental democratic values of human dignity, equality and freedom. In addition, it regulates the relationship between economic citizens and thus may have fundamental implications for company law.  The Companies Act also aims to continue to provide for creation and use of companies in a manner that enhances economic welfare of South Africa as a partner within the global economy.  Directors in performing their functions in companies must consider the interests of other stakeholders such as the community and the environment in which the company that they serve, functions.  Directors of companies can be removed by means of an ordinary resolution – this is despite any agreement that may have been concluded to the contrary and no special resolution is required (s 71 of the Companies Act). This may appear drastic. However, the law requires that before any such action may be taken, certain requirements should be met to ensure ubuntu and fairness. Certain procedural requirements must be adhered to before a removal can be lawfully effected.  The Companies Act also provides protection for minority shareholders. This demonstrates the element of ubuntu and requires parties to be fair to one another.  Principles of majoritarianism feature strongly throughout the legislation. Notably, collectivity or solidarity is also an element of ubuntu.  The Companies Act provides for a system of informal dispute resolution before the Takeover Regulation Panel where appropriate, or other accredited forums. This is similar to the African practice where a dispute is referred to a ‘Kgoro’ which will attempt to resolve the matter. During this process, the audi alteram partem principle is applied