This month we include not only the Awards made to legal advisers in both M&A and general corporate finance on 16 February at the annual DealMakers Gala Awards by sister publication DealMakers, but also a feature on the topic of Mergers and Acquisitions. The aspects covered are just a few of those essential to a successful deal.
The year ahead is likely to be challenging but there are already a couple of interesting events to chew over, including the anticipated departure of Barclays from ABSA and Bidvest's plan to bring its Foodservice business onto the JSE.
On 30 November 2015, the Competition Tribunal heard argument from the Competition Commission and the Delatoy Group regarding the definition of a "firm", and the attribution of liability to entities which form part of the same corporate group.
In Motale v Abahlobo Transport Services (Pty) Limited and others  JOL 34696 (WCC), Mr Motale (the applicant) repeatedly applied for access to certain company records of Abahlobo Transport Services (Pty) Limited (the first respondent, referred to as "the company"), of which he was a director and a shareholder. The documents requested related to the tax affairs of the company, and included certain bank statements.
In South African corporate law, the business and affairs of a company must be managed by or under the direction of its board of directors (s66(1) of the Companies Act (71 of 2008)). Given the vital role that directors play in companies, it is necessary for there to be some degree of accountability to ensure that they act in the best interests of the company and have the degree of care, skill and diligence reasonably expected of a person carrying out the functions in relation to the company (s76(3)(b) read with s76(3)(c)(ii)).
The notion "piercing the corporate veil" remains one of the most contested areas of litigation within the corporate law context, yet it is the least understood subject. The general principle is that companies or corporate entities are regarded as legal entities with their own juristic personalities, separate from their shareholders and directors. As such, corporate obligations remain that of the company and not the share-holders and directors acting in its interest.
An applicant (the creditor) serves an application for the winding-up of a respondent (the company). The application is based, firstly, on the fact that the company is both factually and commercially insolvent and, secondly, that it is just and equitable to do so. The merits are uncontentious.
Arbitration proceedings constitute "legal proceedings" for purposes of s133(1) of the Companies Act and are covered by the business rescue moratorium. The moratorium only suspends the time limits for a creditor's right to commence proceedings or otherwise assert a claim against the company during the moratorium and is not an absolute bar. The Supreme Court of Appeal provided this clarity in Chetty t/a Nationwide Electrical v Hart and Another NNO 2015 (6) SA 424 (SCA) (Chetty v Hart).
Human interaction is founded on relationships and, by virtue of its nature, conflict is inevitable. In instances where parties themselves cannot settle disputes, the most appropriate method of resolution must be determined according to the nature of the dispute at hand.
International experience has shown that abusive tax avoidance can be broken down into three categories. The first involves abnormal arrangements that are entered into or carried out in a manner which would not be employed but for the tax benefits they promise to provide. The second involves arrangements that lack commercial or economic substance, and typically involve common features such as circular cash flows, tax indifferent parties and offsetting or self-cancelling elements. In practice, these categories often overlap, involving artificial and contrived composite transactions. At the extreme end of the spectrum, arrangements in these categories may also fall foul of the substance over form doctrine.
Section 8EA of the Income Tax Act (58 of 1962) constitutes an anti-avoidance provision which, if applicable, has the effect that the amount of any dividend or foreign dividend received or accrued to the holder of a preference share is deemed to be an amount of income as opposed to exempt income for tax purposes. In order for the provisions of s8EA of the Act to apply, the preference share in question must be regarded as a "third-party backed share".
In his Foreword, Tax Ombud, Judge B M Ngoepe describes the book as being "written in a manner that makes tax law knowledge accessible. It can be used not only by tax experts, but also by anyone seriously wanting to acquit themselves with our tax regime." When the Tax Administration Act 28 of 2011 (TAA) came into effect on 1 October 2012 it opened up a whole new sphere of tax law which although always existed, was previously concealed within the various tax Acts. This work sets out to explain the TAA and this emerging area of law in an easy to use guide.
A number of years ago I came across a research article by Justin Kruger and David Dunning, "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments" (Kruger, J and Dunning, D; Journal of Personality and Social Psychology 1999, Vol. 77 no. 6.). According to their research, people with limited knowledge in a particular domain frequently do not realise the extent of their lack of skill. This not only leads to them making regrettable errors but it also robs them of the ability to realise it.
Being a trustee of a pension or provident fund is an onerous engagement. Trustees are often responsible for millions (and sometimes billions) of rands' worth of future or existing retirement benefits. It is a responsibility not to be taken lightly, and should only be accepted on an informed basis.