Browsing by Author "Phungula, Simphiwe Peaceful."

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Business rescue in South Africa : an exploration of business rescue and the role of the business rescue practitioner.
(2018) Patel, Tasmiya Essop.; Phungula, Simphiwe Peaceful.
Abstract available in PDF file.
Business rescue: a delay tactic for liquidation?
(2019) Nxumalo, Misiwe Mpilenhle.; Phungula, Simphiwe Peaceful.
No abstract provided.
Corporate veil in South Africa: a critical study of piercing the corporate veil in South Africa with reference to groups of companies.
(2020) Nkabinde, Nonjabulo Fortunate.; Phungula, Simphiwe Peaceful.
Abstract available in PDF.
A critical analysis of the effect of the moratorium on property owners.
(2021) Beekarun, Yasthil.; Phungula, Simphiwe Peaceful.
No abstract provided.
A critical analysis of the institution of business rescue proceedings during liquidation proceedings.
(2022) Krishundutt, Sanam.; Phungula, Simphiwe Peaceful.
South Africa is currently undergoing harsh economic times, and as such, many companies are feeling the brunt of the situation. As a result, these companies begin to trade at a loss and are left without any other option but to liquidate their affairs in order to pay off creditors. However, with the development brought by the Companies Act 71 of 2008 (“the Act”), business rescue was introduced. Business rescue is an alternative to liquidation and it allows the company to undergo rehabilitation and continue trading if certain requirements are met. Chapter 6 of the Act aims to assist businesses in providing some sort of relief in the form of business rescue to provide them with the breathing space that they require to try and become a viable business again. Just like any new formulated concept, it is susceptible to abuse. Many companies that are already under liquidation are suspending their liquidation in favour of business rescue, despite, in some instances, the liquidation order having already been granted against the company. The Covid-19 pandemic has made the question of whether a business can suspend liquidation proceedings in favour of business rescue more prevalent as the pandemic has caused a detrimental financial impact on a number of businesses. Now more than ever businesses find themselves struggling to keep afloat, and as a result many of them have to consider the avenues of liquidation or business rescue. This dissertation aims to look at both liquidation and business rescue proceedings and decipher whether the courts were correct in their decision regarding when business rescue proceedings can be instituted during liquidation proceedings. The importance of taking into account the above is due to the fact that many companies in present day are experiencing financial difficulties, and liquidation or business rescue proceedings are the options that they are left with. However, one has to carefully consider both options, taking into account the company’s financial circumstances. This is of importance, as one needs to establish if there is a reasonable prospect of rescuing the company or not. If there were, then business rescue would indeed be the route to be taken, but if not, then liquidation proceedings would be. However, many companies that have no prospect of being rescued, and that have already opted for liquidation may want to institute business rescue proceedings to delay the inevitable and frustrate creditors, thus leading to the abuse of the newly formulated concept, which has to be curbed.
The directors’ fiduciary duty to act in the best interests of the company: the possible developments of common law by statute and how they affect human rights.
(2018) Nomadwayi, Bakhulule.; Phungula, Simphiwe Peaceful.
This research traces the developments of the directors’ fiduciary duty to act in the best interests of the company and looks at how these developments affect human rights and interests of stakeholders. The main focus of the study is on the human rights impact of this duty. Initially, this duty was only regulated in terms of common law which proved to be problematic. The problem with common law lies within the definition of ‘best interests of the company’, which not only exclude the interests of other stakeholders but also has the potential to bring about violation of human rights, particularly the rights to equality, dignity and fair labour practice. At common law best interests of the company means interests of the company itself and its shareholders. The common law only protects the company and its shareholders, while excluding the rights and interests of stakeholders. The common law duty to in the best interests of the company is not in line with our contemporary law because it ignores human rights. The neglect of human rights by this duty renders it inconsistent with the values contained in the Constitution. Furthermore, the exclusion of stakeholders’ rights by this duty cannot be justified because stakeholders play an important part in safeguarding the stability and continued existence of the companies. The fiduciary duty to act in company’s best interests is now contained in the Companies Act of 2008. Inclusion of this duty in the Act enables our courts to interpret it in a manner that protects human rights and which takes into account interests of other stakeholders. Section 7 (a) of the Act provides that among other goals of the Act is the promotion of compliance with the Bill of Rights when applying the company law. The impact of section 7 is that it imposes an indirect duty on directors to consider the human rights impact of their decisions. Section 158 of the Act enables the courts to “develop common law as it is necessary to improve the realisation and enjoyment of rights established by the Companies Act of 2008.” Given this recognition of the Bill of Rights by the Companies Act, it’s of vital importance that our courts should interpret and apply the duty to act in the best interests of the company in manner that is consistent with the Constitution. Directors are now obliged to pay attention to the human rights impact of their decisions.
The enforcement of the King IV Code with emphasis on the role of the board of directors for corporate governance in South Africa.
(2019) Naidoo, Greshen.; Phungula, Simphiwe Peaceful.
Corporate governance refers to the processes used to manage a company. The governing body of an organisation, which includes the board of directors of a company, is responsible for corporate governance. The King IV Code (The Code) recommends principles and practices to achieve good corporate governance in South Africa. While, following of the Code by directors is voluntary, there is a need for its enforcement, because the decisions of directors affect all stakeholders. Internal and external stakeholders of the company benefit from good corporate governance. The Code can be enforced by its application, the business judgement rule, the Johannesburg Stock Exchange (JSE) listing requirements and the Companies Act 71 of 2008. This study adopts a desktop research incorporating case law, legislation, journals, diagrams, articles, research papers and a comparative analysis of expert views to examine the effect and enforceability of the Code. The research is exploratory in nature and includes a literature study, which provides an understanding of the need for enforcement of the Code. The objective of this study is to examine the application of the Code on the boards of directors to establish why it needs to be enforced and the mechanisms through which it can be enforced.
The evolution of an effective business rescue statutory regime in South Africa 1926 – 2021=Inguqukomumo yohlobombuso lokomthetho lokutakula amabhizinisi esebenza ngendlela eNingizimu Afrika 1926-2021.
(2021) Phungula, Simphiwe Peaceful.; Williams, Robert Charles.
ENGLISH ABSTRACT: An embryonic concept of what is now referred to as “business rescue” was enacted as so-called “judicial management” in the then Union of South Africa by the Companies Act 46 of 1926. It had already become clear that companies were substantial drivers of the country’s economy and a vital source of employment. It was therefore highly desirable that companies with economic potential should not be wound up and liquidated if they encountered financial difficulties that could, potentially, be relatively quickly overcome with a return to solvency and viability. The legal process of an attempt to achieve the “rescue” of struggling but potentially viable companies raised many difficulties. How was to be determined whether a company in serious financial difficulty had the potential to return to solvency? What legal process was to be set in train in attempting to achieve that objective? Who was to have locus standi to initiate that process? How would a company’s admission to a statutory business rescue regime affect the legal rights of creditors who had claims against the company and whose own solvency might be imperilled if payment to them was deferred? Who would be in managerial control of the company whilst it attempted to regain solvency? How long would the attempt in this regard be allowed to last? The thesis traces how these and other issues emerged and how potential answers presented themselves and have been refined. The judicial management provisions of the Companies Act 1926 were the first substantial attempt to provide answers to such questions, but the initial legislation was sketchy, vague, and, in some respects, contradictory. Early reported judgments revealed difficulties, and weaknesses in the statutory process, and divisions of judicial opinion soon became apparent. After a lengthy debate, a modern business rescue regime was incorporated into the Companies Act 71 of 2008. The lessons learned from the shortcomings of judicial management and the positive and negative aspects of the business rescue regimes of other countries had been considered, and important contributions were made by an international advisory team. The thesis traces the development of South Africa’s business rescue regime from its beginnings in the Companies Act of 1926 to the present day and provides a critical review of the present law in this regard with suggestions for improvements and further refinement. IQOQA LOCWANINGO: Umqondo osemusha walokho manje osekubizwa ngokuthi i “business rescue” wawushaywe ngokuthi i “judicial managment” endaweni ngaleso sikhathi eyayibizwa ngokuthi i-Union of South Africa ngokoMthetho Wezinkampani 46 ka-1926. Kwase kusobala ukuthi izinkampani zingabashayeli abakhulu bomnotho wezwe kanye nomthombo obalulekile womsebenzi. Ngakho-ke kwakufiseleka kakhulu ukuthi izinkampani ezinamandla kwezomnotho kwakufanele zingaqedwa uma zihlangabezana nezinkinga zezimali ezazingase, zinqotshwe ngokushesha uma kuqhathaniswa nokubuyela ekukhokheni nasekusebenzeni. Inqubo yezomthetho yomzamo “wokuhlengwa” kwezinkampani ezazidonsa kanzima kodwa ezazingase zikwazi ukuphumelela yeza nobunzima obuningi. Imibuzo eyavelwa kwabe kungukuthi kwakuzonqunywa kanjani ukuthi inkampani esebunzimeni bezezimaliy yayinalo ithuba lokubuyela kwi-solvency? Iyiphi inqubo engokomthetho okwakumelwe imiswe ukuze kuzanywe ukufeza leyo njongo? Ubani owayezoba ne-locus standi ukuze aqale leyo nqubo?Ukwamukelwa kwenkampani ohlelweni olusemthethweni lokuhlenga ibhizinisi kwakungabathinta kanjani abanamalungelo asemthethweni futhi abakweletwayo izinkampani uma besengozini yokuthi inkokhelo yabo ihlehliswe? Ubani owayengaba sesikhundleni sokuphatha inkampanini ngenkathi izama ukuhlengwa? Kwakuzothatha isikhathi esingakanani ukuhlenga inkampani? I thesis ilandelela ukuthi lezi zinkinga zavela kanjani nokuthi izimpendulo ezingaba khona ziye zavela kanjani futhi zacwengwa kanjani. Izinhlinzeko zokuphatha kwezobulungiswa zoMthetho Wezinkampani 1926 kwaba umzamo wokuqala omkhulu wokunikeza izimpendulo kuleyomibuzo, kodwa umthetho wokuqala wabe ungacacile, futhi, ngandlela thize, uphikisana. Izahlulelo ezenziwa ngalesenesikhathi zaveza ubunzima, nobuthakathaka enqubweni yomthetho, nokwehlukana kwemibono yenkantolo kwasheshe kwabonakala. Ngemva kwenkulumo mpikiswano ende, uhlelo lwesimanje lokuhlenga ibhizinisi lwafakwa kuMthetho Wezinkampani 71 wezi-2008. Izifundo ezatholwa kumthetho we judicial management kanye nezici ezinhle nezimbi zemibuso yokuhlenga amabhizinisi kwamanye amazwe kwase kucatshangiwe, kanye negalelo elibalulekile lethimba labeluleki bamazwe ngamazwe. Le thesis ilandelela ukuthuthukiswa kombuso wokuhlenga amabhizinisi aseNingizimu Afrika kusukela ekuqaleni kwawo kuMthetho Wezinkampani ka-1926 kuze kube namuhla futhi inikeza ukubukezwa okubalulekile komthetho wamanje mayelana kanye neziphakamiso zokwenziwa kwentuthuko kanye nokuthuthukiswa okucutshunguliwe.
The influence of the general anti-avoidance rules on tax avoidance schemes and the significance thereof for tax payers and tax advisors in South Africa.
(2017) Sibisi, Sydney Pambili.; Kruger, Shaun.; Phungula, Simphiwe Peaceful.
Abstract available in PDF file.
Liability of directors for reckless and fraudulent trading : the continuance of s424 (1) of the Companies Act 61 of 1973 together with the coming into force of s22 and s77 (3) (b) of the Companies Act 71 of 2008.
(2013) Phungula, Simphiwe Peaceful.; Williams, Robert Charles.
This research paper focuses on the s424 (1) of the Companies Act 61 of 1973. It is deals specifically with the wording of the section and how courts have interpreted it. It critically explains the most cherished principles of corporate law as to the interpretation of the section. Notwithstanding the existence of s424 (1), in 2011 the new Companies Act 71 of 2008 came into force. The new Companies Act also deals with the liability of directors for reckless and fraudulent trading. However, the new Companies Act deals with such liability differently from s424 (1) of the companies Act of 1973. The difference between the s424 (1) of the Companies Act of 1973 and the new Companies Act of 2008 can be seen on the application of both Acts. Section 424 (1) of the Companies Act of 1973 applies by the application of creditors at the winding up of the company whereas the new Companies Act of 2008 introduces s22 which applies even when the company is still continuing to do business. Furthermore, s424 (1) of the Companies Act provides remedies to the creditors for the debts incurred by the company whereas the new Companies Act introduces s77 (3) provides for remedies to the company for any loss, damages, or costs sustained by the company as a direct or indirect consequence of the directors’ conduct. Accordingly, despite the coming to force of the Companies Act 71 of 2008, s424 (1) of the Companies Act 61 of 1973 still exist in the circumstances of winding up the company. The application of both s424 (1) and s22 and s77 (3) has encouraged me to deal with the topic of liability of directors for reckless and fraudulent trading. This research paper tries to look at both Acts and how they approach the liability of directors in the aforesaid manner. The research paper tries to look at what courts have said since the coming into force of the Companies Act of 2008 since 2011. I wish to deeply pass my gratitude to supervisor Professor RC Williams of University of KwaZulu Natal who has helped and guided me in completing this research paper. I also wish to thank Professor B Grant and D Subramanien who have also helped me in formulating the structure of this research paper.
Ranking of creditors in business rescue proceedings: a critical evaluation of s135 (1) and (3) of the Companies Act 71 of 2008.
(2019) Mbonambi, Thamsanqa Patrick.; Phungula, Simphiwe Peaceful.
No abstract available.
The ranking of creditors’ claims during business rescue proceedings as envisaged in the Companies Act 71 of 2008.
(2019) Zilwa, Lumka.; Phungula, Simphiwe Peaceful.
No abstract available
Reckless and fraudulent trading by a company and the business judgment rule as a defence for directors.
(2018) Peter, Lunga Cosmo.; Phungula, Simphiwe Peaceful.
Abstract available in pdf.
Section 76 of the Companies Act 71 of 2008 as a mechanism of enforcement for the King IV Code on corporate governance for South Africa.
(2019) Seedat, Faatima.; Phungula, Simphiwe Peaceful.
This dissertation examines the severe problems of corporate governance experienced at Steinhoff International Holdings NV (Steinhoff) and ESKOM Holdings SOC Ltd (Eskom).¹ These failings suggest that South African corporate governance standards are ineffective on account of a poor ethical culture in companies; in particular, members of governing boards have shown a conscious disregard for the rules. Steinhoff, a foreign-based company with a secondary listing on the Johannesburg Stock Exchange, has shown a scant concern for the strictures of the Companies Act 71 of 2008 (2008 Act). As an external company with secondary listing, the King IV Code on Corporate Governance for South Africa² (King IV Code) does not apply to Steinhoff. This study recommends a broadening of the definition of ‘company’ in section 1 of the 2008 Act to include external companies to ensure that companies such as Steinhoff are bound by governance legislation and exercise the enhanced accountability and transparency provisions set out in chapter three³. The enforceability of the King Code is also investigated − specifically the use and application of section 76 of the 2008 Act⁴ as a mechanism of enforcement, based on the assumption that the King Code is legally enforceable under and in terms of section 76(4), read with section 76(3), section 5, section 7(b)(iii) and section 158(a) of the 2008 Act⁵. The study recommends the inclusion of selected King IV principles into hard legislation to assist and guide boards of governors to practice good governance.
A South African perspective of business rescue abuse: protecting the sanctity of the business rescue process without losing sight of its purpose.
(2021) Mthembu, Lusanda Remind.; Subramanien, Darren Cavell.; Phungula, Simphiwe Peaceful.
The current Companies Act 71 of 2008 (the Act) signaled a move away from a creditor-protectionist society and toward a debtor-protectionist business rescue model. As a result, applications have sprung up to take advantage and abuse this new rescue procedure. Unfortunately, this change has led to the widespread misuse and abuse of the business rescue process. Essentially, business rescue finds refuge in the Companies Act 71 of 2008 Chapter 6 (the Act). It offers a restoration mechanism to companies in financial distress. When done correctly, the business rescue procedure provides a much-needed ‘win-win’ situation for all parties involved. However, when a company cannot be rehabilitated, the secondary goal of the business rescue procedure is to achieve the best possible outcome for the creditors. Unfortunately, there are two sides of the coin when it comes to business rescue proceedings. Business rescue is used as a means to frustrate creditors from exercising their rights. Unfortunately, in the economic aftermath of the COVID-19 pandemic, more and more companies will resort to business rescue proceedings as a means to seek refuge from creditors even if the facts do not justify this. This dissertation raises difficult questions of how the statutory framework governing business rescue procedure is open to abuse and whether it sufficiently protects creditors from exploitation without them having to resort to our courts for recourse. While business rescue envisages noble objectives such as ensuring the continued existence of a financially distressed company, the preservation of valuable jobs, and so on, the abuse of the process often results in creditors being left out of pocket which needs to be addressed by the legislature. Furthermore, this dissertation will provide recommendations on how the Act needs to be rectified to protect it from abuse and preserve its sanctity of the Act.