There is a conceptual difference/distinction between:
1. A private sector company that is for profit and established with risk money from sharegolders and
2. A state owned enterprise with a developmental dimension and a mandate to operate on a commercial
1. A private sector company that is for profit and established with risk money from sharegolders and
2. A state owned enterprise with a developmental dimension and a mandate to operate on a commercial
basis and generate surpluses to contribute to the fiscus and sustain its operations.
3. When businesses under (1) face trading difficulties with existential threat, Business Rescue is a mechanism to protect it from creditors while a re-engineering exercise is
3. When businesses under (1) face trading difficulties with existential threat, Business Rescue is a mechanism to protect it from creditors while a re-engineering exercise is
carried out to potentially save it and carry on trading. Its board and shareholders make such a decision.
4. In the case of SOEs, the state is the sole shareholder. When the DPE was established, it was envisaged that it would be mandated to exercise oversight
4. In the case of SOEs, the state is the sole shareholder. When the DPE was established, it was envisaged that it would be mandated to exercise oversight
on behalf of the state and to ensure a co-ordinated and effective SOE ownership function , and regular and publicly disclosed aggregate reporting on the SOE sector.
5. However, the DPE was never properly structured to exercise this mandate and function
5. However, the DPE was never properly structured to exercise this mandate and function
effectively.
6. There was also no relevant and Fit for Purpose legislation and structure developed to govern situations like SAA which has been a serial under-performer.
7. The BRP process as prescribed under the Companies Act was Not intended for SOEs.
6. There was also no relevant and Fit for Purpose legislation and structure developed to govern situations like SAA which has been a serial under-performer.
7. The BRP process as prescribed under the Companies Act was Not intended for SOEs.
Its use in the case of SAA was a conceptually wrong choice. It is a blunt instrument for a cause, the legal prescription of which, it cannot it is manifestly unsuitable.
8. How for example, does it cater for determination of a developmental/social dimension
8. How for example, does it cater for determination of a developmental/social dimension
that must be evaluated to establish whether an SOE comprehensively performs to mandate or not? This is the conundrum at the centre of the SAA saga.
9. The BRP was a desperate and ill-conceived choice. I advised against it in Dec. But I was a strange voice.🙆♂️
9. The BRP was a desperate and ill-conceived choice. I advised against it in Dec. But I was a strange voice.🙆♂️
