1constitutional court of south africa

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The property challenge issues

A preliminary question is whether FNB, as a juristic person, is entitled to the property rights protected by section 25 of the Constitution. In this regard section 8(4) of the Constitution provides as follows:

“A juristic person is 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.”
In the First Certification case70 an objection was raised that, inconsistently with Constitutional Principle II, the extension of the rights guaranteed by the Bill of Rights to juristic persons would diminish the rights of natural persons. This Court rejected the objection in the following terms:
“ . . . [M]any ‘universally accepted fundamental rights’ will be fully recognised only if afforded to juristic persons as well as natural persons. For example, freedom of speech, to be given proper effect, must be afforded to the media, which are often owned or controlled by juristic persons. While it is true that some rights are not appropriate to enjoyment by juristic persons, the text of NT 8(4) specifically recognises this. The text also recognises that the nature of a juristic person may be taken into account by a court in determining whether a particular right is available to such person or not.”71
In the Hyundai case72 this Court held that although juristic persons are not the bearers of dignity they are entitled to the right to privacy although their privacy rights “can never be as intense as those of human beings”.73 Exclusion of juristic persons from the right to privacy –
“ . . . would lead to the possibility of grave violations of privacy in our society, with serious implications for the conduct of affairs. The State might, for instance, have free licence to search and seize material from any non-profit organisation or corporate entity at will. This would obviously lead to grave disruptions and would undermine the very fabric of our democratic State. Juristic persons therefore do enjoy the right to privacy, although not to the same extent as natural persons.”74
We are here dealing with a public company. It is trite that a company is a legal entity altogether separate and distinct from its members, that its continued existence is independent of the continued existence of its members, and that its assets are its exclusive property.75 Nevertheless, a shareholder in a company has a financial interest in the dividends paid by the company and in its success or failure because she “ . . . is entitled to an aliquot share in the distribution of the surplus assets when the company is wound up”.76 No matter how complex the holding structure of a company or groups of companies may be, ultimately – in the vast majority of cases – the holders of shares are natural persons.
More important, for present purposes, is the universal phenomenon that natural persons are increasingly forming companies and purchasing shares in companies for a wide variety of legitimate purposes, including earning a livelihood, making investments and for structuring a pension scheme. The use of companies has come to be regarded as indispensable for the conduct of business, whether large or small. It is in today’s world difficult to conceive of meaningful business activity without the institution and utilisation of companies.
Even more so than in relation to the right to privacy, denying companies entitlement to property rights would “ . . . lead to grave disruptions and would undermine the very fabric of our democratic State”.77 It would have a disastrous impact on the business world generally, on creditors of companies and, more especially, on shareholders in companies. The property rights of natural persons can only be fully and properly realised if such rights are afforded to companies as well as to natural persons. I therefore conclude that FNB is entitled to the property rights under section 25 of the Constitution, its provisions having been quoted in paragraph 25 above. I accordingly proceed to consider the property challenge.
The following questions arise:
(a) Does that which is taken away from FNB by the operation of section 114 amount to “property” for purpose of section 25?

(b) Has there been a deprivation of such property by the Commissioner?

(c) If there has, is such deprivation consistent with the provisions of section 25(1)?

(d) If not, is such deprivation justified under section 36 of the Constitution?

(e) If it is, does it amount to expropriation for purpose of section 25(2)?

(f) If so, does the deprivation comply with the requirements of section 25(2)(a) and (b)?

(g) If not, is the expropriation justified under section 36?

Before turning to these issues it is essential, by way of introduction, to consider the meaning of section 25 more broadly and in a more comprehensive context.

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