LAWS1012A WEEKS 2-3

CHAPTER 3: TEXTBOOK NOTES

1.1 NATURAL PERSONS, JURISTIC PERSONS, STATUS, CAPACITY, LEGAL SUBJECTS, LEGAL OBJECTS
- All legal persons have legal personality and have rights, duties, and capacities.
- Our legal system recognises the legal personality of two types of legal persons:
 individual human beings (natural persons)
 human beings acting together in groups for a particular purpose (so-called juristic
persons, like companies, clubs, and churches).
- By virtue of being bestowed with legal personality, an entity acquires both status (meaning
simply and broadly stated, the state of being recognised as a legitimate role player in a
particular legal system) and legal capacity (you will remember that active legal capacity
means that a person can ‘do’ certain things in a legally recognised manner within a specific
legal system).
- Persons (legal subjects) can have different kinds of rights and duties depending on the kinds
of legal objects to which these rights and duties relate.
3.6 JURISTIC PERSONS – HOW DO JURISTIC PERSONS COME INTO EXISTENCE?
 JURISTIC PERSONS AND THE CONSTITUTION OF THE REPUBLIC OF SOUTH AFRICA, 1996
- The Bill of Rights, contained in chapter 2 of the Constitution of the Republic of South Africa,
1996, applies to both natural and juristic persons.
- Thus, juristic persons are entitled to the rights in the Bill of Rights ’to the extent required by
the nature of the rights and the nature of that juristic person’.
 ESTABLISHMENT OF JURISTIC PERSONS II EXAMPLE ON PAGE 51
- A juristic person, in contrast to a natural person, has been described as merely a legal
concept and as such has no physical existence
- Juristic persons are primarily established in two ways:
i. by means of a general enabling Act; or
ii. by means of a specific Act of Parliament.
- They may also be established in a third way by means of conduct but, in practice, this does
not happen very often.
- There are two general enabling Acts:
i. Companies Act 71 of 200854
ii. Close Corporations Act 69 of 1984.
- As such, once a company or a close corporation has been incorporated, as provided for in
the Acts, they become juristic persons with all the rights and duties associated therewith
 MEANING AND ESTABLISHMENT OF JURISTIC PERSONS
- Section 14(4) of the Companies Act 71 of 2008 states that the issuing of a registration
certificate provides conclusive evidence that the requirements for incorporation have been
met and that the company is so incorporated.
- As of this date, the company has the same powers, to the extent that it can, as a natural
person unless the company’s memorandum of incorporation states otherwise.
- The locus classicus [a well-known or authoritative case on a particular matter] on the
establishment of legal personality is Salomon v A Salomon & Co Ltd.
- It was held that as soon as a company has been incorporated in compliance with all the legal
requirements a company becomes a person separate from its incorporators, shareholders
and/or members.
- The principle of separateness of the company from its shareholders, established in the
Salomon case, have been entrenched and treated as sacred in South African law.
- Courts will only disregard the separateness of the company from its shareholders in
exceptional instances, e.g., to prevent fraud, tax evasion, etc.
 CONSEQUENCES OF SEPARATENESS
- One of the biggest advantages of incorporating a juristic person is that it creates limited
liability, subject to exceptions.
- In addition, a juristic person has perpetual existence, which means that a change in
shareholding does not affect the existence of the company.
- Several consequences follow once a juristic person has been established.
- These include, inter alia, that the juristic person is liable for its own debts and that neither
the shareholder nor the members, as the case may be, are responsible for the company’s
debts.
- Likewise, the juristic person is also not liable for the debts of its shareholders or members.
Shareholders are not, by virtue of being a shareholder, entitled to act on behalf of a
company; only the appointed agents of a company (i.e., the board of directors) may act on
behalf of the company.
- The profits of the company belong to the company; shareholders are only entitled to share
in the profits if the board declares dividends.
- Furthermore, shareholders are not the owners of company assets; they are only able to
share in the surplus assets upon liquidation of the company if there are such assets.
- Upon incorporation the company may sue and be sued in its own name.