The normative value system underpinning the Companies Act 71 of 2008 with specific reference to the protection of creditors and employees

Abstract

The company developed through an evolutionary process. Our conceptualization of the company and its position in law is determined by our philosophical approach to justice (our underlying system of belief), the resultant theory of law that we adopt and the underlying economic, political and social environment in which the company operates. Three broad philosophical approaches to justice are identified in this study. The first revolves around the idea of maximizing welfare, the second around the idea of respecting freedom and the third approach sees justice as bound up with virtue and the good life. It is argued in this thesis that we cannot detach arguments about justice and rights from arguments about virtue and the good life. It is not possible to devise a grand theory of the nature of the company. But from a normative perspective the communitarian theory and arguably the concession theory (more particularly the dual concession theory of Dine) is the most acceptable theory of the nature of the company. The real entity theory, as articulated by Dodd, is the preferred theory of the corporate personhood of the company. A company, especially a large company, is a public or quasi-public entity and a corporate citizen that should have the same legal, social and moral rights and responsibilities as a natural person. From a normative perspective the entity maximization and sustainability model (EMS model) and the stakeholder model are the most attractive models of corporate governance. It is generally accepted that the ultimate purpose of the company must be to serve society. Subject to this ultimate and supreme objective, the corporate objective on a narrower level must be to maximize and sustain the company as a separate legal entity. The aforesaid conceptualization of the company corresponds with the normative value system that underpins the Constitution of the Republic of South Africa, 1996 (the Constitution), and therefore also the Companies Act 71 of 2008 (the Companies Act of 2008). The Constitution encompasses a social democratic vision for South Africa in which commercial autonomy must be tempered by virtue, dignity and social and economic equality. The Companies Act of 2008 gives express recognition to bring company law within our constitutional framework. There has been a fundamental paradigm shift in the normative value system that underpins our company law since liberalism and laissez-faire reigned supreme in the eighteenth and nineteenth century Great Britain, from which country our company law originates. The underlying philosophy and approach of our company law is now more aligned with that of Canada. This also has an important effect on the rights, protections and remedies of creditors and employees of the company.