Rule by decree from a black tower

BY DAVID GLEASON, 12 FEBRUARY 2013, 06:37 | 0 COMMENTS Facebook LinkedIn Pinterest Messenger Share Email

A DANGEROUS trend is emerging. Increasingly, the government is resorting to rule by decree. In the process it is ignoring South Africas laws. As an example, there is no codification available of the laws and rules that govern the application of exchange controls. Relaxed though they may have been in recent years, they have been in place since 1960. Surely it is not unreasonable to presume that in the course of more than 50 years the South African Reserve Bank, the operator of these controls, has had ample time and opportunity to collate information which very properly should be in the public purview?

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What has actually happened over time is that the Banks exchange control department decides what this countrys exchange control policy is and then issues a practice note. Hey? Since when could matters of this kind be decided in isolation by faceless individuals sitting in the comfort of the black tower in Pretoria? Since forever, or so it seems. The department has issued literally thousands of exchange control directives over the years, but has never bothered to systematise them. Nor is this the only example. My attention has been drawn by senior attorney Alex Elliott to the continuing problems attached to the Companies and Intellectual Property Commission, the heir to the monumental bloopers left behind by the former Registrar of Companies and its successor, the Companies and Intellectual Property Registration Office (Cipro). It is clear that changing names gets us no nearer to resolving the mess. Does anyone remember the wholesale and illegal deregistration of thousands of companies by Cipro on July 16 2010? This little act of corporate immolation was repeated in February 2011, before the new act took effect in May 2011. This new Companies Act makes it clear that the commission can restore a company deregistered in accordance with certain procedures (s82(3)). But it has no power to restore a company deregistered by its predecessor, Cipro. But it hasnt let that get in the way. In August last year it issued a "guidance" note on procedures to restore companies including those deregistered by Cipro. In the note it says it does have the power to restore companies (although a court doesnt), and offers a simplified process to restore companies which found themselves part of the bulk deregistration, if they pay R200. Whats going on? Elliott reckons it looks as if the commission recognises its vulnerability on the bulk deregistrations and is trying to avoid legal action through a sweet deal to victims of bulk deregistration. But the restoration is legally invalid, which means a deregistered company is a legal no-no. So persons in trouble can delay or even halt legal proceedings against them altogether because it isnt legally possible to sue an entity that doesnt exist. This is, apparently, already happening. Creditors who want to sue a deregistered company may be persuaded by the commission to restore the entity at a price. Theyd best beware, because any judgments they may get are at risk. Taken together, what the commission is doing is continuing Cipros tradition of imposing illegal or extralegal processes onto the corporate landscape. On this basis, theres really nothing to stop company directors and officers of deregistered companies from ignoring the deregistration with all that might bring in its train or choosing a quick and easy route to restoration, itself illegal.

Its called stuffing the rule of law, courtesy government agencies.