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lOMoARcPSD|3972427MRL2601 - Study Notes -
MRL2601 - Study Notes - EXAM SUMMARIES
EXAM SUMMARIES
Entrepreneurial Law (University of South Africa)
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STUDY UNIT 1:
The impact of the Constitution and Globalisation on Entrepreneurial law
Importance of infusion of African leadership philosophies and Constitutional Values
→ Africanisation: Renewing the focus on Africa and ensuring that teaching is adapted to African
values, realities and conditions. It aims to ensure that people in a particular context such as
the community or family in the case of traditional African societies maintain sound
relationships tailored on accommodating opposing views and conciliating competing interests.
→ An inclusive approach of joint decision-making in matters that affect the business is foundational to the
ubuntu concept.
→ A more horizontal approach is promoted where not all decisions are made from the top.
→ Ubuntu means people are people through others and is an underlying concept of Africanism.
→ Ubuntu was given explicit application in our law in the highest court in S v Makwanyane 1995 in which
case Madala J noted that ubuntu advocates social justice and fairness.
→ In Pharmaceutical Society of SA & Others v Tshabalala-Msimang and Another and New Clicks
SA v Minister of Health & Another, the court describes ubuntu as a relationship of mutual respect.
→ In Koyabe and Others v Minister of Home Affairs and Others, the court associated ubuntu with a
general obligation to treat people with respect and dignity, to avoid undue confrontation and to give
reasons for administrative decisions.
→ The second report issued by the Institute of Directors of South Africa King Report on Corporate
Governance, 2002 first canvassed the notion of introducing African business values to be applied in
South Africa, which is now summarised as ‘ubuntu’.
→ The importance of ubuntu in the South African context is recognised where it states that ‘ the common
purpose of all human endeavours, individual or corporate, should be that of service to
humanity’ [King Report on Corporate Governance, 2016].
→ One of the rules of natural justice is the audi alteram partem-rule. This principle is firmly entrenched
in our law. It basically means that before any judicial functionary takes a decision on a matter, both
sides of the story must be heard. This principle is reflected in ubuntu.
→ Ubuntu ultimately dictates that one has to be fair in all one’s relationships, which will include being
quick to listen compassionately to other people’s stories and slow to pass judgment.
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Constitutional principles / values
→ S 8(2) of the Constitution provides that the Bill of Rights binds a natural or a juristic person (like a
company or close corporation) to the extent that it is applicable, taking into account the nature of the
right and the nature of any duty imposed by the right.
→ When applying a provision of the Bill or Rights to a natural or juristic person, in order to give effect to a
right in the Bill of Rights, a court must apply, or, if necessary, develop the common law to the extent
that legislation does not give effect to that right S 8(3).
→ A court may develop the rules of the common law to limit the right, provided that the limitation is in
accordance with the limitation clause contained in s 36(1) of the Constitution.
→ The values of ubuntu are reflected in s 1 in the Constitution. Ubuntu underlies the building of our
constitutional democracy and to develop African leadership values to be applied in corporations,
therefore, is consistent with the constitutional values.
→ Examples of how the values of ubuntu are imbued in the law regulating different South African
businesses:
It is a rule in all business enterprises that the chosen name should not be offensive, racist or
impinge negatively on any individual / legal person’s right to dignity.
The values of ubuntu must inform the manner in which corporate decisions are taken by
directors. Proper, constructive dialogue requires the infusion of the culture of ubuntu to promote
social cohesion.
One of the purposes of the Companies Act is to promote compliance with the Bill of Rights in
the application of company law. It enshrines the rights of all people and affirms the fundamental
democraticvalues of human dignity, equality and freedom. In addition, it regulates the
relationshipbetween economic citizens and thus may have fundamentalimplicationsfor
company law.
The Companies Act also aims to continue to provide for creation and use of companies in a
manner that enhances economic welfare of South Africa as a partner within the global economy.
Directors in performing their functions in companies must consider the interests of other
stakeholders such as the community and the environment in which the company that they
serve, functions.
Directors of companies can be removed by means of an ordinary resolution – this is despite any
agreement that may have been concluded to the contrary and no special resolution is required
(s 71 of the Companies Act). This may appear drastic. However, the law requires that before
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Ubuntu is also evident in light of the fact that humanness is promoted in that agreements must
be respected and honoured by those who concluded. This is evident in various types of
contracts: partnership agreements, contracts concluded for the formation of trusts, shareholders
agreements, etc. Fairness also plays an important role in the interpretation of shareholders’
agreements.
The disclosure requirements in the Companies Act reflect the value of transparency of ubuntu
The remedies provided for in the Companies Act also reflects that restorative restitution is
promoted rather than imposing criminal sanctions
Constitutional interpretation and development of the common law:
→ The constitutional values play an important role in how the court interprets and applies the legislation,
and develops the common law.
→ The guidelines for proper interpretation that have been provided by the Constitutional Court dictate
that when a section of the legislation is capable of more than one construct - one being more
restrictive and the other providing for a wider net of protection – the broader construct be preferred,
specifically if a constitution right is at stake.
→ One of the golden rules of interpretation – section should be interpreted in context.
→ This entails consideration of policy underlying the legislation and taking cognisance of the purpose of
the particular section in context of the legislation, ie. where it is placed in the legislation.
→ In the SA context, it is likely that restitutive practices of employment equity and broad-based black
economic empowerment would be considered, for instance in a scenario where the court is required to
evaluate whether or not the board of directors should be held liable for their actions in certain
instances.
→ The court has a duty to develop the common law so that the law keeps up, and remains suitable as
the needs of the community it aims to serve, change. Section 39 of the Constitution determines that
the court must, when developing the common law, promote the spirit, purport, and objects of the Bill of
Rights.
→ Our common law has evolved through centuries of feudalism, colonialism, discrimination, sexism,
exploitation, and apartheid.
→ In Everfresh Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd 2012
The CC considered whether the common law should be developed to require that parties to a
contract should be legally required to contract with each other in good faith and on reasonable
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