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IN THE COMPANIES TRIBUNAL OF THE REPUBLIC OF SOUTH AFRICA

“The Tribunal”

Case Number: CT002May2018

In the matter between of:

Fast Issuer SPV (RF) Ltd                                                                                     Applicant

Registration Number 2015/042887/06

 

APPLICATION FOR EXEMPTION FROM THE REQUIREMENT TO APPOINT A SOCIAL AND ETHICS COMMITTEE

 

DECISION

INTRODUCTION:

[1] The Applicant is Fast Issuer (RF) Ltd, with registration number 2015/042887/06, duly represented herein by one of its directors Cameron Stuart Gough.

[2] The Applicant seeks an exemption from the requirements to appoint a Social and Ethics (SEC) in terms of sections 72(5) of the Companies Act 71 of 2008 (“The Companies Act”) read with regulation 43(2)(b) of the Regulations to the Companies Act.

[3] Applicant duly filed form CTR142 and an affidavit with the Tribunal, in this regard, on 03 May 2018. Applicant submitted that the company is a special purpose vehicle and that its main business is to acquire the right, title and interest in and to instalment sale agreements (including receivables payable under such instalment sale agreements), the vehicles to which such instalment sale agreements relate and the related security in respect of such instalment sale agreements (collectively referred to as the “Participating Assets”) pursuant to a securitization scheme, with funds raised directly through the issue of Notes and to manage, or procure the management of, the Participating Assets so acquired. The company’s main objective is to achieve stable returns by investing in participating assets.

[4] The Applicant further submitted that it does not have employees, but however, has a PI score of above 500 points. The applicant, in addressing regulation 43(5) which provides for the functions of a Social and Ethics committee, submitted that:

- the contribution of the company to social and economic development of the community in which it operates would be negligible due to the limited effect on exposure to the community;

- the company’s activities and products have no effect, directly or indirectly, on the environment, health and public safety;

- the actions of the company in respect of consumers, including advertising, public relations and consumer protection would be irrelevant, as specialised purpose vehicles are created for the consumers who are sophisticated institutional investors who can fend for themselves;

- the requirements to comply to oversee labour relations would be irrelevant as the company does not have employees.

- due to the nature and extent of its activities, and the fact that it does not have any employees, the applicant has applied to the Tribunal for exemption from having a Social and Ethics Committee, as required by S.72(4)(a).

[5] The Applicant has submitted its Annual Financial Statements and Memorandum of Incorporation, both which confirm the applicant’s submissions made above.

 

Application of the Law

[6] This is an application in terms of S.72 of the Companies Act, which provides that:

(4) The Minister, by regulation, may prescribe-

(a)A category of companies that must each have a social and ethics committee, if it is desirable in the public interest, having regard to-

(i) Annual turnover;

(ii) Workforce size; or

(iii) The nature and extent of the activities of such companies;

(b) The functions to be performed by the social and ethics committee required by this subsection; and

(c)The rules governing the composition and conduct of social and ethics committees.

[7] Subsection 5 provides the opportunity to apply for exemption for those companies that are required to have Social and Ethics Committees in terms of subsection (4) as follows:

A company that falls within a category of companies that are required in terms of this section and the regulations to appoint a social and ethics committee may apply to the Tribunal in the prescribed manner and form for an exemption from that requirement, and the Tribunal may grant such exemption if it is satisfied that-

(a) the company is required in terms of other legislation to have, and does have , some other form of formal mechanism within its structures that substantially performs the function that would otherwise be performed by the social and ethics committee in terms of this section and the regulations; or

(b) it is not reasonably necessary in the public interest to require the company to have a social and ethics committee, having regard to the nature and extent of the activities of the company.

[8] Subsection 6 provides for the duration of an exemption granted in terms of the section above, and stipulates that such exemption shall be valid for five years, or such shorter period as the Tribunal may determine at the time of granting the exemption.

[9] Regulation 43(1) gives effect to section 72(4) of the Companies Act and provides as follows:

This regulation applies to:

(a)every state owned company;

(b) every listed company; and

(c)any other company that has in any two of the previous five years, scored above 500 points in terms of regulation 26(2).

[10] Regulation 43(2) requires a company that falls within the aforementioned section 43(1), to appoint a social and ethics committee unless it has been exempted by the Tribunal in accordance with Section 72(5) and (6).

[11] Regulation 43 (5) provides for the functions of a Social and Ethics committee and these include the monitoring of; social and economic development, good corporate citizenship, the environment, health and public safety, consumer relationships and labour and employment.

 

EVALUATION

[12] The applicant is a company that is required to appoint a social and ethics committee in terms of Regulation 43(1). The applicant submitted that it applies for an exemption from having a Social and Ethics committee due to the reasons outlined above

[13] The applicant submitted that the exemption is based on S.72(5)(b) of the Companies Act in that it is not reasonably necessary in the public interest to require the company to have a Social and Ethics committee , having regard to the nature and extent of the activities of the company.

[14] The SEC is a statutory company committee established to monitor and ensure that companies act in a responsible manner and contribute to the economic and social development of communities in which they operate.

[15] The applicant has clearly shown that its business activities are of a unique nature and that there is no need to have a Social and Ethics committee in the absence of any external and internal stakeholders in the company, save for the directors of the company and those who elect to participate in the investment scheme . The company does not operate within and is not exposed to any particular community, has no employees and operates a “voluntary participation’ trading business where only those who can afford to invest in the company can do so. It is apparent that no stakeholder (in the absence thereof), will be prejudiced from the absence of a Social and Ethics committee within the company. It would be futile for the applicant to constitute such a committee as the functions of the committee are not relevant and applicable to the applicant company.

FINDINGS

[16] The Tribunal is satisfied that the applicant has shown that it is not reasonably necessary in the public interest to require the company to have a Social and Ethics committee, having regard to the nature and extent of its activities.

 

ORDER:

1. The application for an order for exemption from the requirement to appoint a social and ethics committee is granted.

2. The exemption shall be effective for a period of five (5) years from date hereof.

 

 

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B. Zulu

Member: Companies Tribunal

18 May 2018

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