Abstract

Keywords

Companies Act 2008; proper purpose; duties of directors; distribution; primary purpose test; dominant test; subjective test; objective test

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In its endeavours to change the long-standing common law position on company law, the Companies Act 71 of 2008 (hereinafter "the 2008 Act")1 has partially codified the duty to act for a proper purpose. Looked at through the lens of the provisions regulating the distribution of company money and/or property, its purpose, as described in the overall objects of the Act in section 7 is to preserve the existence of companies as vehicles to do business but also to reaffirm the concept of a company as a means to achieving economic and social benefits. These were the policy directives issued by the South African government in its 2004 policy paper, which have been transfused into the 2008 Act.2 Section 5(1) of the 2008 Act enjoins our courts to interpret and apply the provisions of the Act in a manner which gives effect to the purposes set out in section 7.3 The latter statement suggests that whenever disputes pertaining to the distribution of company

money or property or related to how directors perform their duties in relation to the company in question are brought before our courts, the courts have the responsibility to ensure that the performance of those duties is interpreted in the context of fulfilling the purposes/objects of the Act as set out in section 7.

Rules pertaining to the distribution of company money or property serve an important role as one of the mechanisms used by the 2008 Act to achieve that which it envisages under section 7 of the Act, that is, to preserve the existence of companies, but also to reaffirm the concept of a company as a means to achieving economic and social benefits. Thus, one of the cardinal purposes of the distribution rules is to ensure that the company is managed judiciously.4 These rules impose obligations on directors and as such must be observed, based on the duties of directors as provided under section 76(3) of the 2008 Act. One of the duties under section 76(3) which directors must perform when acting in that capacity is to exercise their powers and perform their functions for a proper purpose.5

Previously, prohibitions against directors' actions in the realm of improper purpose were to the effect that directors may not distribute assets of the company among its redundant employees for the sole purpose of treating employees generously, other than the members,6 or to issue shares or refuse to do so for an improper purpose, or contravene common law rules by paying dividends out of capital,7 for example, unless they honestly

believed that there were profits for distribution at the time.8 In interpreting the rules pertaining to improper purpose practically the challenge was that divergent views persisted as to which standard of judgment should be used to determine whether an improper purpose existed in the circumstances of a particular case.9 The standards of judgment applied by courts varied from a "causative test" to a "subjective test", a "primary purpose test" and an "objective test".10 Judging from case law, in the process to determine whether directors acted for a proper purpose, courts in the different jurisdictions considered in this paper seem to be in tune with one another in the application of the "primary purpose test", the "dominant test" and the "causative test" to ascertain whether indeed the power conferred was exercised for a proper purpose. However, on further perusal of the contemporary jurisprudence and/or commentaries on the subject of proper purpose, one senses that the approach differs markedly on which standard to apply, whether subjective or objective or both. The difference seems to arise from the fact that the existing statutes do not attempt to define what proper purpose entails. As a result, for the purpose of decision making on the subject, the absence of a definition has suggested to commentators and the courts alike that the common law jurisprudence which over the years has informed its interpretation is still relevant, especially as some jurisdictions have more or less absorbed the common law position into their statutory frameworks. Some countries, such as South Africa, have codified directors' duties into their company law legislation, and have also statutorily provided that common law rules still apply to determine director liability.11 Looking at case law in the South African context, the courts seem not to be of one mind as to which standard of judgment is contemplated under the 2008 Act. Some courts still favour an interpretation of the statutorily expressed duty of proper purpose by using only the common law objective standard of judgment. This may be justified because the duties in the 2008 Act are those applied at common law. However, the problem with approaching the interpretation of this duty in terms of common law principles only is that it stands to dilute the policy direction adopted by the Act currently in operation, especially if the Act in question contemplates charting a different course by imposing a higher standard of judgement than was the case at common law. The interpretative possibility is an adoption of a standard completely unintended by the express provisions of the Act.

This paper seeks to critically analyse the requirements of the duty imposed on directors12 to act for a proper purpose as provided in section 76(3)(a) of the 2008 Act whenever they distribute company money and/or property.13 This analysis is conducted with the obligations imposed under sections 4 and 46 of the 2008 Act in mind. The purpose is not to question the inclusion of this duty in the 2008 Act. It is simply to question whether common law interpretation of the duty still suffice in the face of section 76(3) of the 2008 Act, which seems to suggest that a different standard of judgment must be used. The argument that is sought to be made here is that the use of common law principles in interpreting proper purpose is well and good when the actions of directors are challenged based on the common law, but, where this duty has been incorporated into statutory law the interpretation of the duty in the context of the wording of the statute should be paramount. In addition, when interpreting any provision of the statute, consideration of its objects becomes inevitable. The interpretation of the duty cannot, in the face of the changes brought about by the statute, remain stagnant by continued reliance on common law standards of judgment. Therefore, the wording of the provision in question and the purpose of the statute cannot and must not be ignored; they must be given effect. A comparative approach is adopted, using legislation and case law from Australia and Canada as poles of comparison. These two jurisdictions are selected solely because like South Africa their legal heritage is based on English common law, and a comparison of the three jurisdictions therefore makes sense.

The duty to act for a proper purpose attaches to the exercise of powers conferred on directors, be they acting collectively or individually. The duty is

fiduciary in nature.14 Previously the duties of directors were regulated by common law15 informed by principles from equity.16 The UK Supreme Court in Eclairs Group Ltd17 expressed the fundamental nature of the responsibilities of directors to act for a proper purpose as follows:

The rule that the fiduciary powers of directors may be exercised only for the purpose for which they were conferred is one of the main means by which equity enforces the proper conduct of directors. It is also fundamental to the constitutional distinction between the respective domains of the board and the shareholders.

From this narrow statement it can be gleaned that at common law it was important for directors not to overstep the bounds of the power which was conferred on them by the shareholders of the company through the company's constitution. In South African company law, directors' duties were not codified under the 1973 Act.18 The policy direction under the 2008 Act has changed, resulting in the duties being codified at a fairly high level.19 Under the 2008 Act the duty to act for a proper purpose is fused together with the duty of good faith and is regulated in terms of section 76(3)(a).20 Additional to the duty to act for a proper purpose is the duty to “act in the best interests of the company" as well as with "care, skill and diligence" as regulated in sections 76(3)(b) and 76(3)(c) of the 2008 Act. As will be argued below, under the 2008 Act these duties are meant to operate cumulatively as the operation of one seems embedded in the operation of the other. Furthermore, one's intuition is raised where the duty to act for a proper purpose is not expressly required to be complied with in order for a director to earn protection under the business judgment rule as provided under section 76(4) of the 2008 Act. But, the duties regulated under sections

76(3)(b) and (76(3)(c) are provided.21 Nevertheless, on proper analysis one may safely submit that taken together these duties seem to be inseparable, as it is inconceivable that the 2008 Act may require a director to act for a proper purpose without doing so in the best interest of the company and with care, skill and diligence.

Under the Australian Corporations Act 2001 the duty to act for a proper purpose is contained in sections 181(1)(b) and 180(2)(a). Under section 180(2)(a) the duty forms part of the satisfaction of the business judgment rule. It states that "a director or officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and equity, in respect of the business judgment rule, if they make the judgment in good faith for a proper purpose".22 Under section 181(1)(b) "a director or other officer of a corporation must exercise their powers and discharge their duties for a proper purpose."

Under the Canada Business Corporations Act, 1985 (hereinafter "the CBCA") the duty to act for a proper purpose is not included. Rather the Act emphasis the phrase "to the best interests of the company" in sections 122(1)(a),23 fusing it with the duty to act honestly and in good faith. Under the Corporations Act the phrase "in the best interests of the company" is regulated in section 181(1)(a) together with the duty of good faith. The section reads "a director or other officer of a corporation must exercise their

powers and discharge their duties in good faith in the best interests of the corporation".24

As will appear, the Australian, Canadian and UK courts have over the years applied the same principles as the South African courts when determining whether directors acted for a proper purpose. The difference, however, has been in the preferred standard of judgment to be used in determining whether a director acted for a proper purpose. Commentators agree that the presence of the duty to act for a proper purpose under section 76(3)(a) of the 2008 Act confirms the position under common law, but in addition removes any doubts as to the existence of the duty and makes it distinct from that of good faith.25 According to Cassim et al the setting out of this duty distinctly confirms the foundations of its legal principles, that in effect it has been used by the courts as an attempt to restrain the exercise by directors of the discretionary powers that they possess.26 This was so because the nature of the application of the power is that its exercise often leads to prejudice to another party.27

The words "for a proper purpose" are not defined under any of the statutes considered here. It is submitted that literally construed the duty to exercise one's powers for a proper purpose provides two connotations: (i) that, in addition to acting honestly and in good faith, a director must also exercise his/her power for the purpose for which it was conferred and not for ulterior motives; and (ii) it also could assert that directors must not act beyond their powers, which is a principle used to control power conferred on public officials under administrative law. The understanding here is that when directors conduct the affairs of the company they are expected to do so within the confines of the conferred powers and for a rational purpose.28 Cassim et al confirms that the first connotation constitutes what the duty has always been taken to mean at common law.29 This duty is distinct from the

duty of good faith, but they operate cumulatively such that a director who may have acted in good faith can be found to have not exercised his powers for a proper purpose.30 In Visser the Western Cape High Court stated that:

The position in South African law has always been that directors occupy a fiduciary position and as a result must exercise powers conferred on them in what they bona fide consider to be the best interests of the company, for the purpose for which the power was conferred, and within any limits which may be imposed for the exercise of the power.31

In Visser the test for a proper purpose was said to be purely objective.32 In law it has been accepted as a useful starting point to determine whether the conferred power was used for a proper purpose. This was so because once it had been ascertained what the actual purpose for which the power was exercised, then that would assist to determine whether the actual purpose falls within the confines for which the power was conferred.33

It is implied, as has been realised by the High Court in Visser, that the provision conferring the power calls for an interpretation which takes into account the instrument as a whole34 and other relevant factors. In giving effect to the approach, the court in Visser applied what seemed to be the "dominant purpose test". In its ruling the court inferred that in the context of decisions by directors, there is often a close relationship between the requirement that the power should be exercised for a proper purpose and the requirement that directors should act in what they consider to be the best interests of the company. To the court, the overarching purpose for which directors must exercise the powers conferred on them is the purpose of promoting the best interests of the company.35

Approaching the interpretation of the duty for proper purpose from the context of the early Courts of Chancery on how the principle to act for a proper purpose was considered at the time, the court in Eclairs Group Ltd stated that:

The early Court of Chancery attached the consequences of fraud to acts which were honest and unexceptionable at common law but unconscionable according to equitable principles. In particular, it set aside dispositions under

powers conferred by trust deeds if, although within the language conferring the power, they were outside the purpose for which they were conferred.36

Referring to earlier cases on the subject heard much earlier, the court further stated that:

… that the donee, the operator under the power, shall, at the time of the exercise of that power, and for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view to the real purpose and object of the power, and not for the purpose of accommodating or carrying into effect any bye or sinister object (I mean sinister in the sense of its being beyond the purpose and intent of the power) which he may desire to effect in the exercise of the power.37

Viewed in the context of the ruling of the court, one may deduce that the principle of proper purpose had nothing to do with fraud in the common law meaning of the term or any conduct which could be properly termed dishonest or immoral. What it meant was merely that the power had been exercised for a purpose, or with an intention, beyond the scope of or in a manner not justified by the instrument creating the power.38 Therefore, the principle was concerned with the abuse of power. What was being done by a director was in fact within the scope of the power conferred, but was being done for an improper purpose.39 Therefore, what the court suggests is that the director's bona fide belief that he/she is acting in the best interests of the company would not in itself mean that the director would not ordinarily be exercising a power for an improper purpose.40 To ascertain the true state of affairs it was equally important to determine the motivational aspects which influenced the director in question to act improperly. An inquiry into the state of mind of the director at the time would be indispensable. The court in Eclairs Group Ltd seems to have recognised this critical aspect,

because contrary to the position taken by the court under South African law in Visser, the court preferred a subjective test.41 According to the court:

Where the question is one of abuse of powers, said Viscount Finlay in Hindle v John Cotton Ltd (1919) 56 Sc LR 625, 630, the state of mind of those who acted, and the motive on which they acted, are all important.42

Accordingly, it is necessary to subjectively scrutinise the reasons which influenced directors to make a particular decision to determine what purpose motivated them and/or ascertain what purpose occupied their mind at the time of their taking a decision. To assist in determining the purpose for which the conferred power was exercised or to ascertain whether a director can be said to have exercised a power for the purpose for which it was conferred, the court stated in Madoff that a four-stage test must be employed. The court's approach may be universally applicable.43 Also, looking at the court judgments discussed hereunder, the universality of the application of the four-stage test seems to have been the foundation upon which the various courts have relied. The test involves the identification of: (i) the power whose exercise is in question; (ii) the proper purpose for which the power was conferred; (iii) the substantial purpose for which the power was exercised in the instant case; and (iv) whether that purpose was proper.44

It is submitted that when applying this four-stage test in the context of distributing company money and/or property the first leg would refer to the power which the director has. In Howard,45 ruling in the context of self-interest, the court stated that the determination of the power exercised by directors, including the nature of the power and any limits within which it may be exercised, represents the legal question. In the South African context, quite apart from its counterparts, the powers which a director must use for such purpose are conferred by the 2008 Act. Directors no longer derive their powers from the company's Memorandum of Incorporation (hereinafter "the MOI") as is the case in Australia and Canada. It is submitted that the character of the power is inherent in the duties which directors possess as conferred by the 2008 Act.46 Shareholders may vary

this power in the company's MOI, but, even the shareholders cannot vary the power in whatever form they think proper. The variation must constitute an additional protective measure to the company by limiting, restricting or qualifying these powers or the activities of the company.47 Directors must act within these powers at all times. To act contrary will not always suggest that the power was exercised improperly or for an improper purpose, however.

In terms of the second leg, the proper purpose for which the power was conferred will be paramount. In most statutes the proper purpose for which a power is conferred is not expressly stated. The 2008 Act is no exception. However, one may infer that in the context of distributions, the purpose for which the power is conferred on directors is to facilitate the proper distribution of company money and/or property. When doing so, directors must therefore not act in a manner that will contravene the distribution rules so as to compromise the solvency and liquidity of the company. In Msimang v Katuliiba48 the court stated that in order to assess whether directors acted in a manner contravening the Act their conduct in relation to their duties as directors must be scrutinised. Where the power has been properly exercised, the courts, taking into account the business judgment rule, may not invalidate the exercise of that power without justification. At all times they must bear in mind that it remains the directors' call whether or not the distribution in question should have been made, having taken into account their statutory and fiduciary duties as imposed on them under sections 4, 46, 76(3) and (4) of the 2008 Act. As long as the director at the time reasonably and rationally believed, having taken into account its reasonably foreseeable financial circumstances, that the company would or would not sustain the distribution, as the case may be, his decision would stand. There must always be a rational basis for his/her belief.

The second leg invites the application of questions of rationality in regard to the decision making process employed by directors. Even under the 2008 Act the rationality principle finds application by virtue of section 76(4)(a)(iii). Much as the use of the requirement of rationality in the context of company law has been articulated in various other cases such as Charterbridge Corporation Ltd v Lloyds Bank Ltd49 and The Manning River Cooperative

Dairy Co Ltd v Shoesmith,50 the rationality principle has been referred to less frequently.51 At its core, the principle of rationality relates to the fact that decisions made by those on whom powers have been conferred must be related to the purpose for which the powers were given.52 In the context of the exercise of public power, the requirement of rationality has been held in some court judgments to concern the relationship between the decision and purpose for which the power was given.53 The question was asked in this way: "was the decision or the means employed rationally related to the purpose for which the power was given"?54 This vital relationship between "the power conferred" and "the purpose of its use" was made clear in Democratic Alliance v South African Broadcasting Corporation Limited,55 where the Western Cape High Court intimated that:

Rationality is a minimum threshold requirement applicable to the exercise of all public power by members of the executive and other functionaries. It is a requirement of the principle of legality that decisions must be rationally related to the purpose for which the power was given, otherwise they are in effect arbitrary.56

The court in Visser stated that the rationality criterion as an aid to section 76 of the 2008 Act is objective.57 It is submitted that there is no reason why this administrative law principle should not, with appropriate modification, apply equally to directors, whose power has been conferred on them by statute, like the power conferred on public officials.58 Consequently, in order for a decision to be rational the provision of cogent reasons for taking that decision will be one of the criteria justifying the decision.59

On the third leg, in Howard the court stated that the examination of the substantial/primary purpose for which an action was taken, leading to a conclusion as to whether or not that purpose was proper, is a factual question. In that context, facts will have to be established through the presentation of evidence so as to determine what motivated a director to act in a particular manner as well as to ascertain his/her state of mind at the time, whether indeed the director in question acted with that particular purpose in mind or whether or not his/her decision was informed by the interests of the company.60 If the board/director distributes company money

and/or property based on ulterior motives, such conduct would be unlawful. It is submitted that it is at this stage that an objective test is called for to establish whether the directors acted objectively, even though subjectively they might have intended to act for the benefit of the company. Hence a sanction must not be applied until it is proven that the exercise of the power was not for a proper purpose, as the fourth leg requires.

The operation of the above principles and the divergence in the standards of judgment applied to them can be gleaned/observed in the following cases. The case law discussion which follows relates to three jurisdictions, being South Africa, Australia and Canada. UK case law will be discussed in conjunction with South African case law. The consideration of UK case law is informed by the fact that one of the UK provisions regulating the duties of directors is similar to one of the provisions under the 2008 Act which will be referred to hereunder. For that reason, UK company law may serve as a comparitor for the purpose of interpreting and applying the principle of proper purpose in the South African context.

The first among these is the South African case of Visser.61 From the outset it is worth noting that in this case the court used both the objective and subjective tests at different stages of its judgment to determine whether or not the refusal to transfer shares was lawful.62 What seems apparent, however, is that of these two tests only the objective standard of judgment was used to interpret and analyse/apply the duty to act for a proper purpose. The case concerned an application for refusal by the board of the first respondent, Goede Hoop Sitrus (Pty) Ltd (hereinafter ("GHS"), to approve a transfer by the applicant, Visser Sitrus (Pty) Ltd (hereinafter "VC"), to the second respondent, Mouton Sitrus (hereinafter "MC"), of the shares held by VC in GHS. The shares were not necessarily to be transferred from the company to the shareholder in question, but from one shareholder to another. VC sought to compel

GHS to register the transfer by way of relief in terms of section 163 of the 2008 Act, stating that any refusal by GHS to register the transfer of shares without rational or cogent reasons would constitute oppressive and unfair prejudicial conduct.63 VC also sought the amendment of a clause in GHS' MOI restricting the transferability of its shares.64

In invoking the provisions of section 163, the claim by the applicants related to the question whether GHS' directors breached their fiduciary duties in refusing to register the transfer.65 In response, the court ruled that if a director acts and/or exercises the power conferred on it by the company's MOI, and in so doing meets the standard set under section 76 of the 2008 Act, the director would be acting lawfully.66 The question posed by the court was: "Can a shareholder who is prejudiced by the decision then complain that the decision is 'unfairly' prejudicial to him?" In other words, where directors act lawfully and in accordance with the standard imposed on them without any malice, their decision cannot be reversed by a court simply because the decision adversely affects another person's interests. The director's' decision will stand. In fact, the counsel for the applicants conceded that circumstances where directors would be found to have acted unlawfully could be rare, especially where directors exercised their powers in good faith, for a proper purpose, in the best interests of the company.67 Applying the dominant purpose test, the court emphasised that the test for proper purpose is objective, the overarching purpose for which directors must exercise their powers being the purpose of promoting the interests of the company:68

The power to refuse to register a transfer of shares must thus be exercised in what the directors consider to be the best interests of the company. More specifically, the clause conferring the power has in mind that there may be circumstances in which a company's best interests would be served by not having the proposed transferee as the holder of the shares in question. The board might consider that it would be preferable, in the best interests of the company, that the proposed transferee should not become a shareholder at all or that he should not acquire a greater stake than he already has. The exercise of the power

will often, by its very nature, result in prejudice to the parties to the proposed transfer.69

Summing up what was in its mind in this regard, the court ruled that, in its opinion having had the benefit of hearing a description of the process followed by the directors and the various board meetings in which the decisions were taken,70 at the time of decision making the directors of GHS were bona fide of the opinion that the best interests of the company would be served by not allowing MC to increase its shareholding in GHS. In the court's view, the actual purpose for which GHS' board exercised the power to refuse the proposed transfer fell within one of the intended purposes of the empowering provision, that is, to enable the board to prevent a person from acquiring an increased shareholding in the company where the obtaining of the increased shareholding was regarded as being contrary to the best interests of the company.71

Further, VC alleged that the board had exercised the power for an improper purpose because the directors were using the power as leverage to force MC to conclude a long-term contract, even though the MOI permitted short-term contracts. Again the court ruled in favour of the board. Referring to the adequacy of the information which the directors made reference to before making the decision in question so as to enable themselves to make a proper decision, the court noted that even if the argument raised was the board's purpose, the court was not convinced that it was an improper purpose. This was so because the board of a company is entitled to encourage long-term contracts if this would best serve the interests of the company.72 Besides, MC did not allege that the directors had failed to take reasonable diligent steps to inform themselves of the facts relevant to their decision, and even if they had made that argument, the court ruled that it had no reason to doubt that, as business people, the directors had sufficient information at their disposal to make a proper assessment.73

As to whether the decision of the directors had a rational basis, the court stated that simply because the applicants had a different view from that of the board, that in itself did not mean that the applicants had a better way forward for GHS than the course which the board of GHS was charting. Therefore, this would not mean that the board was acting irrationally by preferring its view to that of MC.74 It would be fallacious to take the view that a proposed transferee always acquires shares with a view to better

advancing what he regards as the best interests of the company. The transferee may have other business interests which would be enhanced if the affairs of the target company were curtailed or conducted differently.75 Therefore, the court concluded that in refusing to approve the transfer the board had met the standard set by section 76 of the 2008 Act and that the refusal was lawful.76 The court dismissed the application.77

In Pretorius v PB Meat (Pty) Ltd78 the ultimate decision of the court suggests that the court preferred the dominant purpose test as well as the objective test, as in the Visser case, to determine whether or not the directors of the company were acting for their own interests or in the interests of the company. The court did not refer to the subjective test. Essentially, the allegations levelled against the applicants were that they had not acted bona fide and in the best interests of the company in making an application requesting further company records. Their argument was that in making the application for access to the records, they were doing so in order to be able to perform their duties as directors of the company. In its ruling the court stated that the applicant's access to company records must be fettered by the purpose for which such access was sought. The court held that the request for documentation by the applicants was not for the purpose of exercising their powers and performing their duties in the best interests of the company. In fact, the purpose was so that they could defend the allegations levelled against them, which went to the root of the performance of their duties in terms of section 76 of the 2008 Act. Having assessed the reasons informing their application, the court found that the applicants did not request the information to protect the company, but to protect themselves as individual directors. Therefore, the court denied the applicants access to the information they required.

If the approach in the above two cases is compared to one of the most important cases on proper purpose in UK case law, a different picture appears. The UK case in question was decided by the Supreme Court,

based on the Companies Act 2006. The case is that of Eclairs Group Ltd.79 In the case the Supreme Court of Appeal seemed to apply both the subjective and the objective tests, informed by the dominant purpose for which the power was used, which influenced the directors to make the decision they did, rather than only the objective test preferred in Visser and the Australian case of Howard discussed hereunder. This "subjective and objective dominant purpose test" is qualified by the "causation test" due to the possible existence of multiple causes, some proper and some improper. The latter test places emphasis on the existence of a link between the improper use of the conferred power and the end result, as in where, for example, "but for" the improper purpose the power would not have been exercised or the result in question would not have materialised.

Importantly, in the Eclairs Group Ltd decision Lord Sumption set out a number of principles applicable in cases related to proper purpose. According to Lord Sumption, in determining purpose it was not necessary that the purpose of an instrument should be expressly stated. Rather,

purpose would usually be implied from a mixture of the express terms of the instrument, an analysis of their effect and form, and the court's understanding of the business context. Primarily, proper purpose is concerned with the abuse of power by engaging in acts which are within the scope of the power but exercised for an improper reason or motive. An assessment of whether the power has been properly exercised is therefore necessarily subjective and dependent on the state of mind of the persons exercising the power. To determine whether a power has been properly exercised, it is necessary to assess the primary or dominant purpose motivating the use of the power.80 However, the assessment must be made having considered the range of a director's functions and the conflicts may be inseparable from the position of a director.81 A court of equity needed not just to uphold the integrity of the decision-making process. Its purpose was to limit its intervention in the conduct of a company's affairs to cases in which an injustice has resulted from the directors' having taken irrelevant considerations into account.82 Put differently, it is the overall determination which directors must make which borders on what motivated them to opt for that particular decision. Leaning on the objective standard of judgment, according to the court one possibility in identifying the dominant purpose is to choose between the "weightiest" purpose about which the directors would feel most strongly and the purpose which caused the decision to be made as it was.83 As there are likely to be multiple causes, some proper some improper, the relevant test should be that of causation, that is, "but for" the relevant motive, the power would not have been exercised.84 To the court this approach was correct since it was consistent with the rationale behind the proper purpose rule.85

In cases where the director would have made the same decision anyway had he/she acted for a proper purpose, the court stated that the act would remain valid despite the existence of some improper considerations.86 Proper purpose is precisely meant to apply and most valuable to apply in situations where there are conflicting factors and where the affairs of a company are contested. In such circumstances, this is a primary tool for ensuring that directors act within their powers and recognise the difference between their powers and those of a company's shareholders. Ultimately, it

is up to the board to decide whether the information provided is sufficient. However, there will always be room for the directors to decide erroneously. In the end, the Supreme Court of Appeal upheld the appeal and dismissed the directors' decision. In the eyes of the court the manner in which the directors in the Eclairs Group Ltd case acted proved that they did so for an improper purpose. This was so because they were primarily influenced by seeking to influence the outcome of the proposed shareholder resolutions, rather than to obtain the information sought by the prior disclosure notices. The court came to this conclusion despite the fact that the directors were found to have acted rationally and in a genuine belief that they were acting in the best interests of the company.

RT Langford and IM Ramsay discuss the case in the context of the implications for the autonomy of directors of the different judicial interpretations of the proper purpose rule.87 Expressing their views on whether courts should adopt an objective or a subjective test when interpreting the proper purpose rule, as well as on the fact that Lord Sumption seemingly used a subjective test to dispense with Eclairs Group Ltd, the authors first acknowledge that Lord Sumption used a subjective test to analyse the proper purpose rule. Further, they acknowledge that the use of the subjective test was contrary to the views of corporate law scholars and of earlier authority.88 Nevertheless, in their opinion the use of the test by the Lord was correct. Their support is based on their interpretation of what Lord Sumption said. The UK Supreme Court of Appeal in Eclairs Group Ltd referred to the duty of proper purpose under the Act as one determined on subjective standards and the motives which informed the directors' decision at the time. According to Langford and Ramsay what Lord Sumption meant by the latter statement was that the proper purpose rule encapsulates both subjective and objective elements, and his statement that the test is subjective should therefore be interpreted as meaning that.89 Their support for the use of the test is based on two grounds. The first is that, following the statement that the test is subjective, Lord Sumption cited Hindle v John Cotton Ltd (see under Heading 3 page 11 above). The statement made was that "the state of mind of those who acted, and the

motive on which they acted, are all important". According to Langford and Ramsay this statement means that:

… in order to determine for what purpose directors made the decision under review, it is necessary to understand their subjective motivations.

To that end, they submit that the application of the objective test, in addition to the subjective test, has the purpose of ascertaining as a matter of law the purposes for which the power may or may not be exercised. It is also to determine/test whether the purpose which the directors in question say motivated them to make the decision in question was permissible.90

Their second concern is their difficulty in reconciling the decision of Lord Sumption (that the directors had acted for an improper purpose) with the application of a subjective test.91 The majority of the directors were in fact found to have based their action on a genuine belief that it was proper for them to issue the restriction notices. But the same genuine subjective belief which was required and which the directors were found to have possessed at the time of making their decision was not enough to protect their' decision. According to the authors this suggests that from the point of view of the court, the directors failed to act for a proper purpose as objectively determined by the court.92

It is proposed that what the above submissions suggest is that the fact that a director has acted subjectively will not for all purposes mean that he has ultimately also acted objectively. His/her motives might have influenced him/her not to act objectively even though subjectively he was genuine in carrying out his duties to his principal. If the court finds that a director has passed a subjective test, that in itself shall not be regarded as being enough to satisfy the duty to act for a proper purpose. What must also be satisfied is the requirement that one acted objectively as well. According to Langford and Ramsay the ruling of Lord Sumption means that a test which considers the subjective motivations of directors is ultimately an objective test. In their words:

This test assesses the conduct of directors against what the court determines are the proper purposes for which a particular power can be exercised and thereby places a restraint on directors' conduct and limits their available actions. It is a test that has particular importance in the context of a battle for corporate control.93

Having read the case, and as has been noted in the discussion above, the question which comes to the fore is: whether it is possible for a director to act genuinely subjectively and yet act improperly from an objective point of view? It is submitted that in applying both the subjective and objective standards of judgment, the Eclairs Group Ltd case confirmed that this is possible. The opinion of Langford and Ramsay is therefore supported. What they suggest is that subjectively speaking a person may have proper motives and as such carry him/herself properly in that regard, but the power itself may be exercised for an improper purpose, hence objectively speaking a court would not sanction any action which to the court bears no relation to proper purpose, even though subjectively speaking the actions of the director in question were proper.

From the outset it must be stated that there is no duty to act for a proper purpose under the CBCA in terms of section 122(1)(a) regulating the duty of good faith. Nevertheless, Canadian courts seem to appreciate the application of the subjective standard of judgment when determining the motivational aspects of a director. This standard is applied in conjunction with the objective standard. One deduces from the decisions of the courts that had section 122(1)(a) of the CBCA also contained the duty to act for a proper purpose alongside the duty of good faith, as is the case under the 2008 Act and the Corporations Act 2001, the subjective standard of judgment would be the preferred standard where motivational aspects of a director's conduct are under scrutiny. It is in this context that the two cases below are discussed.

To that end, the application of both the subjective and objective standards of judgment were visible in the almost half a century old case of Teck Corp Ltd v Millar94 on corporate law, relating to directors' fiduciary duties in the context of a take-over bid. The premise from which the court set out and the principles evoked in the case seem to resonate with those in Visser. The court seemed to be referring to the application of the subjective standard or to the motivational aspects which tend to inform the decision of directors when it stated that before directors take a decision, they must first have informed themselves. For example, if someone seeks to take control of a company, directors of the company must be allowed to ask who is seeking

control and why. If, after they have informed themselves, they believe that there will be substantial damage to the company's interests if the company is taken over, the exercise of their power to defeat the taking of control will not necessarily be categorised as improper. Suggesting the application of an objective test, however, the court later stated that directors must act in good faith and must have reasonable grounds for their belief. According to the court impropriety may lie in the directors' purposes. A finding of impropriety would be based on proof that the directors' decision was actuated by collateral purpose. It does not depend on the nature of any shareholders' rights that may be affected by the exercise of the power concerned. In Teck Corp Ltd Berger J eventually ruled that the purpose of the directors was not to keep themselves in control. In fact, the purpose was to prevent the deal from materialising. To the court, this was a proper purpose which the directors were entitled to use their powers to prevent.

The Peoples case is not strictly speaking a proper purpose case. However, it is introduced here to illustrate the application of both the subjective and objective test. In its decision the court was emphatic as to which standard of judgement is preferred in Canada when the duties of directors are in question. On route to applying the subjective test, the court first referred to the fiduciary duty in section 122(1)(a). The court stated that section 122(1)(a) requires that directors and officers of a company in their dealings involving the use of the company's resources are to make reasonable business decisions that are to the advantage of the company.95 In other words, only the company is expected to benefit from the performance of director's duties. Directors must respect the trust and confidence placed in them to manage the assets and affairs of the business in pursuit of the realisation of the objects of the company.96 Referring to whether a subjective or an objective test applied in the circumstances of the case, the court in Peoples stated that under section 122(1)(b) of the CBCA the test was objective. From the point of view of the court it was clear that the factual aspects of the circumstances surrounding the actions of directors or officers are important only when the court considers the directors' duty of care.97 Where the court also has to consider the motivational aspects of a director's decision then a subjective standard will be the central focus of the statutory fiduciary duty under the duty of good faith in section 122(1)(a), exercised in the best interests of the company.98 The understanding here is that under

section 122(1)(a) and (b) of the CBCA an objective test applies under the latter subsection. A subjective test will apply only were a court has to engage in the motivational aspects of a decision if the duty being determined is the duty of good faith as regulated in terms of the former subsection. As was alluded to earlier, in Canada there is no duty to act for a proper purpose under the CBCA. However, had it been included it is assumed that it probably would have been regulated alongside the duty of good faith in section 122(1)(a), as is the case under the different statutes which are the subject of discussion in this paper. If that were to be the case, then it seems that a subjective standard of judgement would apply.

In perusing some of the early Australian cases on proper purpose, the principles applied seem to be similar to those applied in the above cases, especially with reference to the dominant purpose test. Where they differ from the above cases is in the application of either the subjective or the objective test. The Australian cases emphasise the objective test rather than the subjective test. In Howard99 the court agreed with the above cases, when it ruled that in order to judge whether a proposed action is not in pursuit of self-interest, the actions of the board of directors must be used as a guideline to determine their purpose for allotting additional shares owing to the lack of a clear list of different corporate actions that could constitute an improper purpose. Although the court did not classify the actions of the board as the consideration of motivational aspects, looked at in hindsight the court seems to have been referring to such motivational aspects. Nevertheless, according to the court, self-interest would constitute a ground for finding an improper purpose when the true purpose for an allotment of shares is to dilute the majority voting power. However, the court used an objective test rather than a subjective test to determine liability. According to the court, when a dispute arises over whether a company made a decision for one purpose or for another, or where there is more than one purpose and one of them has to be the substantial or primary purpose, the court will be entitled to look at the situation objectively in order to estimate how critical or pressing, or substantial or per contra insubstantial an alleged requirement may have been.100 If the court finds that a particular requirement, though real, was not urgent or critical, at the relevant time, it may have reason to doubt or discount the assertions of individuals that they

acted solely in order to deal with it, especially where their actions were unusual or even extreme.101

Another of the earliest of these cases is Harlowe's Nominees Pty Ltd v Woodside (Lake Entrance) Oil Company NL.102 In this case the High Court ruled that the first task of a trial judge was to decide whether it had been established to his satisfaction, even if on a balance of probabilities, that the directors of the company were actuated by an improper purpose.103 In establishing this fact the court takes cognizance of the process followed by the directors, their thinking and their actions leading to their decision making.104 As was submitted in the case of Howard above, by looking at the line of thinking of the directors the court seems to have recognised that establishing the motives of the directors is indispensable. The court also stated that in cases where directors must issue shares, there may be occasions when directors may fairly and properly issue shares for various reasons. What is required is that those reasons must relate to the purpose of benefitting the company as a whole. The purpose must not be to maintain control of the company by the directors themselves or their friends.105 According to the court: "an enquiry as to whether additional capital was presently required is often most relevant to the ultimate question upon which the validity or invalidity of the issue depends; but the ultimate question must always be whether in truth the issue was decided honestly in the interests of the company".106 The court continued:

Directors in whom are vested the right and the duty of deciding where the company's interests lie and how they are to be served may be concerned with a wide range of practical considerations, and their judgment, if exercised in good faith and not for irrelevant purposes, is not open to review in the courts.107

Only directors possess the ability to determine the company's best interests and how they may serve these interests.108 The allotment of shares would be voidable as an abuse of their fiduciary power where the directors create an advantage for themselves otherwise than as members of the general body of shareholders. Where the allotment is for the purposes of giving the company greater freedom to plan for future joint operations to ensure its long-term stability rather than to prevent another person from gaining control, the decision to allot will suffice.109

Wayde v New South Wales Rugby League Ltd,110 was a case decided in the context of oppressive and unfair prejudicial conduct. The challenge was based on an honest decision by the board. The articles of the respondent company permitted its board to determine how many teams should be permitted to compete in a rugby competition that year. For that season the company's board determined that only 12 teams would compete. A company called Wests, which was a member of the respondent and owned a team excluded from the 12 selected, complained that the decision of the board had an oppressive effect to the interests of the company. The decision of the Australian High Court, per Mason ACJ, confirmed the principle that the power vested in directors to make decisions inherently involved prejudice to another. It stated that to determine the number of teams to compete inherently involved prejudice to the team excluded. The existence of such prejudice was insufficient to invoke the remedy.111 In dismissing the claim, the court acknowledged the fact that it was inescapable for any court not to delve into what motives informed director-made decisions. To that end the court appreciated the special expertise and experience that boards possess and the fine line between the bona fide and proper exercise of the given power in pursuit of the purpose for which it was conferred and the caution which courts must exercise in determining its application in order to avoid an unwarranted assumption of responsibility for the management of the company.112

What can be deduced from the above discussion is that the fundamental principles upon which the duty of proper purpose rests are the same in all the jurisdictions. The difference lies in the preferred standard of judgment for purposes of interpretation and practical application. Under the Australian Corporations Act 2001 it seems settled that courts prefer the objective standard of judgment based on the dominant purpose test. Under Teck Corp Ltd and the Peoples case the Supreme Court of Canada preferred using both an objective and a subjective standard of judgment to judge whether a director acted in good faith at the time of decision making.

In South Africa the position is less clear as to which standard of judgment the courts seem to believe the provisions under the 2008 Act related to proper purpose contemplate. Divergent views appear in the cases considered. Accordingly, it remains arguable whether a subjective or objective standard of judgment is the appropriate test to determine whether

a director acted for a proper purpose in the circumstances of a particular case. This is especially so, having regard to the seemingly conflicting directions taken by the courts. It is submitted that the better option between the two approaches would be to use both the objective and the subjective standards of judgment. This is so because, in interpreting proper purpose, it would seem that under the 2008 Act courts are required to bear in mind the statutory context within which that duty must be construed. They should take into account the ordinary meaning as well as the context in which the terms of the statute are used and what they were meant to achieve.113 In Visser the court seemed to have realised this.114 Such context and meaning will be deduced from the text itself as well as from the objects of the Act as a whole.115 Most closely allied to the objects of the 2008 Act is the emphasis on high standards of corporate governance and the management of companies in an efficient and responsible manner.

As has been argued earlier, the provisions of section 76(3) are meant to apply cumulatively and are not meant to be stand-alone provisions, each provision fulfilling its own purpose as against the purpose sought to be achieved by the other. In that context it is submitted that the duty to act for a proper purpose in the distribution of company money or property is related to the duty of exercising care, skill and diligence, which is how directors are expected to carry out their duties in terms of the objectives provided in section 7 of the 2008 Act. In that respect the provisions of section 76(3)(c)(i) and (ii) of the 2008 Act cannot be ignored in interpreting and applying the duty to act for a proper purpose. The section states that, subject to subsection (4) and (5), a director of a company, when acting in that capacity, must exercise the powers and perform the functions of director:

… with the degree of care, skill and diligence that may reasonably be expected of a person: (i) carrying out the same functions in relation to the company as

those carried out by that director; and (ii) having the general knowledge, skill and experience of that director.

The s 76(3)(c) provisions closely resemble those contained in s 174 of the UK Companies Act 2006.116 Effectively, what the section states is that a director will be regarded in law as having exercised his powers for a proper purpose if the director acted with care, skill and diligence that may reasonably be expected of a person carrying out the same functions in relation to the company as those carried out by that director who has the general knowledge, skill and experience of that director in the circumstances of the case. It is clear from the wording of this section117 that the standard to assess whether the directors carried out their duties for a proper purpose cannot only be objective. The section seems to suggest that whenever a director exercises his powers for any purpose, be it to distribute company money or property or for another purpose, the director's' motives must be assessed subjectively as well.118 This assessment must be made: "in comparison to other directors carrying out the same functions in relation to the company as those carried out by that director with the same general knowledge, skill and experience as the director in question."119 In other words, courts have a responsibility to make a value judgment in terms of how other directors with similar general knowledge, skill and experience would have conducted themselves. The aim is to ensure that directors with

the same skill are compared on an equal footing120 with directors who do not have similar skills.

Previously, Naudé convincingly canvassed for the application of a subjective standard of judgment as influenced by English company law when reviewing whether directors can be held liable for breach of the duty of care, skill and diligence. His thinking was informed by various factors.121 While du Plessis acknowledges that section 76(3)(c) brings subjective elements into court reviews, he also submits that, because South African company law has changed since the UK case of City Equitable Fire Insurance Co Ltd in 1925 and Fisheries Development Corporation of SA Ltd v Jorgensen in 1980, which set the tone for the duty of care and skill in South Africa, and has followed international developments in the area of the duties of directors, South African courts, as was decided in the Australian Daniels v Anderson case, must use modern yardsticks to determine whether directors have breached their common law duty of care, skill and diligence that will include the principles of the modern law of delict.122 His view is that there is no reason in principle, based on policy or on practical considerations, why our courts should not move away from the subjective standard developed under English courts.123 According to him, the basis of liability for the breach of the duty of care, skill and diligence should be the principles of the law of delict.124 Richard Stevens and Phillip de Beer seem to favour an objective standard of judgment. Arguing on the basis of English influence, especially with such cases as Dorchester Finance Co Ltd v Stebbing in mind,125 the authors are of the view that since section 76(3)(c) appears to have been lifted from the UK Companies Act 2006, South African courts should follow the objective standard of judgment adopted by English

courts, which has an upward trajectory in interpreting and/or reviewing the duties of directors.126

It is submitted that it is clear from the provisions of section 76(3)(c)(i) and (ii) that the 2008 Act has preferred to take a different path. The section is phrased differently from those under the Corporations Act 2001. Hence an objective assessment seems the contemplated norm under the 2001 Act.127 In fact, the position in Australia was very much influenced by the case of Daniels v Anderson.128 In that case the court preferred what it termed the use of the modern law of negligence to determine whether a director was in breach of his duty of care, skill and diligence. The court's view was that the modern law of negligence can cope with the potential tension between expecting objective professional standards of all directors in all types of companies.

In Visser the court seems to have followed the approach suggested by du Plessis. This was surprising as one would have thought that, after the court had quoted in full the provisions of section 76(3) of the 2008 Act,129 it would proceed to analyse these using both the objective and subjective standards of judgment. This is especially so given that the court failed to recognise subjective elements in interpreting the duty to act for proper purpose. Instead the court simply stated that an objective test was applicable to determine the duty of proper purpose without mentioning the subjective standard.130 The court did not even attempt to interrogate the possible application of the subjective standard of judgment to the duty of proper purpose by virtue of section 76(3)(c)(i) and (ii) of the 2008 Act. In fact, the court said nothing about the section. It is submitted that the court erred in not reviewing the actions of the directors by inviting subjective elements into its decision by virtue of section 76(3)(c)(i) and (ii) of the 2008 Act. Much as du Plessis argues for an objective test, he in fact does confirm that section 76(3)(c) does not completely objectify directors' duty of care, skill and diligence.131

The section does not require comparison with a "reasonable person" as is the case in Australia, but instead refers to what is "reasonably expected of a person".132 To that end, section 76(3)(c) takes a different path from that taken by section 180(1) of the Corporations Act 2001.133

What the court in Visser turned its attention to and recognised is the applicability of the subjective standard of judgment under section 76(4)(a)(i) based on the words "in the best interests of the company".134 In quoting the provisions of section 76(3)(c)(i) and (ii) of the 2008 Act, the court seemed to have in mind that these provisions were applicable to determine the lawfulness of the directors' decision.135 One was convinced that this was the proper course which the court was about to take because, when looking at the provisions of section 76(3)(c)(i) and (ii), the section seems to direct that a subjective test be applied to determine the proper purpose for which a power was exercised.

It is evident that this section is relevant to the performance and exercise of powers for the purpose for which they were conferred under the duty to act for a proper purpose. The proper purpose for which a decision was taken must be determined unambiguously in the context of whether the director exercised the power to distribute company money and property with the care, skill and diligence reasonably expected of a person carrying out the same functions in relation to the company in question as those carried out by that director, who has the same general knowledge, skill and experience as that director. The proper purpose for which the powers were used should therefore not be determined in the abstract.136

It is therefore submitted that under the 2008 Act a subjective as well as an objective standard of judgment are unambiguously the standards contemplated to be applied to establish whether or not a director acted for a proper purpose when distributing company money or property. The four-stage test referred to earlier will therefore be an aid in determining whether a director used the power for its conferred proper purpose during the process which led to the distributive decision. The duty to act for a proper purpose is pervasive. The purpose for the directors' decision will be decisive in determining if indeed the decision was proper in the circumstances of the case, given the nature of the power conferred upon them. Proper documentation of the detailed analysis of the reasons for the decision as well as of the legal advice obtained will feature prominently in detemining whether the decision was taken for a proper purpose. Where directors are not acquainted with the operations of the company to be protected under the business judgment rule, they are entitled to rely on other persons as provided under section 76(5) of the 2008 Act.137

If I director has performed his or her' duties for a proper purpose it could therefore be deduced, first and foremost, that the director did not exceed the limitations of his or her capacity as conferred on him or her by the company's MOI.138 More so, it can be said that the director exercised in the best interests of the company the care, skill and diligence expected from a director with the knowledge, skill and experience befitting a reasonable director in the same position and circumstances as the director in question. Ensuring that directors exercise their power properly is a necessary exercise to undertake to protect investors as well as those who might contract with the company.139 This is the reason why the legislature had it as a requirement that the objects for which the proposed company was to be established must be in the company's memorandum of association,

which when signed and registered would establish the company.140 The principle was established such:

…objects and purposes foreign to, or inconsistent with, the memorandum of association are ultra vires of the corporation itself.141

Directors commit a breach of trust if they exercise powers which are non-existent or their actions go beyond the powers conferred on them.142 It is irrelevant whether they believe they do so in the best interests of the company.143 The issue under the proper purpose is whether the conduct impugned is inconsistent with the proper discharge of the duties of the office in question.144 All relevant circumstances must be taken into account, including the extent of the director's awareness and the financial stability of the corporation.145 Whether the action was proper in the circumstances of the particular case at the time will be for the court to decide. Directors must exercise their powers effectively. For example, when refusing to register shares, directors must at all times act bona fide in the best interests of the company.146 There must be a formal resolution to that effect, as mere inactivity will not suffice.147

What is telling, though, in the 2008 Act, is that in the definition of a director under the Act and/or common law no distinction is drawn between executive and non-executive directors.148 This suggests that no distinction shall be drawn in the performance of their duties by executive and non-executive directors. It is not clear from the 2008 Act, however, whether this also means that their level of skills, knowledge, expertise and experience should not be distinguished for the purposes of founding liability. This distinction is especially potent when it is remembered that the 2008 Act contemplates holding directors individually liable for their actions or omissions. The cases

discussed above do not deal with this issue. Courts therefore have the need to clarify and give direction in this regard.

It is submitted that the above discussion shows that the duty to act for a proper purpose and its regulation still plays a meaningful role in restraining directors in the exercise of their powers. Quite a number of divergent views have emerged in the above discussion as to which standard of judgment should primarily be used to determine whether a particular decision was made for a proper purpose in the circumstances of a case. The discussion reflects that Australian courts have applied the objective standard of judgment based on common law, with the primary purpose test as the norm and the preferred standard in determining whether a director acted for a proper purpose at a particular time. In Canada, the preferred standards of judgment has been both the objective and subjective tests, accompanied by the "primary purpose test" and the "causative test". And in the UK both the subjective and the objective tests seem to be applied. The different approaches are evident in how the courts of these countries have ruled on the provisions of the CBCA as well as the Companies Act 2006.

South African law has also followed the common law approach, preferring an objective test accompanied by the "dominant purpose test" instead of the subjective test. An argument has been made in this paper that the 2008 Act requires the application of both the subjective and objective standards of judgment. Having looked at the wording of sections 4(1)(b) and 76(3)(c)(i) and (ii) of the 2008 Act, this interpretation seems inevitable. But also, the policy direction of the Act as gleaned from its objectives must serve as a valuable guide. Overall, it is submitted that what the 2008 Act requires is a two-pronged approach to the interpretation of the duty to act for a proper purpose. First the duty must be interpreted in terms section 76(3)(a), then the latter section must be considered in the context of section 76(3)(c)(i) and (ii). To proceed otherwise would be not in the spirit and purposes of the 2008 Act.

Ultimately, at all times directors must realise that they are the primary agents of the company. They have a constitutional, fiduciary and statutory obligation to act with integrity and responsibility for the efficient and responsible management of companies. The manner in which they carry out their duties is bound to impact significantly on how companies are governed. If directors are reliable and sincere in the performance of their obligations, they will certainly invigorate and strengthen corporate governance generally. This is the reason why directors are accorded protection under the business

judgment rule whenever they act prudently. However, if they are not prudent, the objectives of corporate governance will not be attained.

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Pretorius v PB Meat (Pty) Ltd 2013 ZAWCHC 89 (14 June 2013)

Pryor v Pryor 1864 2 De G J & S 205

R(FDA) v Secretary of State for Work and Pensions 2013 1 WLR 444

Re D'Jan of London Ltd 1993 BCC 646

Regal (Hastings) Ltd v Gulliver 1942 1 All ER 378 (HL)

Richard Brady Franks Ltd v Price 1937 58 CLR 112

Roadchef (Employee Benefits Trustees) Ltd v Hill 2014 EWHC 109 (Ch)

Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168

Rolled Steel Products (Holdings) Ltd v British Steel Corporation 1986 Ch 246 (CA)

Savoy Corp Ltd v Development Underwriting Ltd 1963 NSWR 138

Smolaret v Liwszyc 2006 WASCA 50

Sparks & Young Ltd v John Hoatson 1906 27 NLR 634

Teck Corp Ltd v Millar 1973 33 DLR (3d) 288 BCSC

The Manning River Cooperative Dairy Co Ltd v Shoesmith 1915 19 CLR 714 (HC)

Village Cay Marina Ltd v Acland 1998 UKPC 11 (BVI)

Visser Sitrus (Pty) Ltd v Goede Hoop Sitrus (Pty) 2014 5 SA 179 (WCC)

Wayde v New South Wales Rugby League Ltd 1985 HCA 68

Whitehouse v Carlton House Pty 1987 162 CLR 285

Legislation

Canada Business Corporation Act, 1985

Close Corporations Act 69 of 1984

Companies Act, 2006 (UK)

Companies Act 61 of 1973

Companies Act 71 of 2008

Companies Amendment Act 37 of 1999

Corporations Act, 2001 (Australia)

Pension Funds Act 24 of 1956

Government publications

GN 515 in GG 19983 of 30 April 1999

Gen N 1183 in GG 26493 of 23 June 2004 (South African Company Law for the 21st Century: Guidelines for Corporate Law Reform)

Proc 32 in GG 34239 of 26 April 2011

Internet sources

ICLR 2015 http://www.iclr.co.uk/case-summaries/2015/wlrd/497

Incorporated Council of Law Reporting for England and Wales 2015 Summary: Eclairs Group Ltd and Glengary Overseas v JKX Oil & Gas plc http://www.iclr.co.uk/case-summaries/2015/wlrd/497 accessed 1 July 2017

Kilian 2007 http://www.clta.edu.au/professional/papers/conference 2007/2007CK_ODPPNPSACA.pdf

Kilian CG 2007 The Object of the Doctrine of Proper Purpose in the New Proposed South African Companies Act http://www.clta.edu.au/ professional/papers/conference2007/2007CK_ODPPNPSACA.pdf accessed 11 November 2017

List of Abbreviations