Companies Act 71 of 2008 and the "Turquand" rule

Abstract

The Companies Act 71 of 2008 (“the Act”) had a long and arduous path to come into existence. It started with the Guidelines for Corporate Law Reform published in Notice 1183 in Government Gazette 26493 of 2004-06-23, ironically marked “Confidential”. After various Bills, the Act was signed by the President on 2009-04-08 but only to come into operation on a date determined by proclamation, and from the general effective date would then repeal most of the Companies Act 61 of 1973 (“1973 Act”) (s 225 of the Act). The Act starts a new era in South African corporate law and will change the existing law, also the common law, extensively. It appears that the Act follows an eclectic approach in that it borrowed extensively from the corporate laws of other jurisdictions. This is not per se an unacceptable modus operandi, but careful grafting into the existing common law is necessary, so as not to create problems and uncertainty. A situation where this may be the case, and where the confusion may be exacerbated, is in respect of company capacity and representation.