n Stellenbosch Law Review = Stellenbosch Regstydskrif - The approach of the Supreme Court of Appeal to the enterprise reality in company groups
[Discussion of 2010 3 SA 382 (SCA)]

Volume 23, Issue 3
  • ISSN : 1016-4359
  • E-ISSN: 1996-2193



Company law has not yet been able to give effect to the enterprise reality in dealings with corporate groups, while maintaining the principle of the separate legal personality of the companies comprising the group. This case note considers the judgment in 2010 3 SA 382 (SCA), where the majority considered the combined transactions of two fellow-subsidiaries as constituting a loss of property for purposes of indemnification in terms of section 33(1) of the Insolvency Act 24 of 1936. The note draws a comparison between this decision and [2001] UKHL 2; [2001] 1 WLR 143. J Vella "Departing from the Legal Substance of Transactions in the Corporate Field: The Ramsay Approach Beyond the Tax Sphere" (2007) 7 243 257 argues that may be explained by way of the purposive interpretation of commercial legislation. It is submitted that the same can be said of the approach of the Supreme Court of Appeal in the decision. In terms of this approach a statutory provision must be given a purposive interpretation in order to determine the nature of the transaction to which it is intended to apply. The court must then decide whether the actual transaction, which might comprise of a number of separate parts intended to operate together, falls inside the scope of the purpose of the section. This approach may be especially helpful, considering the inclusion of purposive interpretation clauses in recent commercial legislation. At the same time, it might aid courts to provide greater acknowledgement of the enterprise reality within corporate groups in the appropriate circumstances.

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