, Preface
As university lecturers and legal practitioners we have found that ther
a definite need for an advanced commercial law book on business
structures, suitable principally for commerce students at all tertiary
institutions. Like law students, commerce students are required to gra
with the complexities of the law of business structures and to acquire
respectable degree of knowledge and understanding of the subject an
intricacies. The Law of Business Structures will undoubtedly fulfil this
need. Both law students and commerce students, including accountin
and auditing students, will find the book useful in guiding and assistin
them in the study of the law of business structures. In addition, those
who teach the law of business structures will find this book to be a us
guide and teaching aid.
We hope that The Law of Business Structures will also serve the ne
of practitioners, whether attorneys, accountants, auditors or company
secretaries, who require a reliable and ready source of information on
law of business structures, and particularly on the new Companies Ac
of 2008.
The Law of Business Structures contains a fairly detailed treatment
the law of partnerships, business trusts, close corporations and
companies, whether large or small, and whether formed for a profit-
making or a non-profit-making objective. The centrepiece of the book
undoubtedly company law. The reason for the strong focus on compa
law is quite obvious. Company law in South Africa has been thorough
and extensively overhauled. Basic and fundamental corporate law
doctrines and concepts were deemed to be outdated, obsolete or arch
and to have outlived their usefulness, because they were no longer
appropriate to the contemporary economic and business environment
additional policy factor led to this sea change, namely, the need to
harmonise South African company law with that of our main trading
partners internationally, in order to ensure that South African compan
are not competing at a disadvantage because of an outdated and
restrictive company law regime. Hence, the new Companies Act 71 of
2008, with its many innovative legal concepts and new underlying
philosophies, was passed. The reader will find in the chapters on com
law a detailed discussion and explanation of core company law topics.
,becoming increasingly important for practitioners and students of the
subject to familiarise themselves with the provisions of the Companie
of 2008.
We have purposively avoided excessive theoretical analysis, but wi
refraining from careful and detailed explanations and analyses of
important legal concepts and principles. Case law has been kept to a
minimum. However, law and commerce students know full well that le
principles cannot be fully understood without a
knowledge and comprehension of the leading cases on a particular to
Accordingly the reader will find a discussion of the important cases on
subject.
We have included a glossary of important terms, which is intended
provide some background and guidance to students who are new to t
area of law. We have also included sample questions at the end of ea
chapter (with the exception of chapter 23 dealing with transitional
arrangements). The purpose of these questions is to test the student’
knowledge and understanding of the content of each chapter. We trus
that students and lecturers will find these questions both useful and
challenging.
The Law of Business Structures thus provides a comprehensive but
a simplified treatment of the different types of business structures in
South African law. It is by no means an exhaustive treatment, since t
field of law is simply much too large.
Publishing a book of this sort calls for much editorial skill, efficiency
hard work on the part of the publishers. We take pleasure in thanking
Linda van de Vijver and her team for their laborious efforts and exert
in the publication of this book. We would also like to thank them for
compiling the index, the table of cases and the table of statutes.
We would, furthermore, like to acknowledge our indebtedness to ou
students who have given us insight into the difficulties that students o
this area of law generally experience.
Finally, we would like to thank our families and loved ones for their
enduring support, encouragement and patience, without which this bo
could not have been written.
The law is stated as at 31 August 2012.
Farouk HI Cassim, Managing Editor, on behalf of the authors
November 2012
, Contents
Preface
Glossary
Chapter 1: Introduction and Overview
Farouk HI Cassim
1.1 Introduction
1.2 The forms of business structures
1.2.1 The sole trader (or sole proprietorship)
1.2.2 The partnership
1.2.3 The company
1.2.4 The disadvantages of a company
1.2.5 The close corporation
1.2.6 Some important differences between private compan
and close corporations
1.2.7 The business trust
Questions
Chapter 2: Partnerships
Farouk HI Cassim and Maleka Femida Cassim
2.1 The definition of a partnership
2.2 The essential elements of a partnership
2.2.1 Contribution by each party
2.2.2 Carrying on a business in common for the joint bene
the parties
2.2.3 The object of making a profit
2.2.4 A legitimate contract (or lawfulness)
2.2.5 The subjective intention to form a partnership
2.3 The juristic nature of a partnership
2.3.1 General
2.3.2 Exceptions to the juristic nature of a partnership
2.4 The types of partnerships
2.4.1 The universal partnership
2.4.2 The extraordinary partnership
2.5 The rights and duties of the partners among themselves
2.5.1 The sharing of profits and losses
2.5.2 The right to participate in the management of the
As university lecturers and legal practitioners we have found that ther
a definite need for an advanced commercial law book on business
structures, suitable principally for commerce students at all tertiary
institutions. Like law students, commerce students are required to gra
with the complexities of the law of business structures and to acquire
respectable degree of knowledge and understanding of the subject an
intricacies. The Law of Business Structures will undoubtedly fulfil this
need. Both law students and commerce students, including accountin
and auditing students, will find the book useful in guiding and assistin
them in the study of the law of business structures. In addition, those
who teach the law of business structures will find this book to be a us
guide and teaching aid.
We hope that The Law of Business Structures will also serve the ne
of practitioners, whether attorneys, accountants, auditors or company
secretaries, who require a reliable and ready source of information on
law of business structures, and particularly on the new Companies Ac
of 2008.
The Law of Business Structures contains a fairly detailed treatment
the law of partnerships, business trusts, close corporations and
companies, whether large or small, and whether formed for a profit-
making or a non-profit-making objective. The centrepiece of the book
undoubtedly company law. The reason for the strong focus on compa
law is quite obvious. Company law in South Africa has been thorough
and extensively overhauled. Basic and fundamental corporate law
doctrines and concepts were deemed to be outdated, obsolete or arch
and to have outlived their usefulness, because they were no longer
appropriate to the contemporary economic and business environment
additional policy factor led to this sea change, namely, the need to
harmonise South African company law with that of our main trading
partners internationally, in order to ensure that South African compan
are not competing at a disadvantage because of an outdated and
restrictive company law regime. Hence, the new Companies Act 71 of
2008, with its many innovative legal concepts and new underlying
philosophies, was passed. The reader will find in the chapters on com
law a detailed discussion and explanation of core company law topics.
,becoming increasingly important for practitioners and students of the
subject to familiarise themselves with the provisions of the Companie
of 2008.
We have purposively avoided excessive theoretical analysis, but wi
refraining from careful and detailed explanations and analyses of
important legal concepts and principles. Case law has been kept to a
minimum. However, law and commerce students know full well that le
principles cannot be fully understood without a
knowledge and comprehension of the leading cases on a particular to
Accordingly the reader will find a discussion of the important cases on
subject.
We have included a glossary of important terms, which is intended
provide some background and guidance to students who are new to t
area of law. We have also included sample questions at the end of ea
chapter (with the exception of chapter 23 dealing with transitional
arrangements). The purpose of these questions is to test the student’
knowledge and understanding of the content of each chapter. We trus
that students and lecturers will find these questions both useful and
challenging.
The Law of Business Structures thus provides a comprehensive but
a simplified treatment of the different types of business structures in
South African law. It is by no means an exhaustive treatment, since t
field of law is simply much too large.
Publishing a book of this sort calls for much editorial skill, efficiency
hard work on the part of the publishers. We take pleasure in thanking
Linda van de Vijver and her team for their laborious efforts and exert
in the publication of this book. We would also like to thank them for
compiling the index, the table of cases and the table of statutes.
We would, furthermore, like to acknowledge our indebtedness to ou
students who have given us insight into the difficulties that students o
this area of law generally experience.
Finally, we would like to thank our families and loved ones for their
enduring support, encouragement and patience, without which this bo
could not have been written.
The law is stated as at 31 August 2012.
Farouk HI Cassim, Managing Editor, on behalf of the authors
November 2012
, Contents
Preface
Glossary
Chapter 1: Introduction and Overview
Farouk HI Cassim
1.1 Introduction
1.2 The forms of business structures
1.2.1 The sole trader (or sole proprietorship)
1.2.2 The partnership
1.2.3 The company
1.2.4 The disadvantages of a company
1.2.5 The close corporation
1.2.6 Some important differences between private compan
and close corporations
1.2.7 The business trust
Questions
Chapter 2: Partnerships
Farouk HI Cassim and Maleka Femida Cassim
2.1 The definition of a partnership
2.2 The essential elements of a partnership
2.2.1 Contribution by each party
2.2.2 Carrying on a business in common for the joint bene
the parties
2.2.3 The object of making a profit
2.2.4 A legitimate contract (or lawfulness)
2.2.5 The subjective intention to form a partnership
2.3 The juristic nature of a partnership
2.3.1 General
2.3.2 Exceptions to the juristic nature of a partnership
2.4 The types of partnerships
2.4.1 The universal partnership
2.4.2 The extraordinary partnership
2.5 The rights and duties of the partners among themselves
2.5.1 The sharing of profits and losses
2.5.2 The right to participate in the management of the
