---

COMPANIES TRIBUNAL

of

THE REPUBLIC OF SOUTH AFRICA

 

Case Number CT00163ADJ2019

 

 

In the Ex Parte Application

 

RHI Refractories Africa (Pty) Ltd                              Applicant

(Registration number 1997/015191/07)

 

In respect of

 

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

 

Presiding Member of the Tribunal; Lucia Glass

 

 

DECISION (Reasons and Order)

 

 

1.     The Applicant applies for an exemption, from the requirement to appoint a Social and Ethics Committee (further herein referred to as “SEC”), in terms of Section 72(5)(a) and Section 72(5)(b) of the Companies Act 71 of 2008 (further herein referred to as 'the Act'). I quote the relevant Sections; Section 72(5)(a) of the Act reads as follows: "the company is required in terms of other legislation to have and does have, some 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.” (emphasis added) Section 72(5)(b) of the Act reads as follows: “it is not reasonably necessary for 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." (emphasis added)

 

2.          The Deponent to the Applicant's founding affidavit is Farhana Rahaman, who alleges that she is a Director and the Applicant’s Secretary, and that she is duly authorised to depose to the founding affidavit, on behalf of the Applicant, by virtue of a resolution of the Board of Directors, of the Applicant. (attached to the papers).

 

3.          It is averred that the Applicant is duly registered and incorporated as such in accordance with the laws of Republic of South Africa.

 

4.        Furthermore it is alleged that the Applicant conducts the business of supplying high- grade refractory products, systems and services into an exclusive market. A refractory comprises of heat resistant material, in the forms of a brick. It retains strength and form at high-temperature processes, exceeding 1200 degrees Celsius. It is commonly used in smelters or kilns to convert minerals to steel, alloys, etc.

 

5.        It is alleged that given the specificity of the product, the Applicant’s customer base is limited to the steel, cement, lime, petrochemical, glass and non-ferrous metal industries. As at 10 September 2019, the Applicant has a total of 36 customers and 140 employees.

 

6.         It is averred that the Applicant imports most of its refractory products from RHI Magnesita GmbH (‘RHI Magnesita”) which company forms part of the same group of companies as the Applicant and that the Applicant conducts the business of buying and selling refractory products.

 

7.        It is alleged that there are currently 2 (two) directors on the board of directors of the Applicant, both of whom are involved with the day to day management of the Applicant.

 

8.     It is averred that after the calculation of the high public interest score, the Applicant does in fact meet the requirements set out in Regulation 43(1)(c) and is therefore required to appoint a SEC. (calculations attached to her affidavit).

 

9.           It is averred that in terms of Section 72(5) (a) of the Act, there are formal mechanisms within its structure that substantially perform the function that otherwise would be performed by the SEC in terms of the Act and Regulations and that such mechanisms are applied in terms of other legislation. Documentary proof of the various Codes and Policies, of the Applicant, for example, the Applicant’s Code of Conduct, are attached to the papers.

 

10.        It is averred that in terms of Section 72(5) (b) of the Act, the Applicant merely conducts the business of buying and selling refractory products.

 

11.         It is alleged that, that any environmental, health and/or safety impact is only likely to occur when such product is being produced, used and disposed and that the Applicant is not involved in the production of the product, that the Applicant purchases the product and stores it in various of its warehouses located across South Africa and then sold to the customer. The Applicant sells the product to a customer, ownership and all risk and benefit in and to the product passes to the customer. The Applicant provides its customers with guidelines on how to use and dispose the product in a manner which it considers the best interest of the environment, health and public safety.

 

12.        It is averred that the Applicant’s business activities are restricted, and its customer base is limited to only 36 (thirty six), institutional and corporate customers and the services of the Applicant are not offered to the general public. As a result, the Applicants consumer relationships, advertising and public relations are restricted and do not have any significant effect on the general public.

 

13.         Further that the restrictive and specific nature of the Applicant’s business means that it can only offer employment to workers whom have the skills to carry out the work required and cannot offer employment to the public generally. As a result, the Applicant only has 140 employees who comply with the South African labour legislation.

 

14.        It is submitted that the Applicant’s business has no significant impact on the public and therefor the public interest does not demand that it appoint a SEC.

 

15.         It is further averred that the Applicant’s Refractory products are unique and are only utilised in an exclusive market, therefore its business activities are not extensive, but they are exclusive. The result is that the activities of the Applicant has a minimal effect on the public interest

 

Decision

 

16.         In terms of Section 72 (5) (a), the Applicant ought to have established a SEC in terms of other Legislation. (emphasis added). The Applicant avers that there are other mechanisms within its structure that substantially perform the function, that otherwise would be performed by the SEC in terms of the Act and Regulations and that such mechanisms are in terms of “other legislation”. No reference is made to the legislation involved. Documentary proof of the various Codes and Policies, of the Applicant, for example, the Applicant’s “Code of Conduct”, are attached to the papers, which I assume is derived from various other legislation.

 

17.         It is my view, that the applicant’s interpretation of the words “other legislation” is too far removed. The stated “codes and conducts” which the Applicant avers are in terms of “other legislation” for instance do not encompass the entire duties of the SEC. Thus, the application for exemption to establish a SEC in terms of this Section, will not be considered.

 

18.         In terms of Section 72 (5) (b) The application for exemption from a SEC, will be considered inter alia, its public interest and nature and extent:

 

·         The nature of the applicant’s business is one of supplying high-grade refractory products, systems and services to an exclusive market. A refractory comprises of heat resistant material, in the forms of a brick.

·         The brick retains strength and form at high-temperature processes, exceeding 1200 degrees Celsius. It is commonly used in smelters or kilns to convert minerals to steel, alloys, etc.

·         Given the specificity of the product, the Applicant’s customer base is limited to the steel, cement, lime, petrochemical, glass and non-ferrous metal industries. As at 10 September 2019, the Applicant has a total of 36 customers and 140 employees.

·         The Applicant merely conducts the business of buying and selling refractory products. It purchases the product and stores it in various of its warehouses located across South Africa, which is then sold to the customer.

·         Once the Applicant sells the product to a customer, ownership and all risk and benefit in and to the product passes to the customer.

·         Any environmental, health and/or safety impact is only likely to occur when such product is being produced, used and disposed of. The Applicant merely buys stores and sells the product.

·         The Applicant’s Refractory products are unique and are only utilised in an exclusive market. The result is that the activities of the Applicant has a minimal effect on the public interest.

 

19.         After considering the law, interpreting and applying Section 72 (5) (b) of the Act, it is my view that it is not reasonably necessary for 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 as stated above.

 

Order

 

I according make the following order;

 

The Applicant is granted exemption from appointing a Social and Ethics Committee for 5 years.

 

 

LUCIA GLASS

MEMBER OF THE COMPANIES TRIBUNAL OF SOUTH AFRICA

 

25th September 2019

 

---