THE SHOW MUST GO ON
For the first time in nearly a quarter of a century, there will be no joyful scenes at dozens of rural primary schools later this year as sponsors deliver education and hope to grateful children, parents, teachers and communities.
This is the 23rd year of Rally to Read, the rural education programme that has transformed the lives of thousands of children otherwise condemned to illiteracy and poverty by a failed SA education system. Thanks to Covid-19, however, there can be no mingling or creation of friendships and common purpose across one of SA’S greatest social divides.
The city haves and rural have-nots will be kept apart in 2020, for the first time since 1997. But that doesn’t mean the need for sponsorship is any less desperate. We still rely on the generosity of FM readers, who have supported this programme since its inception. Suspending it is not an option.
Rally to Read, for which the FM is an organising partner, began its journey in 1998, in response to the realisation that basic education was not reaching many of the country’s most remote communities. Basic educational materials, such as books and stationery, were simply not being delivered. School buildings, many without electricity or running water, were left to crumble. Teachers, lacking tools, were demotivated and often absent. When the average rural child was expected to enter high school at the age of 14, he or she had a reading age of seven.
The situation in 2020 is better, but not by much. However, Rally to Read schools are an exception. There, the literacy gap is bridged and children are able to enjoy a full education and the life opportunities that brings. Many have gone on to university. In some cases, they have been the first ever to do so from their communities.
The formula for this success is simple: we deliver what we promise. Sponsors’ money buys portable classroom libraries and stationery, and pays for teacher development.
Trainers from the Read Educational Trust continuously monitor educational progress during the three years we support each school.
But sponsors don’t have to take the organisers’ word for the fact that the programme works. What makes Rally to Read unique is that sponsors deliver goods in person, meet the children and communities they are helping and understand the needs they are meeting. Regular sponsors see for themselves the development of children at “their” schools during offroad adventure weekends.
The personal touch of Rally to Read may be missing in 2020, but rural schools can’t afford to lose sponsor support
To stop now, before the threeyear cycle is complete, would risk undoing everything already achieved
This personal interaction, of course, is impossible in 2020 — though we did manage our traditional Mpumalanga rally in March, just before the Covid-19 lockdown was imposed. But we are still committed to continuing existing interventions in the Western Cape, Eastern Cape, Free State and Kwazulu-natal. To stop now, before the threeyear cycle is complete, would risk undoing everything already achieved. Equally, to postpone for a year would be devastating for children in the programme.
Predictably, the economic chaos caused by the Covid-19 pandemic has caused many companies to reconsider their social investment programmes and prioritise the welfare of their own staff over that of nameless, faceless strangers.
Except, of course, that Rally to Read’s children are not nameless, faceless or even strangers. Our sponsors have met them and seen them grow. Until life returns to normal, organisers will try to preserve some of that relationship through “virtual” school tours and conversations.
The cost of a full sponsorship in 2019 was R36,000 — enough to equip and support a primary school for one year. We hope that despite the lack of personal participation, sponsors can still find that money in 2020. If not, any lesser amount will still be welcomed.
SA faces unprecedented challenges because of Covid-19. For most companies, recovery will be slow, but it will happen. In urban schools, we are already seeing a return to classrooms. Rural education, however, can’t be switched on and off like a tap, so we need the funds to keep it flowing — or at least trickling.
If not, a generation of children will lose their only chance of a future that should be theirs by right.
To learn more about the programme, or to become a
sponsor, visit rallytoread.co.za
for any fraudulent purpose”.
Any director or manager who breaches this can be held liable for any loss, damage or costs sustained by the company
But this liability extends further. If a company goes into liquidation, directors also face personal liability should it be found that it was trading recklessly before it was liquidated. And this is a strict liability, in that there needn’t be any direct link between the reckless trading and the loss.
As many companies battle to keep their heads above water in the pandemic, it’s critical that director and managers learn exactly what constitutes reckless trading. Helpfully, a number of cases have pinned it down for us.
In Fourie v Newton, a 2010 case which revolved around directors’ responsibilities in the collapse of newsagent CNA, the court restated the principles of reckless trading. It is this:
● Gross negligence is necessary, rather than just mere negligence;
● An honest but mistaken view that a company wasn’t trading recklessly won’t negate liability, if a reasonable person wouldn’t have had that view;
● Acting recklessly consists of a failure to give consideration to the consequences of your actions.
In the Philotex case, dating back to 1997, the directors of a company called Wolnit were held to be reckless where they carried on trading without the assurance of support from their parent company, the Rentmeester Group.
Directors can also be held personally liable if they take out credit for the company without a reasonable expectation it will be able to repay that loan.
With credit, there’s another critical point. Normally, directors owe a fiduciary duty of care, skill, and diligence to shareholders. But when it comes to financially distressed companies, they owe that duty to their creditors too.
During Covid-19, we’ve seen many companies suspend their dividend. Legally, this is a wise move, partly because of the way the Companies Act obliges companies to apply the twin test of solvency and liquidity.
These tests must be applied when a company plans certain corporate transactions including, importantly, dividend payments and other distributions.
Here, directors must exercise their judgment in assessing whether their company will be solvent and liquid immediately after making the payment. The standard of care is both subjective and objective: would a reasonable person have thought the company would pass this twin test? Get it wrong, and you face personal liability under the Companies Act.
Boards must also be vigilant to ensure that covenants in loan contracts aren’t breached, and that there isn’t a default due to a company not meeting the requirement of being a going concern.
If all that sounds tricky enough, consider that if you’re the director of a Jse-listed company, you also have a duty to make a prompt disclosure of any circumstance that could be seen as “price sensitive”, like a liquidity shortage.
Disclosure, in fact, is vital.
Under section 129 of the Companies Act, directors who believe a company is in financial distress but have not placed the company in business rescue must inform those affected — including shareholders, creditors and employees. And here, the interpretation is complex.
It’s quite clear there are many minefields around reckless trading which directors have to avoid. As Covid-19 ravages our corporate sector, you can expect many of these provisions to be aired in court in the next few months.
Katz is chair of Ensafrica
It’s quite clear there are many minefields around reckless trading which directors have to avoid