Close Corporations Research Articles

THE COMPANIES ACT 71 OF 2008 DOES NOT OUST THE COMMON-LAW DERIVATIVE ACTION FOR CLOSE CORPORATIONS Naidoo v The Dube Tradeport Corporation [2022] ZASCA 14

The Companies Act 71 of 2008 (2008 Act) abolished the common-law derivative action for companies; section 165 of the 2008 Act replaced it with the statutory derivative action (Griggs “The Statutory Derivative Action: Lessons That May Be Learnt From the Past!” 2002 University of Western Sydney Law Review par 1.2; Coetzee “A Comparative Analysis of the Derivative Litigation Proceedings Under the Companies Act 61 of 1973 and the Companies Act 71 of 2008” 2010 Acta Juridica 298). The question that remained was what impact this would have on common-law rights for close corporations that had been incorporated before the commencement of the 2008 Act but which have not converted to companies under that Act. The Supreme Court of Appeal (SCA) judgment in Naidoo v The Dube Tradeport Corporation ([2022] ZASCA 1) provides much-needed clarity on the status of the common-law derivative action for close corporations. The case also provides guidance on how a court will assess whether knowledge of information can be imputed to a third party in their dealings with a close corporation.

Shareholder withdrawal in close corporations: an Anglo-German comparative analysis

ABSTRACT Small and medium enterprises (SMEs) are important to most economies, but the laws of close corporation entities used by SMEs are underrepresented in comparative corporate law scholarship. This Article critically analyses ‘withdrawal’ regimes in Germany's GmbH (Austritt aus wichtigem Grund) and the UK's private company limited by shares (unfair prejudice remedy) that respond to shareholder conflicts in close corporations. Comparative analysis reveals how the two jurisdictions differ in treatment of ‘non-fault’ scenarios and their underlying visions of shareholder protection. Potential reform of the UK's withdrawal regime based on German and Singapore law is also explored.

The Choice of Legal System for Family Business Succession ─Focus on Trusts and Close Corporations

The Choice of Legal System for Family Business Succession ─Focus on Trusts and Close Corporations

MISTAKE AND SURETYSHIP: AVOIDING THE SPECTRE OF BRINK V HUMPHRIES & JEWELL (PTY) LTD

The nettlesome matter of operative mistake and suretyships tucked away in credit applications tends to find its way into the law reports on a rather frequent basis. This phenomenon is hardly surprising because in the cut and thrust of modern commerce, and even more so in lean times, individuals are keen to apply for credit on behalf of the corporate entities which they represent, but less eager to stand in for these debts when they cannot be serviced. From the contractual perspective of mistake, these cases tend tofollow a familiar pattern. Commonly, a member of a close corporation or director of a private company applies on behalf of the close corporation or company, as the case may be, for some or other form of credit from another party. Usually, within a business context, credit will not be granted without some form of security, and in these instances more often than not the representative is required to agree to a personal suretyship in favour of the creditor, which is often embodied in the credit application form itself. Oncethe representative has appended him or her signature to the application form, he or she inexorably finds himself or herself simultaneously bound as surety and co-principal debtor, the formal requirements for a suretyship agreement having been complied with (as prescribed by s 6 of the General Law Amendment Act 50 of 1956). On the whole older case law displays a reluctancy on the part of the judiciary to excuse a surety on the basis of material mistake in such circumstances, but in Brink v Humphries & Jewell (Pty) Ltd (2005 2 SA 419 (SCA)) the Supreme Court of Appeal adopted a far more lenient approach in favour of the surety, and perhaps heralded a not too subtle change in the law. This note examines the way in which the courts have adjudicated similar cases, and specifically whether more recently they have reinforced the generally stricter approach of old or been prepared to follow the path which Brink seemed to have cleared.

SOME NOTABLE DIVERGENCES IN THE DEVELOPMENT OF SOUTH AFRICAN AND NAMIBIAN INSOLVENCY LAW

It is a well-known fact that the legal systems of South Africa and Namibia, or rather the former South West Africa, were rather identical until the advent of independence of the latter on 21 March 1990. This note thus deals with aspects of the development of insolvency law in South Africa and Namibia since Namibia became independent. What is also important is the fact that both Namibia and South Africa adopted a constitution that is based on a Bill of Rights (see the Constitution of the Republic of Namibia of 1990 and the South African Constitution of 1996). Some developments in insolvency law based on these features are therefore also considered in this note. As indicated, upon independence Namibia retained significant portions of South African law including its legislation. Owing to the shared background of Roman-Dutch-law and English-law influences, both Namibia and South Africa can still be classified as having mixed legal systems. Like South Africa, Namibian insolvency law is not contained in one single statute although it is still largely regulated by the South African inherited Insolvency Act 24 of 1936 (hereinafter “the Insolvency Act”), which deals first and foremost with the sequestration of individuals and related matters. Namibia also inherited the South African Companies Act 61 of 1973 but the South African Close Corporations Act 69 of 1984 was largely adopted as the Close Corporation Act 26 of 1988 that came into operation on 25 July 1994. These pieces of legislation, amongst others, deal with the liquidation or winding-up of companies and close corporations respectively. Apart from these statutory enactments, precedents and common-law principles also apply in the absence of specific statutory provisions. The Insolvency Act of 1936, however, remains the principal source of both South African and Namibian insolvency law and the other enactments render certain provisions of the Insolvency Act applicable. At present and as far as the principles are still comparable, precedents set by South African and Namibian courts remain relevant in both jurisdictions. In order to align some of the terminology with structures and developments in Namibia, the 1936 Insolvency Act was amended in a number of respects by the Namibian Insolvency Amendment Act 12 of 2005. The wording of the Insolvency Act was also thereby amended to make it gender-friendly. However, when dealing with either system it is important to ascertain to what extent statutes that applied in both jurisdictions have been adopted, subsequently amended and/or replaced. The Namibian government has for instance introduced a new Companies Act 28 of 2004 that is bound to replace the South African-based Companies Act of 1973. Although a new insolvency statute is not in the pipeline in Namibia, an amendment act to the 1936 Insolvency Act has been published during 2005 (the 2004 Companies Act was assented to on 19 December 2004 but it will only come into operation once so proclaimed). In South Africa a new Companies Act 71 of 2008 has been introduced but it is also still due to come into operation. New insolvency legislation that will unify the insolvency of individuals and companies is on the table in South Africa but it is not clear when this process will come to fruition. Another general feature is that judgments of the South African and Namibian high courts are clearly still influential in both jurisdictions but as amendments and separate legal developments will deviate from the former common norm, judgments will clearly have to be treated with circumspect in future. In the absence of a comprehensive textbook dealing with the Namibian version of insolvency law, South African textbooks will remain of some use to that jurisdictions but also subject to the same qualifications expressed above.

RELIANCE, FORMALITIES AND THE MODE OF ACCEPTANCE OF AN OFFER Pillay v Shaik 2009 4 SA 74 (SCA)

In Pillay v Shaik (2009 4 SA 74 (SCA)), the Supreme Court of Appeal was confronted with a situation which tends to feature in the law reports more frequently than one would expect, and that is where a party to a transaction involving the sale of immovable property reneges on an apparent agreement by invoking some form of technicality (in casu the lack of a signature on a contractual document) as a bar to the proper conclusion of the contract. Usually, where immovable property is sold directly to a purchaser, section 2(1) of theAlienation of Land Act 68 of 1981 applies and provides that no alienation of land will be of any force or effect unless contained in a deed of alienation signed by the parties, or by their agents acting on their written authority. Failure to comply with this provision renders an alienation of land void. Where, however, immovable property is held in the name of a close corporation or private company merely the members’ interests or shares are transferred to the purchaser, but the purchaser still indirectly gains control over the property owned by the juridical entity. The present matter dealt with the latter type of situation and the legal question was whether the sellers had accepted a signed, written offer made by the purchasers despite the fact that the sellers had not in turn signed the contractual documents. The Natal Provincial Division (Shaik v Pillay 2008 3 SA 59 (N)) found that contractual liability did not lie for want of compliance with a party-imposed signature formality, whereas the Supreme Court of Appeal applied the reliance theory to reach the opposite conclusion in the circumstances. The respective approaches of these two courts are diametrically opposed giving rise to some interesting issues on doctrinal as well as policy levels.

전통적 水利시설의 근대적 변동양상— 漢灘江水系 鐵原･漣川지구의 사례 —

This paper is to clarify the modern reorganization process of traditional irrigation facilities such like Bo(洑) and Zeon(堤堰) in the modern transitory period, Korea rural. Zeon is a kind of reservoir, and Bo is an irrigation canal from the river-bank. In the perspectives of local society history, these traditional facilities in Cheorwon(鐵原) and Yeoncheon(漣川) county, Hantangang-river(漢灘江) valley, had continued long-term existence in the transitory period, colonial period. The case of Bo(洑) shows these characteristics well. This remarkable facts displays long-term sustainability of local irrigation community in a peasant community. Especially, historical materials in Joongang Irrigation Association(中央水利組合) of Cheorwon county present a lots of traditional irrigation facilities in the upstream of the Hantangang-river. This case study brings light on the research of close corporate community in context of East Asian studies.

Regspraak: ’n Verrykingseis behoort slegs suksesvol te wees mits ongegronde verryking ter sprake is en ’n deliktuele vordering slegs mits aan al die aanspreeklikheidsvestigende elemente voldoen is

Regspraak: ’n Verrykingseis behoort slegs suksesvol te wees mits ongegronde verryking ter sprake is en ’n deliktuele vordering slegs mits aan al die aanspreeklikheidsvestigende elemente voldoen is

A Trans-Atlantic Doctrinal Orientation Made Concrete: Ohio’s First 'Modern' Business Corporation Act (1927)

A Trans-Atlantic Doctrinal Orientation Made Concrete: Ohio’s First 'Modern' Business Corporation Act (1927)

Regularities of transformation of dimethoate in apple agrocenoses

The aim of the research was to identify the regularities of dimethoate transformation in apple agrocenoses under the influence of protection technologies.Methods. The work was done in Toxicological laboratory of the North Caucasus Federal scientific center of horticulture, viticulture, winemaking. The research was conducted in field and laboratory conditions with using of methodological approaches based on modern methods and techniques. The pilot territory was laid in close corporation PPF Central. The extraction of analyzed compounds by plant and soil material is carried out according to the "Guidelines for the determination of micro-quantities of pesticides in plants, processed products, soil and water".Results. The background determination of organophosphate pesticides in soil before the planned treatments during this year revealed: the substance of dimethoate is higher the hygienic regulations in 1.3-1.4 times in 53% of the examined samples. During the harvest period, the content of dimethoate in all soil samples exceeded the permissible concentration, in the control version includes 0.3-0.5 PC of dimethoate. The accumulation of dimethoate is associated with its ability to react with complexing metal ions, which count in our soils is sufficient.Conclusion. Compiling the apple protection system is recommended to take into account that the annual using of dimethoates implying a violation of hygienic standards in soil and apple fruits. If there is a single application, residual amounts of dimethoate are in apple fruits, and their concentrations are exceeding or staying in the maximum permissible level. The samples were taken after 40 days of treatment. We recommend to exclude these insecticides (including D. V. dimetoate) from the apple tree protection system or use single application every 2 years in the first half of growing season.

КИТАЙСЬКИЙ ДОСВІД ПРОФЕСІЙНОЇ ПІДГОТОВКИ МАЙБУТНІХ МАГІСТРІВ З ФІЗИЧНОЇ КУЛЬТУРИ ЗА СПЕЦІАЛІЗАЦІЄЮ “ФІЗИЧНЕ ВИХОВАННЯ”

У статті розглядаються питання стосовно забезпечення якості професійної підготовки майбутніх магістрів з фізичної культури за спеціалізацією “Фізичне виховання” у закладах вищої освіти Китайської Народної Республіки. Розгляд питань здійснювався за допомогою аналізу літературних джерел і документів; методу системного аналізу; методу порівняння і зіставлення.Стратегія модернізації вищої освіти у Китаї, розробляється та здійснюється у тісній взаємодії з провідними міжнародними організаціями з врахуванням китайської специфіки.Система вищої освіти Китайської Народної Республіки передбачає відбір найбільш здібних абітурієнтів. Описано рівні і умови організації системи вищої освіти в КНР: спеціаліст, бакалавр, магістр.Проаналізовано навчальний план прикладної магістерської програми з фізичної культури за спеціалізацією “Фізичне виховання” Сіаньського університету фізичної культури. Зазначено, що дисципліни навчального плану поділяються на обов’язкові (суспільні, базові і професійні) та вибіркові. Практика входить до обов’язкового блоку підготовки магістрантів. Магістрантам, що навчалися у закладах вищої освіти, успішно склали іспити за програмою підготовки магістрів і захистили магістерську дисертацію, присуджується освітній ступінь магістра. З’ясовано, що представники всіх структурних підрозділів університету (коледжу фізичної культури, коледжу спортивної підготовки, коледжу соціального спорту і дозвілля, коледжу ушу, коледжу медичних наук, коледжу спортивної економіки і спортивного менеджменту, коледжу спортивного мистецтва, коледжу спортивної журналістики, коледжу футболу, коледжу неперервної освіти, коледжу марксизму) включені до системи забезпечення якості навчання магістрантів, що має 5 підсистем.

The Transformation of International Tax

AbstractThe recession of 2008 precipitated a political crisis that motivated an unprecedented international project to curb corporate tax dodging. This Article argues, contrary to dominant scholarly views, that this effort transformed international tax—changing its participants, agenda, institutions, norms, and even its legal forms. Perhaps most important, efforts to close corporate tax loopholes widened a rift over revenues that threatens a hundred-year-old tax treaty framework. This Article identifies and critically evaluates these changes.

Economic Analysis of Corporate Law

The economic analysis of corporate law applies the concepts and tools of microeconomics to the study of the legal rules, regulations and practices that govern the formation and operation of business corporations, most notably as regards the rights and duties of directors, officers, shareholders, and creditors. The literature has focused mostly on publicly-traded corporations, but the analytical framework extends to the simpler cases of close corporations and limited liability companies and the more complex case of corporate groups. This article outlines the foundations of the economic analysis of corporate law, contrasts the classic approach with more recent functional scholarship, and briefly discusses the law and economics of three specific issues: limited liability, managerial liability, and takeovers.

The New Kid on the Block on the European Market for Corporate Legal Forms: A Polish Laboratory for a Modern Close Corporation

Entering into force in 2021, Poland will have a new legal form: the simplified joint stock company (sJSC). The sJSC is especially relevant for start-ups companies. simplified joint stock company (sJSC), Polish corporate law

A Preliminary Study on the Practice of Multiple Voting Right shares in Taiwan

過去我國實務見解始終否認公司得發行複數表決權特別股，2015年公司法正式引進閉鎖性公司專節後，方承認閉鎖性公司得發行複數表決權特別股，更進一步，2018年修法時放寬至非公開發行之一般股份有限公司均得適用，逐步提供閉鎖性公司及非公開發行公司股權規劃上有更彈性的空間，以符合現今鬆綁管制之國際趨勢，並有利於新創事業籌集資金。本文首先介紹我國特別股規定之演進過程，並討論增訂複數表決權規定後於公司法後將發生之問題，進而介紹美國法相關制度之運作及公司實務之作法作為借鏡，最後歸納數項修正方向建議，以其複數表決制度之適用能更加完備。In the past, the opinions of the courts in Taiwan have always denied that the corporations could issue multiple voting rights shares. Until 2015, the Corporation Law in Taiwan finally amended to include “Close Corporation Section”, it was acknowledged close corporations could issue multiple voting right shares. Moreover, the rules applied to non-public corporations after the amendment of the Corporation Law in 2018, gradually providing more flexible space for the equity planning in close corporations and non-public corporations. The amendment of multiple voting right shares is also in line with the current trend of the world to ease restrictions. The article first introduces the evolution of the rules of preferred stocks, and discussed the problems that may occur after the amendment of multiple voting right shares. Furthermore, it would make a thorough inquiry into the practice of multiple voting right shares in America to conclude some suggestions for the legal system in Taiwan.

Companies and Close Corporations

Companies and Close Corporations

Accountability and Competence for the Examination of Accounts at the Diocesan Level

The article is focussing on the range of applicability of the duty of rendering account as well as on the corresponding competence to control the accounts that the universal and the particular Canon Law provide at the level of a Catholic diocese. The particular law concerned is the one of the Archdiocese of Cologne, where the competence to control accounts rests upon two institutions: the „Kirchensteuer- und Wirtschaftsrat“ and the „Vermogensrat“. Two questions of crucial importance arise: First, whether juristic persons that serve a religious purpose, - but that exist as juristic persons only in accordance with state law (like e.g. a close corporation/ limited liability company) - are obliged to render accounts according to c. 1287 § 1 CIC? And second, whether the particular law may establish the duty of rendering accounts for juristic persons that are not bound by c. 1287 § 1 CIC?

Shareholder Conflicts in Close Corporations between Theory and Practice: Evidence from Italian Private Limited Liability Companies

Shareholder conflicts are said to be the Achilles heel of close corporations. They materialize in different ways and shapes, mostly in the form of majority oppression, minority abuse or shareholder deadlocks. Different cognitive biases and heuristics, as shown by the behavioural law and economics movement currently so much in vogue, contribute to their emergence (such as over-optimism, strategic behaviour, availability and representativeness heuristics, information asymmetry). In international corporate law practice, depending on the concrete governance goal to be achieved, entrepreneurs employ various contractual safeguards to effectively prevent and resolve the above shareholder conflicts. The most common are restrictions on the transfer of shares (e.g., the right of first refusal, consent clauses), special prerogatives for minority shareholders (e.g., veto rights over management decisions, super-majorities for fundamental corporate actions) and expulsion clauses, while more experienced players also recur to drag-along or tag-along arrangements, as well as to shoot-out procedures. The present article builds upon this framework in order to conduct probably the first thoroughly comparative law in action research on a representative data set of Italian private limited liability companies (srl) incorporated in South Tyrol and Milan. The empirical findings, with some unexpected variations between the two places of incorporation, suggest that with reference to conventional safeguards (the right of first refusal, consent clauses, etc.) a more or less significant degree of contractual sophistication can be observed, while innovative clauses such as tag-along or drag-along provisions are generally lacking. The explanation likely lies in the fact that legal advisers path-dependently imitate standardized corporate charter terms widely acknowledged and tested among the legal community rather than investing considerable efforts in the drafting of optimal customized arrangements. The social and economic costs correlated to sub-optimal and status quo-biased contractual design might not be taken into due consideration. This article also provides useful policy suggestions for the legislator and practitioners for the drafting of the best-fitting corporate charter.

The Big Crowd and the Small Enterprise: Intracorporate Disputes in Crowdfunded Ventures

Equity crowdfunding is a financial innovation that allows small businesses and startups to access capital through soliciting investment over the Internet. The current literature on crowdfunding has focused on its theoretical background and on the development of crowdfunding exemptions from the securities laws permitting the practice. There is less discussion of the impact of crowdfunding on corporate governance. This article fills that gap by outlining the potential for a panoply of intracorporate disputes between and among majority shareholders and “crowd” minority shareholders, placing the discussion within the longstanding—if uneasy—divide in judicial treatment of disputes in public corporations and close corporations. From there, the article argues that courts adjudicating disputes in “close-but-crowdfunded” firms should adopt the contractual approach exemplified by Delaware law, and refrain from importing minority shareholder oppression doctrine into the crowdfunding context. The two primary justifications for providing special protections for close corporation minority shareholders are much weaker in the crowdfunding context. First, the mechanics of the crowdfunding process create both the incentive and opportunity to select appropriate terms upon which the founders will continue their relationship and which will be offered to the crowd. Second, and similarly, that same process undermines the inference that there are unwritten, yet reasonable, expectations about any shareholder’s role in the venture. Furthermore, the application of oppression doctrine in the crowdfunded firm would ultimately harm crowd and non-crowd shareholders alike, while undermining the potential gains from equity crowdfunding as a new source of capital accumulation.

Shareholder Conflicts in Close Corporations: Between Theory and Practice. Evidence from Italian Private Limited Liability Companies

Shareholder conflicts are said to be the Achilles heel of close corporations. They materialize in different ways and shapes, mostly in the form of majority oppression, minority abuse or shareholder deadlocks. Different cognitive biases and heuristics, as shown by the behavioral law and economics movement currently so much in vogue, contribute to their emergence (such as overoptimism, strategic behavior, availability and representativeness heuristics, information asymmetry). In the international corporate law practice, depending on the concrete (principal-principal) governance goal to be achieved, entrepreneurs employ various contractual safeguards to effectively prevent and resolve the above shareholder conflicts. The most common are restrictions on the transfer of shares (e.g., right of first refusal, consent clauses), special prerogatives to minority shareholders (e.g., veto rights over management decisions, super-majorities for fundamental corporate actions) and expulsion clauses, while more experienced players also recur to drag-along or tag-along provisions, as well as to shoot-out procedures. The present article builds upon this framework in order to conduct probably the first wholly law-in-action research on a representative dataset of Italian private limited liability companies (srl) incorporated in South Tyrol and Milan. The South Tyrol represents the paradigm model of the Italian SME market, while Milan occupies an “outlier” position as the major international financial and economic marketplace. The first empirical findings suggest that with reference to “conventional” safeguards (right of first refusal, consent clauses, etc.) a significant degree of contractual sophistication can be observed, while more innovative clauses such as tag along or drag along provisions are generally missing. The explanation may lie in the fact that legal advisers path-dependently imitate standardized corporate charter terms widely acknowledged and tested among the legal community rather than investing considerable efforts in the drafting of optimal customized arrangements.