Dawsons Newsletter


NEWSLETTER
SEPTEMBER 2008


In this Newsletter:
 

§         Special Resolution Required in Certain Sales;
§         Fish Processing Establishments to comply;
§         Performance review of fishing rights holders.
§         Summary of Implications of the National Credit Act;
§         Dawsons’ Part of the South African Delegation of Maritime Lawyers to attend the CMI (Comite Maritime International) Conference in Athens, Greece;
1.       Special resolution required in certain sales

  • If you are in the process of selling, have recently sold or are thinking of selling “the whole or the greater part of the undertaking? or “the whole or the greater part of the assets of your business? take heed of the recently amended Section 228 of the Companies Act.
  • As from 14 December 2007 Section 228 of the Companies Act was amended in order to provide that no director of a Company may on behalf of the Company sell the whole or greater part of the Company’s assets or undertaking without a special resolution of the Company having been passed by the shareholders of the Company.  In this regard, a special resolution is only effective once it is registered by the Registrar of Companies.
  • Obtaining a special resolution requires certain mandatory procedures to be followed including 21 clear days notice of a general meeting of shareholders with the meeting having to be attended by shareholders who hold at least one quarter of the total voting power and thereafter the resolution must then be supported by shareholders present at the meeting who between them hold at least 75% of the voting power.  The Act does allow shorter notice periods in certain limited circumstances.  If the consent of 95% of the votes of all the shareholders can be obtained then shorter notice is allowed.  If the consent of all the shareholders can be obtained then no notice need be given at all.
  • Prior to this amendment to Section 228 an ordinary resolution was required and there was no obligation to register a special resolution with the Registrar.
  • The bottom line, and there is case law supporting this submission, is that any sale agreement concluded being in contravention of Section 228, although not void is nevertheless unenforceable.  It is submitted that such an agreement is subject to  ratification by the registration of a special resolution of shareholders within a reasonable period of time from the date of sale.
  • In light of the above amended legislation it is advisable that in any sale agreements to which this legislation applies, a purchaser should ensure that it inserts a clause into the contract to give it some protection against the consequences of non-compliance.

2.       FISH PROCESSING ESTABLISHMENTS TO COMPLY COMPLIANCE

  • There has been a recent spate of compliance related investigations by Marine and Coastal Management (“MCM?) at FPEs.  The investigations related to the technical compliance by FPE operators with the exact letter of their permit conditions.
  • Many operators of FPEs may be under the misapprehension that they are operating within the confines of their FPE permit conditions but recent experience has shown that it is worthwhile to carefully consider the wording of the permit and its conditions to ensure that there is strict compliance.  The failure to do so may lead to the seizing of fish held in an establishment on the basis that the fish has been processed or possessed illegally.
  • If you have any compliance related queries, we recommend that you contact either Alistair Downing of Peter Edwards who specialise in such matters.    

3.       Performance Reviews of Fishing Rights Holders
§         In the Sector Policy documents for the allocation of long term commercial fishing rights published by the Minister in 2005, the Minister referred to the fact that right holders who were successful in the long term rights applications process could expect MCM to keep an eye on them through a periodic performance measuring or review procedure. The aim of this performance review (“PR?) was two fold, i.e. to ensure that the right holders remained who they had presented themselves as  being in the application process and to allow MCM to keep reliable records of investment, shareholding and other aspects of performance to ostensibly ensure that “management methodologies? remained current and suitable for the fishery in question.
§         It was stated that the first PR would take place after 2 years and thereafter, likely on a 3 yearly basis.  It was also stated that before this PR process was to take place the various sectors would be consulted regarding the parameters and scope of the process. 2008 was the year pegged for the first reviews and it has all but come and gone. What exactly is happening?

  • Rumor is no stranger to the fishing industry and if rumor is to be believed in this instance then the Resolve Group has been successful in its tender for the PR process and is set to start the process as soon as possible. Suggestions are that the sector by sector format for the PR process will be staggered over the end of this year and the course of 2009.
  • Considering that the promised consultation with the industry has still to take place and that there have been no hints that it is forthcoming, this leads to the obvious conclusion that either there will be no commencement of the PR process this year and that the process will kick off in earnest next year, or else, the “consultation process? will be nothing more than a mere lip service and will not effectively or meaningfully attempt to engage the industry or its concerns.

  • In either case it would appear that the PR process is set to kick off soon. It quite clear from the statement in the sector specific policies that issues of transformation (gender and race) in shareholding and management, investment statistics, catch performance, levy payments and compliance with laws will all come under the spot light again with right holders being asked to give account for changes and/or lack of performance in any of these areas.

  • In this time of quiet before the very likely storm to come it may be a good idea to get your house in order by amongst other things, starting to look at your long term rights application forms to see what changes have occurred in your business from 2005 to now, ensuring that you have your catch data for the 06, 07 and 08 years and that all your levy payments are up to date and that you can prove this if necessary. Remembering the unyielding and tight time limits given by MCM in the long term rights application process, it is fair to guess that time is unlikely to be your friend this time round either. Preparation done now may save you a massive amount of stress and frantic work come the New Year.

4.       SUMMARY OF THE IMPLICATIONS OF THE NATIONAL CREDIT ACT
As the effect of the “global credit crisis? will no doubt manifest itself in our own commercial environment, we thought it would be an opportune time to again highlight in as brief a form as possible the implications of the National Credit Act as we see it.   We have compiled a summary of such implications which can be viewed on our website www.dawsonedwards.co.za.
5.       DAWSONS’ PART OF THE SOUTH AFRICAN DELEGATION OF MARITIME LAWYERS TO ATTEND THE CMI (COMITE MARITIME INTERNATIONAL) CONFERENCE IN ATHENS, GREECE

  • CMI is an international conference of maritime lawyers where topical issues and the latest developments in maritime law are debated and discussed at an international level.

  • We wish Alistair Downing of our offices all the best at the conference and on his return, our newsletter will deal with any relevant and interesting issues arising out of the conference.

Yours faithfully

PETER EDWARDS

Managing Director