Research Articles (Mercantile Law)

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  • ItemOpen Access
    Die invloed van ’n werkgewer se likwidasie en/of boedelsekwestrasie op die diensverhouding met die werknemer, met die oog op ondernemingsredding as moontlike alternatief
    (LitNet, 2013-02-19) Smit, Denine; Vergottini, Veruschka
    English: The impact of an employer’s liquidation and/or estate sequestration on the employment relationship with the employee, with a view to business rescue as possible alternative The liquidation/sequestration of employers, along with the subsequent job losses, has far-reaching consequences. It not only deprives employees and their dependants of their means of support, but also affects the productivity and thus economic prosperity of the region and country. Should a viable and lawful alternative exist, it would therefore make sense to explore it. Up until the late 1990s, South Africa had been characterised by a liquidation culture. Companies in financial distress used to be either subjected to takeover or settlement, or liquidated in terms of the provisions of the previous Companies Act 61 of 1973. However, most industrialised countries have since started trying to save failing companies instead of liquidating them. This approach, known as business rescue, has now also been included in the new South African Companies Act 71 of 2008. This article first explores employees’ rights upon the liquidation/sequestration of their employers, as currently contained in the Labour Relations Act 66 of 1995 and the Insolvency Act 24 of 1936. The former stipulates two options, namely either retrenchment in terms of section 189 and 189A, or transferring a business as a going concern in terms of section 197A. Retrenchment entails reducing the number of employees, either when the employer is no longer able to afford his entire staff establishment or when there is no longer enough work for all employees. Recent experience in South Africa has shown that companies seem to be willing to pay ever higher amounts in retrenchment packages, which eventually renders them vulnerable to increased financial pressures. The second option, the transfer of a business as a going concern, is aimed at protecting job opportunities. The new employer to whom the business is transferred is obligated to offer the employees essentially the same conditions of service as those that applied at the previous employer. Where employees’ conditions of service are amended to such an extent that employees end up significantly worse off than before, employees may terminate the employment contract and seek relief on the grounds of constructive dismissal, which, if confirmed, will automatically constitute unfair dismissal. In turn, section 38 of the Insolvency Act currently also provides prescripts with regard to the termination of employment contracts based on the employer’s operational requirements in solvent circumstances. The presence of the aforementioned provisions in the Insolvency Act represents a break from tradition, which had restricted provisions on fair labour practices to the Labour Relations Act alone, and proves the extent to which the employee’s right to fair labour practices has filtered through to insolvency law as well. This interaction between South African labour and insolvency legislation has made great strides in striking the right balance between the interests of the employees, the employer’s creditors and the employer himself. However, for an efficient and prosperous economy it is essential that mechanisms be implemented rather to rescue and retain potentially viable businesses. Therefore the article proceeds to suggest that this interaction between labour and insolvency legislation should culminate in the promotion, development and acceptance of an all-inclusive business rescue plan within the South African legal framework. The focus accordingly shifts to business rescue, as provided for by the new South African Companies Act, as an alternative to liquidation, in order to protect employees against job losses and ultimately retain companies within the economy. It would be irresponsible of a developing economy such as South Africa to allow companies which are contributing to the establishment of the country’s industries and commercial enterprise to be immediately liquidated and dissolved following a temporary setback, if there is a reasonable possibility that they will, by means of a moratorium, be able to overcome their problems, settle their debts and again turn into successful businesses. Business rescue, which may be effected through either a board decision or a court order, affords a struggling business just that: an opportunity to meet creditors’ demands, remain economically active, pay taxes and maintain existing employees’ employment contracts (and even create new jobs). Even if the company is eventually liquidated should business rescue fail, its employees are still much better off, as their contracts would have remained intact for the duration of the business rescue process and they will be treated as preferential creditors during the eventual liquidation. As such, the business rescue plan is an important and innovate step for the South African economy. It offers employees and other affected persons the opportunity to have a say in, and contribute to, an efficient system to prevent the liquidation of a company. It also seems that this is starting to register with an increasing number of companies: statistics show a drastic decrease in the number of liquidations (including voluntary liquidations) carried out since the commencement of business rescue, and ascribe the recorded 72% reduction in liquidations in 2011 in part to business rescue procedures. Following a proper study of the business rescue provisions currently contained in the Companies Act, the research thus concludes that an insolvent business is no longer regarded as an economic outcast, as was the case previously, but instead is viewed as a business unit that, with the required assistance, could again take its place in the market. A business rescue plan offers struggling companies the opportunity to survive as viable units for the benefit of their creditors and employees, instead of being subjected to a liquidation process, which inevitably leads to job and other financial losses. It is proposed that the economic stability of the country would be better served if a serious attempt were to be made to save more businesses rather than liquidate immediately to satisfy creditors. In addition, the community’s interests are much better protected by the retention of job opportunities, the completion of unfinished business and the realisation of potential growth and development. In terms of the provisions of the Companies Act the business rescue process promotes economic development in South Africa by encouraging the growth of emerging commercial enterprises and generally protecting companies against the detrimental effects of liquidation. Therefore an attitude of business rescue creates the expectation of improvement; it points to entrepreneurial activity, which will lead to financial and economic prosperity, and eventually activates the proverbial “healing powers” of business dynamics.
  • ItemOpen Access
    “Vicarious” liability of the employer in sexual harassment cases: A comparative study
    (LAR, 2016-02-17) Smit, D. M.; Viviers, D. J.
    including in South Africa. Consequently, the country’s courts have looked to protect employees by attaching obligations to employers that could render them liable when their employees are sexually harassed in the workplace. The Employment Equity Act and the Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace have also introduced measures in terms of which an employer may be held liable once certain requirements have been met. However, when compared to other jurisdictions such as the United States of America, Australia and Ontario, Canada, where the legal position on sexual harassment in the workplace and employers’ vicarious liability seems clear-cut and effective, the South African measures seem to lack teeth. Various loopholes, poor awareness and training as well as lacking implementation mean that employees who are sexually harassed in employment may find themselves unprotected and unable to hold their employer vicariously liable. In an attempt to contribute to the development of South African law in this regard, this article firstly provides an overview of the current position in South Africa, followed by a comparative overview of the law in the USA, Australia and Ontario, Canada. It is concluded that South Africa stands to learn valuable lessons from these jurisdictions’ approach to sexual harassment in employment. The most significant of these include the proposed establishment of a body similar to the USA’s Equal Employment Opportunity Commission or the Australian Human Rights Commission, which can be tasked specifically to deal with employment issues, including protecting employees against harassment, and enforcing and raising awareness about employer liability; making the drafting of internal policies on sexual harassment in employment compulsory and subject to inspection, and instituting compulsory training for managers to prevent and deal with sexual harassment in the workplace.
  • ItemOpen Access
    A labor law perspective on the protection of persons in a vulnerable employment relationship in South Africa
    (International Journal of Business and Social Research, 2014-05) Viviers, Damian; Smit, Denine
    famously liberal Constitution, the country’s statutes, common law and standing legal practice are continuously being challenged and reshaped. One such instance pertains to the issue of illegal contracts of employment and the legal position of those employed in terms of them. The infamous South African Kylie and Discovery Health court cases have opened the door to much speculation, confusion and debate in this regard, as they haveallowed for the possibility that persons employed under an illegal employment contract may claim labor law protection and recognition. This is largely subject to such persons being labeled ‘vulnerable’ in their employment relationship, with the possibility of their human rights being adversely affected. However, as no formal guidelines have yet been established as to what constitutes ‘vulnerability’, a lacuna has been created in the South African legal system. This article examines how South African labor law has changed over time in respect of vulnerable employment relationships, highlights important precedents set along the way, while brief reference is also made to employment vulnerability in other jurisdictions to enable comparison.It is eventually concluded that the current lacuna may be resolved in three possible ways. Firstly, to enable greater uniformity in decidingdisputes relating to illegal contracts of employment and vulnerable illegal employment relationships, these matters maybe diverted from the country’s Council for Conciliation, Mediation and Arbitration (CCMA) to a to-be-established, separate forum, which can take the form of a tribunal or a specialized court. Secondly, to provide greater legal certainty, the legislature may wish to lay down certain guidelines and rules upon which such specialized tribunal or court should adjudicate these matters. Finally, it is proposed that the statutory definitions of who qualifies as an employee in terms of the country’s Labor Relations and Basic Conditions of Employment acts be expanded or altered.
  • ItemOpen Access
    Sexual harassment in the education sector
    (Academy of Science of South Africa (ASSAf), 2011) Smit, D.; Du Plessis, V.
    No abstract available
  • ItemOpen Access
    Cyberbullying in South African and American schools : a legal comparative study
    (Education Association of South Africa (EASA), 2015-05) Smit, D. M.
    Bullying conjures up visions of the traditional scho olyard bully and the subordinate victim. However, b ullying is no longer limited to in-person encounter, having come to incl ude cyberbullying, which takes place indirectly ove r electronic media. In this electronic age, cyber platforms proliferate at an astonishing rate, all attracting the youth in l arge number, and posing the risk that they may become subject to cyberbullying. Far from being limited to those individual learner s being cyberbullied, the effects of this phenomenon extend to the learne r collective, the school climate, and also the enti re school system, man- agement and education, thus requiring an urgent res ponse. This article first provides a general overvi ew of cyberbullying and its impact on learners, schools and education. This is done through a comparative lens, studying the e xtent of the phenome- non in both the United States and South Africa. The focus then shifts to the existing legislative fram eworks within which the phenomenon is tackled in these respective jurisdict ions, particularly the tricky balancing act require d between learners’ constitutional right to free speech and expression, and the protection of vulnerable learners’ right t o equality, dignity and privacy. The article concludes by proposing certain possible solutions to the problem.
  • ItemOpen Access
    Depressie en die wêreld van werk – ’n arbeidsregtelike perspektief
    (LitNet, 2013-09-29) Smit, Denine; Fourie, Laetitia
    Afrikaans: Depressie raak tans meer as 121 miljoen mense wêreldwyd en sal waarskynlik teen 2020 die tweede mees algemene toestand ter wêreld wees. Aangesien depressie op die gemiddelde ouderdom van 25 kop uitsteek, is dit vanselfsprekend dat dit ’n uitwerking op ’n land se arbeidsmag sal hê. Die Wêreldgesondheidsorganisasie (WGO) omskryf depressie as “’n algemene geestesongesteldheid wat kronies of herhalend kan word en wesenlike beperkings kan oplê aan ’n individu se vermoë om sy of haar daaglikse verantwoordelikhede na te kom”. Wanneer hierdie omskrywing met die maatstawwe vir gestremdheid ingevolge Suid-Afrika se Goeie Praktykskode vir die Indiensneming van Persone met Gestremdhede vergelyk word, wil dit voorkom asof depressie in bepaalde omstandighede as ’n gestremdheid aangemerk kan word. Deur ’n vergelykende studie van die gestremdheidsverwante wette in die Verenigde Koninkryk (onder meer die Equality Act van 2010 en die Disability Discrimination Act van 1995) en die bestaande Suid-Afrikaanse wetgewing en statutêre instrumente (waaronder sowel bogenoemde Goeie Praktykskode as die Goeie Praktykskode vir Ontslag, die Grondwet van die Republiek van Suid-Afrika, die Wet op Gelyke Indiensneming en die Wet op Arbeidsverhoudinge), dui hierdie navorsing daarop dat die Suid-Afrikaanse statute en instrumente gebrekkig is wat betref die mate van beskerming wat dit aan sowel werknemers met depressie as hul werkgewers verleen. Alhoewel die Goeie Praktykskode vir die Indiensneming van Persone met Gestremdhede ’n nuttige riglyn is om die billike hantering van mense met gestremdhede te bevorder, kort Suid-Afrika instrumente met voldoende regsgeldigheid wat uitsluitlik oor gestremdheid handel en spesifiek vir depressie in die werkplek voorsiening maak. Tans word depressie as die “stiefkind” van gestremdheid behandel en ontvang dit weinig formele erkenning as regverdiging vir siekte en/of ongeskiktheid. Hierdie artikel stel dus voor dat die wetgewing van die Verenigde Koninkryk as model vir Suid-Afrika dien om verdere wetgewing op te stel ten einde werknemers met depressie meer doeltreffend teen onbillike diskriminasie te beskerm en terselfdertyd oor die ekonomiese belange van die werkgewer te waak.
  • ItemOpen Access
    ‘Kylie’ and the Jurisdiction of the Commission for Conciliation, Mediation and Arbitration
    (University of South Africa, 2011) Smit, Denine; Du Plessis, Voet
    No abstract is available
  • ItemOpen Access
    Identifying the structure envisioned for closely held incorporated business entities under the new statutory dispensation
    (Faculty of Law, University of the Free State, 2015) Henning, J. J.
    English: In the process of company law reform, the official belief was expressed that the regime provided in the new Companies Act 71 of 2008 for forming and maintaining a structure that reflects the characteristics of a close corporation had been sufficiently simplified so as to obviate the need to retain the Close Corporations Act 69 of 1984 as an avenue for new incorporations. The question arises as to whether such a structure is indeed provided for under the new Companies Act and, if so, what its salient features are. This contribution briefly addresses these questions
  • ItemOpen Access
    The series limited liability company: innovative, flexible...and complicated
    (Faculty of Law, University of the Free State, 2015) Hauman, M.; Snyman-Van Deventer, E.
    English: Since the introduction of the limited liability company (LLC) in the United States of America, various states have recognised the need to experiment with ways of improving the limited liability this structure offers. Of particular interest in this regard is the development of the series LLC. The series LLC was intended to provide a more flexible manner for businesses to conduct their activities, while preventing the risks of liability from affecting the entire LLC enterprise. However, uptake of the series LLC has been slow. This can allegedly be ascribed to uncertainty about how this structure may be utilised for commercial purposes, as its relation to business law remains, to a large extent, unresolved. This article examines these uncertainties, including the “separateness” of the series LLC, the recognition of the limited liability it affords, the application of bankruptcy law, taxation, as well as the fiduciary duties attached to the structure. Certain recommendations are made to ease the way forward, while further legal development is awaited. First, series LLC statutes need to specifically provide for all the rights of each series as well as the rights reserved for the master LLC. Secondly, these statutes must specify a default rule for the measure of “separateness” between the master LLC and each series. Finally, series statutes ought to provide for notice of the limited liability of each series to creditors of the LLC.
  • ItemOpen Access
    Regime on foreign direct investment within the Southern African Development Community (SADC): a comparative study of foreign direct investment (FDI) laws of select Southern African countries
    (Faculty of Law, University of the Free State, 2003) Baloro, J.; Nulliah, Q.
    English: This paper has as its emphasis the cogent need for the effective implementation of a general but uniform legal framework or environment for the treatment of foreign direct investment by the recipient African States. Hence its purpose, namely, the need to move towards the development of a harmonised legal regime on foreign direct investment within the Southern African Development Community. This necessitates a comparative study of the FDI laws of select South African countries, examining and analysing the principal features of the legal regimes of some of these countries with the aim of illustrating the areas of commonality and highlighting the differences. It also assesses the feasibility of developing or adopting an already existing model legislation on direct foreign investment by contracting parties to the SADC treaty. It thus proves instructive not to confine this paper to Southern African countries, but rather to draw from the experiences of various other countries on the African continent.
  • ItemOpen Access
    Die multilaterale beleggingsooreenkoms (MAI): 'n kruispad vir internasionale beleggingsregulering?: kroniek
    (Faculty of Law, University of the Free State, 2001) Wandrag, R.; Snyman, E.
    Abstract not available
  • ItemOpen Access
    Tax laws harmonisation between Lesotho and the Republic of South Africa
    (Faculty of Law, University of the Free State, 2001-12) Thabane, K. S.; Dednam, M. J.
    English: Lesotho is geographically landlocked within the Republic of South Africa. Research has been done at border gates whereat Basotho shoppers are able to claim and gain reimbursement of the value-added tax amounts paid against shopping in South Africa. Basotho have to pay 10% general sales tax due on sales at the Lesotho side of the border. This arrangement is administratively difficult to implement and has therefore led to massive losses of sales tax revenue for Lesotho. Also, having acquired their trading stock free of value-added tax, branches of South African businesses are liable to commodity tax in Lesotho. Research has however revealed contrary practices as indicated. It is submitted that the existence of different laws governing economic activities in countries that cannot avoid interacting with one another leads to skewed distribution of resources amongst these countries. It remains unclear whether the provisions of the Lesotho valueadded tax law will address the widespread abuse of the system as well as the glaring evasion of the tax being experienced by Lesotho today. It is in the light of the abovementioned that the hypothesis of this article was formulated: that the efficient collection of tax revenue, the decline in the abuse of the tax system and the evasion of sales tax, will all occur to some significant extent if, amongst others, the Lesotho value-added tax legislation is in harmony with its South African equivalent. In conclusion the harmonisation of the tax rates provided for by statutes of the two countries is recommended.
  • ItemOpen Access
    Plea-bargaining in South Africa: the need for a formalised trial run: chronicles
    (Faculty of Law, University of the Free State, 2001) Du Toit, S.; Snyman, E.
    Abstract not available
  • ItemOpen Access
    Inkwisatoriese en akkusatoriese elemente in die Amerikaanse pleitonderhandelingsproses: rigtingwyser of waarskuwingsteken?
    (Faculty of Law, University of the Free State, 2002-06) Fick, C. v.d. M.; Snyman-Van Deventer, E.
    No abstract available
  • ItemOpen Access
    Die aanspreeklikheid van die lede van 'n bestuursraad en die administrateurs van aftreefondse
    (Faculty of Law, University of the Free State, 2005) Du Plessis, J. V.
    English: The liability for the non-compliance with fiduciary and statutory duties towards a retirement fund and the members or beneficiaries of such a fund is in many ways not clear for the members of the board or the third party administrator. The question that must be answered is under which circumstances the members of the board or the third party administrator will be held liable? This question is discussed in this article with reference to the duties prescribed by law as well as the determinations made by the adjudicator. The determinations of the adjudicator, although they do not constitute binding precedent, provide clear guidelines for the circumstances under which the different parties may be held liable.
  • ItemOpen Access
    Seksuele teistering in die werkplek: 'n Suid-Afrikaanse perspektief
    (Faculty of Law, University of the Free State, 2004) Snyman-Van Deventer, E.; Du Plessis, J. V.; De Bruin, J. H.
    English: Sexual harassment in the workplace is a grave problem and it significantly impedes on a person's entrance into many sectors of the wage labour market. The number of sexual harassment complaints increases dramatically every year, although researchers estimate that 80 to 90% of sexual harassment cases go unreported. Despite the high figures, few South African court cases and legal literature deal with sexual harassment. The reason for this is that few persons who are harassed report a case for fear that they will lose their jobs or that they will become sources of ridicule. Sexual harassment is an infringement upon a person's personality and thus an iniurandi. The South African Constitution determines that there shall not be discriminated against any person and that includes a person's right to work without harassment and discrimination. It is therefore necessary that all employers ensure a safe environment without discrimination for all employees. Employers must adopt a policy on sexual harassment, communicate it to all employees and ensure that the policy be adhered to. If harassment does take place, the procedure and disciplinary process prescribed in the policy must be enforced.
  • ItemOpen Access
    Regsverteenwoordiging tydens dissiplinêre optredes en arbitrasies - 'n kort oorsig oor die huidige regsposisie
    (Faculty of Law, University of the Free State, 2004) Deacon, J.
    English: With the recent amendments to the Labour Relations Act 66 of 1995 the question of legal representation was raised again. This article deals with the current legal position and explains the advantages and disadvantages of legal representation during disciplinary action and arbitrations. In conclusion legal representation should always be an option for any party during any disciplinary action. The presiding officer should, however, have a discretion not to allow legal representation if circumstances allow it. Legal representation will definitely enhance and promote just and fair dispute resolution and disciplinary action. Legal practitioners can play a meaningful role in maintaining good labour relations and ensuring fairness between the employer and employee. There is little justification for summarily excluding legal representation.
  • ItemOpen Access
    Financial markets in the Southern African development community: the harmonisation and approximation of commercial laws
    (Faculty of Law, University of the Free State, 2003) Henning, J.; Du Toit, S.
    English: The free flow of capital has been identified as a critical factor in the process of reducing poverty in the SADC region, along with the lowering of trade barriers. While the trade protocols have been adopted and much has been made of the harmonisation of stock exchange listing requirements and central banking regulation, it is an effort at harmonising corporate law that is noticeably absent. This article focuses on the harmonisation of business law including the supporting financial markets and the process of corporate law reform in South Africa, Botswana and Zimbabwe.
  • ItemOpen Access
    Dispute resolution in NAFTA and the WTO: a useful guide for SADC?
    (Faculty of Law, University of the Free State, 2003) Snyman-Van Deventer, E.
    English: In the process of developing, structuring and formalising the mechanism for settlement of trade disputes in the SADC region, the system for the settlement of disputes in both NAFTA and the WTO can serve as a useful guide for SADC and even more so for the African Union. The swift, fair and just settlement of especially trade disputes will be a major factor in the economic development of the region and it is therefore necessary that a mechanism for the settlement of disputes is established that will serve the aims of SADC and its member states. This article provides an overview of the mechanisms for trade dispute resolution in the WTO and NAFTA as guide for SADC.
  • ItemOpen Access
    Trade in services: examples for SADC
    (Faculty of Law, University of the Free State, 2003) Lehloenya, P. M.
    English: Over the last few decades, the services sector has become an important component of world trade and the main income earner for many countries. Accelerated by the process of liberalisation, the effects of trade in services now traverse all countries. The main participants and beneficiaries, however, remain developed countries, while developing countries continue to play a marginal role. This comes as a result of a variety of factors ranging from developing countries' inexperience in producing services for export purposes, to trade rules that are more favourable to developed countries, to the complexity and cost of the measures necessary for developing countries to make a successful transition to the new arrangements under liberalisation. Notwithstanding the adverse conditions, opportunities exist in the legal framework developed under the WTO for developing countries to participate more meaningfully in trade in service. These include, inter alia, the possibility of collaborating with foreign firms and benefiting from their experience, as well as establishing regional joint ventures that can compete more effectively at the international level. In the end, the success of developing countries in penetrating the international services market will be determined by the extent to which their domestic service providers manage to adapt to the new trade environment, how all these countries exercise their options in choosing which services to liberalize and their timing in doing so, as well as their ability to resist pressure from developed countries to act against their better judgement.