DAWSON EDWARDS CELEBRATES ITS 15TH BIRTHDAY!


Dawson Edwards celebrates its 15th birthday!

It is with pride that the board of directors and staff at Dawson Edwards and Associates announce that as of the 1st of October 2011 the firm has been practicing for 15 years. A birthday celebration is being planned and will be announced to clients, colleagues and acquaintances shortly.

As some of you may remember, our firm was conceived when the boutique maritime firm of Field and Sims disbanded and Peter Dawson an attorney at that firm, decided to start his own firm in October 1996. The firm originally rented offices on the corner of Spin and Plein street in the centre of Cape Town until March 2000 when we purchased our offices in the leafy and historic suburb of Gardens where we have been practicing from ever since.

Key to our firms success is its key focus on maritime and related commercial matters. A noticeable recent development in the firms practice is the increase in the number of environmental issues being dealt with which may be due to an increase in the competing users of our marine resources.

Despite much activity with the takeovers and mergers of law firms throughout South Africa including maritime practices, Dawsons has resisted the temptation (and proposals) to become part of larger corporate practices. Throughout its years the firm has prided itself on being able to service small, medium and corporate clients both local and international. The independence and specilisation of our firm allows us the flexibility to continue servicing such a varied client base. Hence the decision to maintain the identity and profile of the firm which has been our formula for success over the past 15 years.

Our independence and profile in turn has also allowed us to be involved with a wider range of clients and interests in the maritime sector giving our practitioners a broader and fulfilling experience in matters of the sea.

We would like to take this opportunity to again thank all those who have been clients of our firm over the years and who have supported our practice. Thank you also to our suppliers and service providers and of course our colleagues in the legal fraternity.

As with many industries in South Africa the legal profession faces its own challenges but we are of the view that the profession still has a solid core of attorneys, advocates and judges who carry out their practices ethically, professionally and efficiently and who take pride in contributing towards the great legal system which this country still has intact.



SMALL SCALE FISHERIES UPDATE


Small Scale Fisheries update

Since the submission of comments by interested and affected parties in early November 2010 there has been little progress in the development of the proposed policy for the Small-Scale Fisheries sector. In a hearing before the portfolio committee in early February 2011 the acting DDG for the Department of Agriculture, Forestry and Fisheries (“DAFF”) indicated that it was an intention of the Department to commence a limited roll out of the policy in June 2011. Needless to say this has not occurred as the Nedlac process has not yet been finalised. In the middle of September 2011 an amended draft policy was circulated to the various constituencies within Nedlac and it is this document that will be debated and discussed by the Nedlac task team in order to provide Nedlac with a report on the proposed policy. At this stage the task team has only just begun its series of meetings in order to debate the proposed policy but the proposed time line is that the matter be finalised before the end of 2011. DAFF still remains committed to implementing the policy at the beginning of 2012, this, however, appears unlikely as not only must the policy first be finalised but thereafter an implementation plan needs to be developed and the Marine Living Resources Act needs to be amended to include references to the new Small-Scale Fisheries sector in order that TAC / TAE can be allocated to this fishery. It appears that there is still a long road ahead before the policy is implemented.

 



MARINE LIVING RESOURCES ACT (“MLRA”) – SECTION 21 LITIGATION UPDATE


Marine Living Resources Act (“MLRA”) – Section 21 litigation update

Foodcor Matter

As reported in previous newsletters, Foodcor was unsuccessful in its application to the Western Cape High Court to challenge the lawfulness of certain paragraphs of the rights transfer policy which relate to the applicability of Section 21 of the MLRA to the transfer of shares in fishing rights holding companies.

Justice Griesel dismissed Foodcor’s application on the 6th of December 2010. Foodcor are appealing such judgment to the Supreme Court of Appeal and heads of argument have recently been filed by both parties.

In terms of paragraph 6.2 and 6.3 of the transfer policy, ministerial approval under Section 21 of the MLRA is also required for share sale transactions which result in a change of control of a rights holder, or the rights holder not being as transformed as at the date of allocation of the right.

Foodcor argue that the requirements of the ministerial approval in paragraphs 6.2 and 6.3 of the transfer policy are unlawful on 3 bases:

  • The said paragraphs are ultra vires section 21 of the MLRA, in that bona fida share sales do not result in the transfer of commercial fishing rights;
  • The said paragraphs are unlawfully vague, in that

a) no criteria are provided to determine when the need for ministerial approval is triggered; and

b) once the requirement for authorization is triggered, no criteria are provided to assist applicants seeking approval; and

  • The said paragraphs are irrational, with regard to the application and consequences.

 

The State argues that share transfers which lead to a change in control in the rights holding company require the consent of the Minister on the following bases:

  • On a proper interpretation of Section 21 (2) of the MLRA, such transactions constitute a transfer of a commercial fishing right, and require the consent of the Minister. The transfer policy sets out the guidelines which the Minister will apply in exercising her discretion as to whether to grant such consent.
  • In any event compliance with the transfer policy is a condition subject to which permits are issued. The validity of the permit conditions have not been challenged by Foodcor.
  • There is no merit in the complaints that paragraphs 6.2 and 6.3 of the transfer policy are either vague or irrational.

 

A date for appeal hearing has yet to be set. We will keep a close watch on this matter as it will have a profound effect on the fishing industry and in particular rights holders.

 

Oceana Matter

Oceana also challenged the legality of the transfer policy (31st of July 2009) or alternatively certain paragraphs of such policy. There application was also dismissed by the Western Cape High Court in terms of a judgment handed down by Justice Cleave on the 2nd of June 2011. The core provision of the transfer policy upon which Oceana based there challenge is contained in paragraph 2.9 which stated that “for the purposes of a transfer of a commercial fishing right the level of transformation would be assessed on the basis of ownership and management control.”

Oceana argues inter alia, that by referring only to ownership and management control in the transfer policy the Minister has ignored other elements of the B-BBEE Act codes of good practice which they submit the Minister is obliged to take into account. The Minister argues inter alia that Section 10 of the B-BBEE Act provides that the codes of good practice can be applied but only where reasonably possible. The Minister sets out a number of reasons why in the application of the B-BBEE codes for purposes of the transfer of rights would not be reasonably possible.

Leave to appeal this judgment has been given to Oceana and the record of appeal has recently been finalized. Heads of argument on both sides are expected shortly.

This is another matter on which we will keep a close eye, as it may also have a great impact on the industry.



BUYING OR SELLING A MAJOR ASSET OF A COMPANY – BE AWARE OF LATEST SCA JUDGMENT


Buying or selling a major asset of a company – be aware of latest SCA judgment

Over the years there has been uncertainty about whether a company’s failure to comply with the requirements of Section 228 of the Companies Act (which is now succeed by Section 112 read with 115 of the new Act) can be override the Turquand Rule. The Supreme Court of Appeal has now held that the Turquand Rule cannot remedy long compliance with these formalities of the Companies Act.

Therefore where a company is disposing of its sole asset or the majority of its assets there must be a prior special resolution of its shareholders in place as provided for in terms of the aforesaid sections of the New Companies Act.

For more on this issue, we refer you to an article as included in the Law Society’s monthly De Rebus Magazine (September issue) which discusses this case and the topic in general.