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4.4. ENFORCEMENT MECHANISMS OPEN TO CREDITORS
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researcher is of the view that the preceding understanding will unequivocally apply where a creditor`s interests are affected by the ‘unconscionable abuse conduct’ of those running the affairs of the company.
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interested person may use for addressing complaints on alleged contraventions of the 2008 Act or for securing or enforcing their rights. These are;
Applying to High court for any orders necessary to enforce one`s rights;
Filing a complaint with the companies commission or the takeover regulation panel;
Applying to the Companies Tribunal either for adjudication; or
Alternative Dispute Resolution.
It should however be noted that the High Court remains the primary forum for dispute resolution, the interpretation and enforcement of the 2008 Act.452 The inclusion of the other three channels or alternatives for addressing complaints and enforcing rights under the 2008 Act helps reduce the burden on the Courts, save costs and time or other relevant resources.453 Instead of outrightly approaching the court which may be more costly, a creditor may lodge a complaint with the companies’ commission for an investigation on the manner in which the company is being run that affects the creditor`s rights and those of others.454 The companies commissioner may upon investigation issue compliance notices which may result in positive results favouring the interests of the creditors among other stakeholders. Section 22 of the 2008 Act allows the commission the right to deal with any suspicions on reckless, fraudulent and insolvent trading in a company which it may obtain upon notice by any affected or interested person or by itself. It can accordingly issue a compliance notice which when not taken seriously may result in serious penalties which may even end at forced liquidation. Section 157(2) gives the commission powers to intervene or assist any person in legal proceedings. This may assist creditors who may be financially handicapped to enforce their rights. It provides as follows;
(2) The Commission or the Panel, acting in either case on its own motion and in its absolute discretion, may—
(a) commence any proceedings in a court in the name of a person who, when filing a complaint with the Commission or Panel, as the case may be, in respect of the matter giving rise to those proceedings, also made a written request that the Commission or Panel do so; or
(b) apply for leave to intervene in any court proceedings arising in terms of this Act, in order to represent any interest that would not otherwise be adequately represented in those proceedings.
The Takeover Regulation Panel on the other hand may deal with any transactions which are considered affected transactions.455 Most of these affected transactions may result in the
452 Memorandum on the Objects of the Companies Bill, 2008, Companies Bill [B61D-2008] para 3.
453 MF Cassim ‘Enforcement and Regulatory Agencies’ opcit note 31, 826.
454 Ibid, 835.
455 Section 117(1)(c) shows that all fundamental transactions are affected transactions unless specifically exempted.
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jeopardy of creditor interests if not regulated hence the need for a panel like this which even go to the extent of applying to court for an order to wind up a solvent company in circumstances where there has been fraudulent and illegal activities and the subsequent failure to comply with its compliance notice.456 Moreso, a Companies Tribunal, being new in South African company law, serves to either adjudicate on matters referred to it just like a court of law and makes an order as guided by the Act or it may facilitate alternative dispute resolution processes between parties.457 Creditors with a dispute may prefer this forum as it may be cost effective while at the same time promoting a less formal means of resolving disputes. The Tribunal may approach the court to file its order or any resolution between parties amicably settling, so to certify same as an order of the court in terms of its rules.458 This will help enforce compliance of its orders or parties resolutions in terms of the court`s rules.
Widening the scope of avenues through which rights may be enforced under the 2008 Act helps creditors affected by any conduct to have many options to explore in enforcing their rights. Even in instances where they are not really affected but feel the conduct is not favourable for the company, they still have a ground to report to the relevant bodies just as whistle blowers. The important part is that the Act ensures that whistle blowers459 are protected in harmony with the Protected Disclosures Act 26 of 2000.460 Thus, creditors have effective protection under the 2008 Act with an increased opportunity to approach any appropriate forum to enforce their rights under the 2008 Act.
Secondly, the 2008 Act has extended locus standi of various stakeholders to apply for remedies to appropriate forums or court or tribunal. Section 157(1) of the 2008 Act provides as follows;
(1) When, in terms of this Act, an application can be made to, or a matter can be brought before, a court, the Companies Tribunal, the Panel or the Commission, the right to make the application or bring the matter may be exercised by a person—
(a) directly contemplated in the particular provision of this Act;
(b) acting on behalf of a person contemplated in paragraph (a), who cannot act in their own name;
(c) acting as a member of, or in the interest of, a group or class of affected persons, or an association acting in the interest of its members; or
(d) acting in the public interest, with leave of the court.
456 Section 201 of the 2008 Act. See also MF Cassim & J Yeats ‘Fundamental transactions, Takeovers & offers’
opcit note 31, 747.
457 Section 195 of the 2008 Act.
458 Section 195(8) of the 2008 Act.
459 Those who disclose irregularities or contraventions of the 2008 Act.
460 Section 159 of the 2008 Act.
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These broad provisions are new in company law as they were not part of the 1973 Act. In the premises, subsection 1(c) above gives creditors of a company a right to collectively or jointly institute proceedings in order to help divide costs amongst themselves which makes litigation accessible by all affected persons. Section 157(2) of the 2008 Act gives the companies commission locus standi to commence proceedings or apply for leave to intervene in proceedings on behalf of any person(s) whose rights may not be well represented without its intervention. This then entails that a creditor without a good financial standing may use the commission`s avenue to enforce payment of its debts. Lastly, as we have seen under several mechanisms discussed in chapter 3 & 4, creditors have locus standi to influence the commencement of such proceedings or mechanisms either within the company or through the court process in most which when employed would safeguard creditor interests.461 It is thus conclusive to reckon that the 2008 Act has devised a number of mechanisms, some of which are direct and some indirect, which at the end of it uphold one of its purposes which is to provide appropriate legal redress for investor and third parties within the companies.462 This then promotes the development of companies within all sectors of the economy, and encourages active participation in economic organisation, management and productivity.463