In 2008 South African company law underwent a major change. Why is this relevant to the sport of Athletics?
Quite simple really, the national federation in South Africa was incorporated as a company under section 21 of the old Companies Act in 2006. It’s registration number is Reg No 2006/034767/08.
In 2008 a new Companies Act (No 71 of 2008) was passed. It radically changed the way in which companies are regulated. Some of the major changes were that certain provisions are automatically applicable to a company, unless expressly excluded, and some can’t even be excluded. It also changed the old name of “Association incorporated under s 21” to Non-Profit Companies (NPCs). It made certain provisions applicable to NPCs.
But the Act was not brought into effect until 2011, which happened on 1 May that year. Crucially, certain transitional arrangements were included, which gave companies two years to comply with the new Act. So, by 1 May 2013 all companies had to fully comply with the Act.
Still, how does that affect the sport of Athletics?
Athletics South Africa NPC’s constitution were the Articles of Association in terms of the old Act. (Interestingly, the Articles filed with CIPC are not the same as the constitution, but that for another time. Let’s take it, as everyone always has, that the constitution was the Articles of Association.) Now this part gets a bit complicated, so bear with us. In terms of the new Act the Articles of Association became the Memorandum of Incorporation (MOI). Until 1 May 2013, if there was a clash between the Act and the MOI, the MOI won. After 1 May 2013, the Act wins.
Now, to clear up something else. The Act is very specific. Only certain other laws trump the Companies Act. These are:
• Auditing Profession Act, 2006;
• Labour Relations Act, 1995;
• Promotion of Access to Information Act, 2000;
• Promotion of Administrative Justice Act, 2000;
• Public Finance Management Act, 1999;
• Securities Services Act, 2004;
• Banks Act, 1990.
Why this is relevant is that no-where does the Act provide that the constitution or MOI of another organisation (ie SASCOC) can override the Companies Act, nor does the National Sport and Recreation Act override the Companies Act.
Again, why is this important?
For the following reasons:
Section 4 of Schedule 1 says:
“If the Memorandum of Incorporation of a non-profit company provides for the company to have members, it—
(a) must not restrict or regulate, or provide for any restriction or regulation of, that membership in any
manner that amounts to unfair discrimination in terms of section 9 of the Constitution;
(b) must not presume the membership of any person, regard a person to be a member, or provide for the automatic
or ex officio membership of any person, on any basis other than life-time membership awarded to a person—
(i) for service to the company or to the public benefit objects set out in the company’s Memorandum of
(ii) with that person’s consent.”
Put in plain English: You can no longer have ex officio members of Athletics South Africa, nor can anyone become a member of Athletics South Africa automatically (you have to join). The effect is this: Office Bearers can no longer be regarded as members of Athletics South Africa, unless they are members in their own right – ie they have joined as a member (keep in mind that other than officer bearers and honorary members, ASA does not have individuals as members).
So since 1 May 2013, office bearers are no longer members of ASA.
Section 5 of Schedule 1 says:
‘(1) If a non-profit company has members, the Memorandum of Incorporation must—
(a) set out the basis on which the members choose the directors of the company; and
(b) if any directors are to be elected by the voting members, provide for the election each year of at
least one-third of those elected directors.
ASA has members, so this provision applies. What it expressly states is the MOI must set out the basis on which members chose the directors (ie board members). Since board members can no longer be regarded as members of ASA in terms of s 4 of Schedule 1, they can’t participating in choosing who the directors are. So any election, since 1 May 2013, where board members (or any other office bearers – eg members of commissions) participated in the election, has been invalid.
And s 5(1)(b) of Schedule 1 is also a problem: In terms of the Act, the MOI must (as in has to) provide for the election of at least 1/3 of the elected members. In other words, every year 1/3 of the ASA board has to stand down and either be re-elected or new directors have to be elected. The days of a slate remaining in power for four years ended in 2013.
Athletics South Africa NPC has not amended its MOI, as required by the Act. It is thus in breach of the Act. However, it is not good enough to say, whoops, we didn’t do it but who cares. The Act is specific, where there is a conflict between the Act and the MOI, the Act takes precedence. In many aspects, the Act deems the MOI to have been amended (more on that at a later date).
For now, let’s concentrate on two aspects: Board (and commission) members are no longer members of ASA. The Act is clear on that. So they can’t vote as members and if they have, they have tainted that election.
And one third of the board has to be re-elected every year. If that hasn’t been happening, the Act has been breached and people are sitting as board members in breach of the law.
How is that relevant to the sport of Athletics: When the board of ASA decided to omit athletes from the team to the recent IAAF World Championships, were they acting legally?
It would seem not.