Impact of the Constitution's Normative Framework on the Interpretation of Provisions of the Companies Act 71 of 2008

Keywords: interpretation of law, companies act, horizontal application of the bill of rights, Normative framework, company law, transformative constitutionalism, direct horizontal application, indirect horizontal application, Bill of Rights

Abstract

Given the intention of section 7(a) of the Companies Act 71 of 2008 (the Act) to promote compliance with the Bill of Rights in the interpretation and application of company law in SA, this article assesses the extent to which the Act actually does this. The article thus seeks to showcase evidence of the Act's intentional alignment with the normative framework of the Constitution of the Republic of South Africa, 1996 (the Constitution). The paper does this by answering the question: what are the implications of the Constitution's normative framework on the interpretation and application of the Act? The term "normative framework" is defined, and a distinction is drawn between the descriptive and explanatory social science research questions and the legal research questions which are evaluative and normative in nature. The article provides examples of the contexts in which the intentional alignment of the Act with the Constitution's normative framework is evident. To this extent, commentary is made on the following selected issues: remedies to facilitate the realisation and enjoyment of rights established by company law; the direct and indirect horizontal application of the Bill of Rights to provisions of the Act; and a discernible court's duty to develop the common law as necessary to improve the realisation of the rights established by the Act. A point is made in the article that judicial decisions involving the application of company law must be justified by reference to a cohesive set of values from the Bill of Rights. This is part of transformative constitutionalism. It demands that even commercial law principles should no longer be blindly accepted simply because precedent says so, or for the reason that it is expedient for the purposes of commercial certainty. The article argues that the Act permits the direct horizontal application of the Bill of Rights on its provisions in two stated ways. It is also argued that the Act permits the indirect application of the Bill of Rights through the development of the common law where it is deficient in promoting the spirit, purport and objects of the Bill of Rights. The development of the common law, it is argued, is vital for producing an incremental and cohesive body of constitutionalised common law in the company law context.

Author Biography

Brighton M Mupangavanhu, University of the Western Cape

Senior Lecturer

University of the Western Cape, South Africa

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Published
2019-11-06
Section
Special Edition: Legal Interpretation after Endumeni