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- Volume 26, Issue 3, 2014
SA Mercantile Law Journal = SA Tydskrif vir Handelsreg - Volume 26, Issue 3, 2014
Volume 26, Issue 3, 2014
Author Tracy GutuzaSource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 543 –559 (2014)More Less
In 2013, the Income Tax Act was amended to ensure that taxpayers would not escape the 'exit tax'. This 'tax' is imposed when South African residents cease to be tax resident in South Africa and become tax resident in a country with which South Africa has entered into a treaty for the relief of double taxation. The amendment came about as a result of the decision in Commissioner for the South African Revenue Service v Tradehold Ltd.
Although the amendment purportedly nullifies the decision in Tradehold with respect to the application of the 'exit tax', the judgment of the Supreme Court of Appeal is of interest in relation to its stance on the proviso to the definition of 'residence' in the Income Tax Act. The dispute in Tradehold arose as a result of the insertion of the proviso to the definition of 'residence' in the Income Tax Act. The proviso was added to the definition of 'residence' in the Income Tax Act in 2003 to deal with the problem of potential dual residency. The stated purpose of the proviso is to prevent a taxpayer from having dual tax residency. In terms of this proviso, a taxpayer is deemed to be a non-resident of South Africa when, on the application of a treaty, the taxpayer is deemed to be a resident of the other state who is a party to the treaty.
The questions which this article seeks to analyse, through the facts and judgment of Tradehold, are whether the proviso to the definition of 'residence' is necessary, and whether the proviso achieves its stated purpose of preventing a taxpayer from reducing its tax burden by using dual residency.
Protection of holders of securities in the offeree regulated company during affected transactions : general offers and schemes of arrangementsAuthor S.M. LuizSource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 560 –586 (2014)More Less
A takeover of a company is a common commercial transaction and may be launched in order to gain, consolidate, or achieve total control of a company. The definition of an 'affected transaction', as takeovers are called in the Companies Act 71 of 2008 ('the Companies Act 2008'), covers a variety of transactions and reveals that a takeover can be structured in a number of ways. One way would be for an offeror to make a general offer to acquire the remaining voting securities of a company that the offeror does not already hold, potentially followed by the compulsory acquisition of securities from those holders who do not accept the offer. Another would be to use a scheme of arrangement to acquire control.
Whatever the method used, an affected transaction gives rise to a number of potential conflicts of interest. For example, there may be a conflict between the offeror who is attempting to acquire offeree company securities at the best price and the existing holders of those securities who wish to secure the highest price. Conflict could arise between an existing majority holder of securities in the offeree company and minority holders. Further, members of incumbent management of the offeree company might attempt to secure their own positions rather than act in the best interests of the company.
Author R.M. ShaySource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 587 –605 (2014)More Less
The law is under the imperative to catch up to the times. Many landmark decisions handed down in various jurisdictions over successive decades try to make the law on the books fit the rapidly evolving state of society. It is beyond the ken of legislation's abilities to predict how the development of innovation, culture and custom will modify its course; as such changes occur with little indication of the directions they might take. The courts' expedient task here is to make analogue provisions fit the digital environment - technologically, industrially, and socially. This is the predicament that South African courts will face in the first fair dealing case to be considered here. The Copyright Act has been largely neglected since its promulgation in relation to new digital media and practices; the vast majority of its provisions were drafted almost four decades ago and are thus ill-suited to modern disputes.
This article examines the rules and doctrine of the Copyright Act relating to the protection (and protectability) of information, specifically factual information relayed by commercial news services. The few reported South African cases provide an elementary understanding of the idea/expression dichotomy underlying copyright law. American courts have decisively extended this principle through the formulation of the merger doctrine. I argue that this judicial creation is a policy choice that errs on the side of caution when it potentially protects plain expression; this choice is similarly open to South African courts. The defence of fair dealing for the purpose of reporting current events is then discussed, and the merger doctrine features in the analysis of the factors that are invariably consulted to determine fairness. The article concludes by issuing several caveats on the application of these factors.
Author Elizabeth SteynSource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 606 –650 (2014)More Less
Electricity has been variously described as 'fungible', 'homogeneous' and 'totally undifferentiated' - the product is completely indistinguishable in that all electrons are identical. It varies in value according to time and place - power is much more valuable during peak time on a congested grid than during off-peak hours when there is ample supply in relation to demand. Demand varies wildly from hour to hour and from day to day over the course of a year. The flow of electricity cannot be directed: it flows according to Kirchoff's laws and takes (literally) the path of least resistance. In other words, '[e]lectricity is transmitted between different locations by a network according to the laws of physics, not the contracts between generators and buyers'. There is therefore no direct physical relationship between an individual generator and an individual consumer and a fiction is used to ascribe the flows accordingly. Furthermore '[e]lectrons do not know when they have crossed a state or provincial boundary' but governance becomes harder when electricity crosses political boundaries, as it becomes necessary to accommodate potentially conflicting political preferences. Since it 'travels around the AC grid at the speed of light', it becomes 'impossible to predict where a particular power plant's output will go at a particular point in time'.
Source: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 651 –667 (2014)More Less
'While seeking to portray international society in its totality, I have striven hard not to fall into the trap which sometimes swallows social historians - that is, to leave out chronology and show a world which appears static. I hold strongly that chronology forms the bones of history on which all else is built. The world changed substantially in those fifteen years. In 1815 reaction seemed triumphant everywhere; by 1830 the demos was plainly on its way.'
If one considers these words and applies them to insolvency legislation in South Africa, this legislation appears to show a world which is static. South African insolvency law today is regulated by the Insolvency Act 24 of 1936. It can be described as a creditor friendly system, a system that has remained essentially static since 1936. The pre-eminent policy is that the sequestration of a debtor's estate must be to the advantage of creditors. In this respect recent court judgments in South Africa have focused on sequestration applications that attempt to circumvent this requirement of advantage to creditors. This practice then results in an abuse of the process of the courts. Recently it was pointed out that dishonesty in insolvency proceedings places a burden on creditors and the South African economy in general. This abuse may occur where the costs of sequestration exceed the alleged shortfall between assets and liabilities; where the costs reduce the amount available for distribution to creditors; and where the costs favour administrators rather than creditors. A question considered in this article is to what extent the courts may go in setting requirements to be complied with beyond those in the provisions of the Act, in voluntary surrender of debtors' estates and in compulsory sequestration proceedings. In respect of the requirement that advantage to creditors must be shown in these procedures, Leveson J has been referred to regarding this question when he said that he would not set guidelines to assist practitioners in ascertaining an acceptable dividend for creditors, as this would be encroaching on the functions of the legislature. In this article this question of encroachment, amongst others, is re-visited in an analysis of two recent judgments where insolvency proceedings were abused, namely Arntzen and Plumb.
The use of alternative dispute resolution methods in corporate disputes : the provisions of the Companies Act of 2008 : analysesAuthor Tobie WieseSource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 668 –677 (2014)More Less
It has been said that companies 'desire among all things that ... controversies be rapidly as well as equitably decided', and that prolonged lawsuits are 'the tumors and cancers of business men, eating into the very substance of their lives'. These concerns have had the result that the use of alternative dispute resolution (ADR) processes to resolve commercial disputes has become a growing trend internationally over the last few decades.
The trend towards the increasing use of ADR processes to resolve commercial disputes has also been evident in South Africa where there has been increasing support for mediation, rather than adjudication, over the last few decades. There are currently nearly 50 statutes in South Africa which provide for mediation in some form or other.
Author Adam PikeSource: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 678 –687 (2014)More Less
An article appearing in this journal raised questions and stated propositions in relation to the appraisal remedy provisions found in section 164 of the Companies Act 71 of 2008 ('the Act'). It was suggested that these questions required clarification through either legislative intervention or judicial determination.
The article in question was published prior to the commencement of the Act and thus subsequent amendments may not have been considered. This could perhaps explain all or part of the uncertainty regarding some of the issues covered. Whether this may be the case, and the extent to which it may be the case, will not be considered here. This note instead focuses on seven questions or concerns identified in the article and presents an alternative view to each of them.
Source: SA Mercantile Law Journal = SA Tydskrif vir Handelsreg 26, pp 688 –705 (2014)More Less
The first decision of a South African court dealing with spam has revealed an industry practice as clear as dishwater. The Electronic Communications and Transactions Act 25 of 2002 ('the ECT Act'/'the Act') came into operation on 31 July 2002. The objects of the Act are among others to enable and facilitate electronic communications and transactions in the public interest and to develop a safe, secure and effective environment for consumers, business and government to conduct and use electronic transactions.
The term 'spam' refers to unsolicited communications that are sent bulk to electronic addresses. The issue of spam is dealt with in section 45 of the ECT Act, within the realm of consumer protection (chapter 8 of the ECT Act). The regulation of spam is also addressed in the Consumer Protection Act 68 of 2008 ('the CPA') and, more recently, in the Protection of Personal Information Act 4 of 2013 ('POPI'). The spam provisions in the ECT Act, the CPA and POPI differ and industry regulation of spam adds its own distinctive features.