Aspects of

private law
and corporate
law
0 3 M AY – 1 3 M AY 2 0 2 2

LJKOEN@UJ.AC.ZA
THE DOCTRINE OF SUBJECTIVE
RIGHTS
(i) The relationship between a
legal subject and a legal
object; and

(ii) The relationship between a

legal subject and a legal
subject.

• A legal subject (i.e. a natural or

juristic person) can have an
interest or a so-called
subjective right in a legal
object.

• Legal objects have monetary

value.
Legal Objects
(i) Things – movable and immovable
property, for example, a car (movable)
and a house (immovable).
(ii)Performances - an action of another
legal subject which amounts to giving
something, doing something or
refraining from doing something e.g.
in a contract.
(iii) Intellectual or immaterial property –
products of human creativity and
innovation e.g. song lyrics or a novel.
(iv) Aspects of personality, for example,
one’s good name and reputation.

A plausible fifth type?

• Personal immaterial property – for
example, one’s creditworthiness or
earning capacity.
BUSINESS ENTERPRISES
SOLE PROPRIETORSHIP

• Single-owner enterprise: it is the business

of one person who is the owner / manager.

• A sole proprietorship is not a separate

juristic person (no separate legal
personality).

• No continuity / perpetual succession if

owner dies or where the assets of the
business are sold to another.

• Single owner represents the business and

supplies capital for the business.
 SOLE PROPRIETORSHIP

ADVANTAGES: DISADVANTAGES:

• Easily formed and • Owner bears total risk.

terminated.
• Limited growth.
• Little control by
authorities. • Certain tax implications
for the owner.
• Owner is sole receiver
of profits.
PARTNERSHIP

• People can pool their expertise and

capital to create a partnership.

• Between 2 and 20 natural persons.

• Definition of partnership: a contractual

relationship between persons (partners)
with the aim of making a profit and to
share in it.

• Partners agree in the contract about how

they will divide the profit (or loss)
between them.

• No formal registration required.

• Partnership agreement made uberrima

fides (in the utmost good faith).
 PARTNERSHIP

ADVANTAGES: DISADVANTAGES:

• No formalities. • Personal estate of single

owner/partner can be
• Labour, capital and sequestrated where
ability shared. partnership goes
insolvent (liabilities
• Co-owner/partners [debts] exceed assets).
share the risk.
• No continuity/ perpetual
succession.
Closed Corporation

• A separate juristic person from its members.

• Acquires rights and duties and participates in
business as a juristic person.
• Similar to a company, but does not issue shares or
have share capital.
• 1 – 10 members.
• Regulated by the Close Corporations Act 69 of
1984.
• As such, a CC limits personal liability without
providing a very complicated formal process for
its constitution.
• No new CCs since New Companies Act! Move to
make them companies
• Assets belong to CC, not members.
• Members represent the CC.
• Has continuity / perpetual succession.
• Capital is represented by member’s interest in CC.
 PARTNERSHIP

ADVANTAGES: DISADVANTAGES:

• Simplicity of • Members capacity to

management and bind CC – Each member
decision-making. is an agent of the CC
and CC is bound by the
• Can hold shares in a member’s actions.
company.
• Members personally
• Taxed as if it were a responsible for losses of
company. a CC where they act
carelessly or recklessly.
Types of Companies
 Companies

ADVANTAGES: DISADVANTAGES:

• Continuity / perpetual • Shareholders risk losing

succession. their investment in a
• Limited liability. company when it
• Easy to obtain capital. becomes insolvent.
• Efficient management. • Where a company
• Suitable for small to large becomes insolvent, it is
business. liquidated = assets of the
• Companies usually give company are sold to pay
the public an opportunity its creditors.
to buy shares in the • If anything left, then
company, and through remainder goes to
investment, they help shareholders.
grow the capital of the • Legal requirements and
company. formalities.
• Where company • Minimum number of
flourishes, public directors.
investment grows, and • Minimum number of
the company can pay out shareholders.
profits to shareholders by
means of dividends.
Companies in General

• Separate juristic person.

• Shareholders can be natural or juristic

persons.

• Has continuity / perpetual succession.

• Division between ownership and

management.
BUSINESS AND HUMAN RIGHTS
The content covered in this part of the lecture is not in the text book.
It will be examined and is NB! Please take notes in the lecture as
everything is not on the slides either.
 “The intervention of multinational corporations may
be a potentially positive force for development if
the State and the people concerned are ever
mindful of the common good and the sacred rights
of individuals and communities.”

Social and Economic Rights Action Center (SERAC) and Center for Economic and Social
Rights (CESR) v Nigeria (ACHPR)
International law framework

• Traditional state centric model of international law.

• Multinational enterprises can have a substantial

effect on human right.

• Direct obligations for business in international

human rights?

Soft law instruments

• ILO Declaration on Social Justice for a Fair

Globalization.

• UN Guiding Principles on Business and Human

Rights.
Urbaser S.A. and Consorcio de Aguas Bilbao
Biskaia, Bilbao Biskaia Ur Partzuergoa v. Argentine
Republic, Award, 8 December 2016 (Urbaser
case).

• Confirms obligations of business in terms of UDHR.

• “The Declaration avoids making reference to who would

be responsible for the rights and obligations arising
therefrom. However, upon reading the Declaration, it is
evident that obligations arising therefrom do not lie
exclusively on States. The Preamble expressly sets forth
that the duties would lie both on institutions and on
individuals. Article 1 states that its provisions apply to
individuals even in private relationships. Article 30
declares that nothing in the Declaration may be
interpreted as implying for any State, group or person
any right to engage in any activity or to perform any act
aimed at the destruction of the rights and freedoms set
forth herein. Article 29 sets forth that everyone has duties
to the community. Therefore, business companies and
international corporations are affected by the obligations
included in international human rights law.” (Urbaser
case, par 1159)
South African Law

• Recall the horizontal application of the Bill of

Rights.

• Pridwin case.

• Direct obligations for business in the Constitution.

• Territorial limitation of the Bill of Rights?

• The Companies Act: sec. 7 and sec. 72.

• The purposes of this Act are to (a) promote

compliance with the Bill of Rights as provided for
in the Constitution, in the application of company
law;
(5) A social and ethics committee has the following functions:
(a) To monitor the company’s activities, having regard to any relevant legislation, other legal requirements or
prevailing codes of best practice, with regard to matters relating to -
(i) social and economic development, including the company’s standing in terms of the goals and
purposes of -
(aa) the 10 principles set out in the United Nations Global Compact Principles; and
(bb) the OECD recommendations regarding corruption;
(cc) the Employment Equity Act; and
(dd) the Broad-Based Black Economic Empowerment Act;
(ii) good corporate citizenship, including the company’s -
(aa) promotion of equality, prevention of unfair discrimination, and reduction of corruption;
(bb) contribution to development of the communities in which its activities are predominantly conducted or within which its
products or services are predominantly marketed; and
(cc) record of sponsorship, donations and charitable giving;
(iii) the environment, health and public safety, including the impact of the company’s activities and of its products or
services;
(iv) consumer relationships, including the company’s advertising, public relations and compliance with consumer protection
laws; and
(v) labour and employment, including -
(aa) the company’s standing in terms of the International Labour Organization Protocol on decent work and working
conditions; and
(bb) the company’s employment relationships, and its contribution toward the educational development of its employees;
(b) to draw matters within its mandate to the attention of the Board as occasion requires; and
(c) to report, through one of its members, to the shareholders at the company’s annual general meeting on the matters
within its mandate.
Practice Question 1
Simply Scrumptious Chocolates (Pty) Ltd. is a manufacturer of chocolates incorporated in South Africa. The company is
dependent on its wholly owned subsidiary Marvellous Treats IBC Ltd. for the supply of cocoa to be used in its
manufacturing process in South Africa. Reports have recently emerged indicating that Marvellous Treats had been buying
cocoa from suppliers who were making use of forced labour.

The International Coalition for Slave Free Chocolate NPC is representing six minor children who had been kidnapped in
Mali and trafficked to Cote D’Ivoire to work as labourers on a cocoa plantation. The children allege that once they arrived
at the plantation, they were forced to work long hours and received only minimal compensation. They were also not
allowed to leave the plantation without being accompanied by a plantation manager. The plantation where this occurred
has long been a supplier of Marvellous Treats.

Marvellous Treats also provided the supplier with technical support including the provision of training services to all of its
employees, including these children. The children were also transported from Mali to Cote d’Ivoire using trucks provided
by Marvellous Treats. Melinda Kaufman-Kohler, the CEO of Simply Scrumptious Chocolates, has refused to answer any
questions and simply issued a tersely worded statement in which she says that the company regrets the unfortunate
events which has allegedly occurred at one of its suppliers.

Comment on the human rights obligations which a company such as Simply Scrumptious Chocolates has in terms of
international law. Your answer must reflect on relevant case law and soft law.
Practice Question 2
Simply Scrumptious Chocolates’ financial position has weakened because of negative publicity. It had to retrench some
employees and now has around 200 employees and generated a turnover of R295 million for the financial year. The
company’s profits were also negatively affected by a R5 million settlement reached with a group of community members
as a result of toxic waste the company dumped into a nearby river. The company has 7 shareholders.

Mampolokeng Mabaso has recently been appointed as a Director of Simply Scrumptious Chocolates. Melinda has
advised her that the company does not have a Social and Ethics Committee. Mampolokeng is distressed at hearing this
and fears that the absence of such a committee may have contributed to the egregious oversights by the company.
Mampolokeng approaches you for advice. Advise Mampolokeng on whether Simply Scrumptious Chocolates is required
to have a social and ethics committee and what the role of this committee is in relation to the issues highlighted.