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The prohibition against the provision of financial assistance by a company to the purchasers of its shares as an aspect of the concept of the maintenance of capital
The laws of a land are basically not enacted arbitrarily in a vacuum, but are determined by the ebb and flow of political economic and social developments nationally and globally. The last three decades have brought dramatic changes which have been mirrored in laws passed and in the interpretations...
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| Language: | English English |
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Centre for Law and Society
2026
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| Summary: | The laws of a land are basically not enacted arbitrarily in a vacuum, but are determined by the ebb and flow of political economic and social developments nationally and globally. The last three decades have brought dramatic changes which have been mirrored in laws passed and in the interpretations of statutory laws. Who could have forecast the fall of communism and the fragmenting of the Russian colossus and who would have forecast the demise of apartheid in South Africa? In addition the last few years have seen economic crimes of a magnitude seldom perpetrated before. In South Africa the emphasis of many laws has moved from the preservation of apartheid to the promotion of Black Economic Empowerment and the enshrinement of constitutional rights for all. In the United States of America, the Enron, Worldcom and other similar massive plundering of the assets of companies together with the fraudulent stock exchange manipulations and the failure of the companies' auditors to adequately perform their professional duties have resulted in the passing of the Sarbonnes-Oxley Act of 2002. This act incorporates stringent new accounting and public-disclosure rules in an attempt to curb the abuses that had cost shareholders billions of dollars. However, as Justice Ralph H Zulman stated in his talk given at Corporate Governance Conference on 25.06.2005 "But one form of excess may be replacing another. The wave of corporate scandals has now turned into a rising tide of red tape." In the book on British Company Law by L.G.B. Gower entitled The Principles of Modem Company Law - 2nd edition dated 1957, reference is made on pages 56 and 57 to the crises facing companies as a consequence of the then impending nationalization proposals of the Labour Party and their implications for the company law. South Africa as a developing country had not only to meet the challenges of ensuring better corporate governance but also had to make the laws more "user-friendly" to attract investments. |
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