Significant Older Cases - Alphabetical List
Airport Cold Storage v Ebrahim 2008 (2) SA 303 (C)
- Close corporation) Members - Abuse of juristic personality of close corporation - Controlling members using corporation as instrumentality to promote own interests - Statutory and bookkeeping requirements associated with conduct of close corporation's business not complied with - Close corporation deemed to be personal venture of members - Members declared personally liable for debts of close corporation to plaintiff - Close Corporations Act 69 of 1984, s 65.
Aspek Pipe Co (Pty) Ltd v Mauerberger 1968 (1) SA 517 (C)
- (Company) Winding-up by Court - Members alleging oppressive conduct - Application under sec 111 bis of Act 46 of 1926, as amended - When relief granted - 'Oppressive.' - Meaning of - Tyrannical conduct or tyrannical abuse of power.
Aziza (Pty) Ltd v Aziza Media CC & Another 2002 (4) SA 377 (C)
- (Close corporation) Formation and constitution - Registration of name - Order in terms of s 20(2)(b) of Close Corporations Act 69 of 1984 that name be changed on grounds that it is undesirable - Undesirability of name often obvious, such as name identical to name already registered, name suggestive of blasphemy or indecency or which causing offence to any person or class of persons, or name calculated to cause damage to any other company or person - No hard and fast rules to be applied to ascertain whether name 'desirable' or not - Views differing depending on degree of similarity of names, likelihood of confusion and business activities of parties - After consideration of particular circumstances of matter and names under consideration found that name of respondent as registered not undesirable but abbreviation thereof was - Respondent prohibited from using any abbreviated form of registered name.
- (Close corporation) Formation and constitution - Registration of name - Order in terms of s 20(2)(b) of Close Corporations Act 69 of 1984 that name be changed on grounds that it is undesirable - Application for - When to be brought - Respondent's founding statement registered on 28 August 1998 and applicant's application issued and served on 28 August 2000 - Respondent, using civil method of computing time, arguing that application out of time as section providing that application to be brought 'within period of two years after registration of founding statement' - When attempting to ascertain intention of Legislature, words used to be attributed their 'ordinary meaning', 'popular meaning', 'literal meaning', 'plain meaning' or 'grammatical meaning' - Words further to be read in context they used, having regard to other sections of Act, Act as whole and other similar legislation - Ordinary, popular, plain or grammatical meaning of word 'after' in relation to occurrence of event only able to refer to period of time which commencing after event having occurred - Period of two years in which applicant able to approach Court for relief expiring on 28 August 2000, meaning that application brought in time.
Ben-Tovim v Ben-Tovim 2001 (3) SA 1074 (C)
- (Company) Shares and shareholders - Shareholders - General meeting of shareholders - Powers of - Companies Act 61 of 1963, s 228(1) - Directors' decision to dispose of whole or substantially the whole of undertaking or assets of company requiring approval of shareholders in general meeting - Whether general meeting entitled to decide, rather than merely approve directors' decision, on such disposal - Generally accepted that, if directors cannot or will not exercise powers vested in them, general meeting may do so - Where directors in deadlock, general meeting of shareholders entitled to adopt resolution in terms of which offer for acquisition of main business of company accepted.
- (Company) Shares and shareholders - Shareholders - General meeting of shareholders - Powers of - Companies Act 61 of 1963, s 228(1) - Directors' decision to dispose of whole or substantially the whole of undertaking or assets of company requiring approval of shareholders in general meeting - Special resolution of company requiring written consent of holders of cumulative preference shares to such disposal cannot override s 228 - In any event, where holders of cumulative preference shares voting in general meeting in favour of resolution on such disposal, insistence on written consent amounting to empty formality.
- (Company) Shares and shareholders - Shareholders - Rights and duties of - Voting in general meeting of shareholders - Shareholders not standing in fiduciary relationship to company - Thus not under duty to exercise vote in general meeting bona fide in interests of company as whole - Right to vote attaching to share itself as incident of property - Shareholders entitled to exercise right in own interests - Director of company, in capacity as shareholder, entitled to act entirely in his or her own interests, without taking account of any conflicting interests, provided such director not guilty of fraud or oppression of minority shareholders.
- (Company) Shares and shareholders - Shareholders - Unfairly prejudicial, unjust or inequitable conduct - Application for order in terms of s 252 of Companies Act 61 of 1973 - Application for order setting aside resolution adopted at general meeting of shareholders may properly be brought under s 252 - Grant of relief depending upon whether Court considering it just and equitable to do so in circumstances of case and whether Court of view that relief would bring matters complained of to an end - Court to examine conduct itself and its effect on other members - Motive underlying conduct complained of relevant only as aid in deciding whether it was unfairly prejudicial, unjust or inequitable and whether granting relief would be just and equitable.
- (Company) Shares and shareholders - Shareholders - Unfairly prejudicial, unjust or inequitable conduct - Application for order in terms of s 252 of Companies Act 61 of 1973 - Minority shareholders bound by decisions of prescribed majority if such decisions reached in accordance with law - Resolution approving sale of major asset or undertaking passed at properly convened general meeting of shareholders valid in absence of evidence of improper conduct by shareholders whose vote decisive.
- (Company) Shares and shareholders - Shareholders - Unfairly prejudicial, unjust or inequitable conduct - Application for order in terms of s 252 of Companies Act 61 of 1973 - Conduct complained of must affect shareholder in his or her capacity as member of company concerned - Shareholder in company A complaining that resolution adopted by majority in properly convened general meeting of shareholders depriving company A of its essential source of income and profit-generating capacity - However, in terms of company A's articles of association net profits after tax accruing, not to shareholders, but to company B, a wholly-owned subsidiary of company C in which complaining shareholder holding 25% of ordinary shares - Conduct complained of thus not affecting shareholder in her capacity as member of company
- (Company) Shares and shareholders - Shareholders - Unfairly prejudicial, unjust or inequitable conduct - Application for order in terms of s 252 of Companies Act 61 of 1973 - Section 252(3) requiring that Court be satisfied that it be just and equitable to come to shareholder's aid - Court has discretion to refuse relief even if shareholder satisfying requirements of ss (1) - Not just and equitable to parties if relief sought would not bring to an end matters complained of.
- (Company) Directors and officers - Directors - Director acting in capacity as shareholder in general meeting of shareholders - In such capacity director entitled to exercise right to vote entirely in his or her own interests, without taking account of any conflicting interests, provided such director not guilty of fraud or oppression of minority shareholders.
Big Dutchman (South Africa) (Pty) Ltd v Barclays National Bank Ltd 1979 (3) SA 267 (W)
- Insolvency - Compulsory sequestration - Application - Jurisdiction - Sequestration of debtor entitled to dividend in terms of realisation and distribution account of company in respect of which scheme of arrangement sanctioned - Such debtor having right to dividend which constitutes property capable of conferring jurisdiction over debtor on High Court - Companies Act 61 of 1973, s 311 read with Insolvency Act, s 149(1)(a). Insolvency - Compulsory sequestration - Application - Furnishing of copy of petition to debtor - Informal service of petition on debtor sanctioned - Insolvency Act 24 of 1936, s 9(4A)(a)(iv).
- Insolvency - Compulsory sequestration - Application - Furnishing of copy of petition to debtor - May be dispensed with at discretion of court - Relevant factors including urgency of matter, conduct of debtor in relation to his assets - Court to weigh interests of creditor and debtor and prejudice that may be suffered by creditor if notice is given. Practice - Stay of proceedings - On ground that proceedings already instituted in foreign court - Applicable principles - Defendant/respondent to satisfy court of existence of foreign forum to whose jurisdiction he is amenable and in which justice can be done between parties at substantially less inconvenience or expense - Stay may not deprive plaintiff/applicant of legitimate advantage - Court to weigh advantage to plaintiff/applicant against disadvantage to defendant/respondent, taking into account availability of witnesses, expense and inconvenience to all concerned, speed of judicial process and level of awards of damages and costs. Insolvency - Compulsory sequestration - Act of insolvency - Debtor leaving Republic with intention of delaying repayment of amount misappropriated from company of which he was director - Conduct constituting act of insolvency - Insolvency Act 24 of 1936, s 8(a). Insolvency - Compulsory sequestration - Act of insolvency - Applicant becoming aware of commission of act of insolvency only after commencement of sequestration proceedings - Applicant nevertheless entitled to rely on such act of insolvency.
Botha v Fick 1995 (2) SA 750 (A)
- (Company) Shares and shareholders - shares - Sale and transfer of - Duty of registered shareholder selling his shares to deliver share certificate and completed transfer form to buyer not a requirement for the validity of cession in terms of which rights and title in relation to the shares are transferred, but stems from the sale transaction creating the obligation.
- (Company) Register of members – Correction of - Application in terms of section 115 of the Companies Act 61 of 1973 – Court has wide discretion to ensure that justice and reasonableness prevails.
Botha v Van Niekerk 1983 (3) SA 513 (W)
- (Company) Nature of company - As independent juristic person – Company yet to be incorporated indicated as nominee in contract for the sale of land to “G…or his nominee” – Company later incorporated and nominated as buyer – Company had inadequate assets to buy property – Only R1 worth of shares issued – Seller argued that the company was merely G in another form and attempted to enforce the agreement against G – Aim of incorporation is to protect the assets of the company against liability for debts of the individual – Extraordinary grounds would have to exist for the court to lift the veil of incorporation – In casu at least an intolerable injustice and clearly improper conduct would have to be shown – Application to enforce the contract against G denied – Circumstances under which the court would pierce the corporate veil in general discussed.
Brown v Nanco (Pty) Ltd 1977 (3) SA 791 (W)
- (Company) "Member" - Meaning of in sec. 266 (1) and (2) of Act 61 of 1973.
- (Company) Directors - Institution of proceedings against by a "member" in terms of sec. 266 (1) and (2) of Act 61 of 1973 - "Member" - Meaning of - Remains a member until removed from share register.
Cape Pacific Limited v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790 (A)
- (Company) Legal personality of - Separate identity of - 'Piercing' the corporate veil - Law not settled as to when permissible to do so - Though no general discretion to disregard company's separate legal personality whenever Court considers it just, test of 'unconscionable injustice' too rigid - Where there has been fraud, dishonesty or improper conduct, principle of separate corporate personality to be balanced against policy considerations arising from particular facts and favouring piercing the veil - Can be pierced pro hac vice, where company legitimately established and operated but misused in relation to one transaction - No rule that plaintiff must have or have had no other remedy before veil can be pierced - Third respondent owning shares in F Co enabling him to occupy particular flat - Shares transferred to first respondent (a company) solely for convenience of third respondent - Shares sold to appellant in 1979 - Appellant suing first respondent successfully for delivery of shares - Then transpiring that first respondent had previously transferred shares to second respondent (a company) at third respondent's behest to defeat appellant's rights to the shares - Appellant failing to join second defendant in that action and to claim delivery of shares on 'doctrine of notice' basis - Latter right of action now prescribed - Appellant now suing first, second and third respondents for delivery of shares - Third respondent effectively in complete control of both first and second respondents - In relation to their dealings with shares, first and second respondents alter egos of third respondent - Third respondent fraudulently or improperly abusing corporate personalities of first and second respondents - Proper case for piercing veil - Not precluded by appellant's (prescribed) right to have sued third respondent on 'doctrine of notice' basis - Appellant entitled to order for delivery of shares against second and third respondents - Respondents to pay appellant's trial costs on attorney-and-client basis.
Da Silva v CH Chemicals (Pty) Ltd 2008 (6) SA 620 (SCA)
- (Company) Directors and officers - Director - Fiduciary duty - Breach - Exploitation of corporate opportunity - Corporate opportunity - What constitutes - Opportunity giving rise to conflict between personal interests of director and interests of company if exploited - Opportunity belonging to company - Director liable to company even if resigning before exploitation of opportunity.
- (Company) Directors and officers - Director - Fiduciary duty - Breach - Exploitation of business opportunity not amounting to corporate opportunity - Procurement by director of part of existing business of company for own benefit or that of another - Director liable to company even if resigning before exploitation of opportunity - In absence of such conduct, director free (in absence of contractual restraints) to resign and set up business in competition with company.
Dadoo Ltd v Krugersdorp Municipal Council 1920 AD 530
- (Company) Formation of company - Land Transaction in fraudem legis - Statute prohibiting Asiatic or coloured person from owning land - Law 3 of 1885 (T) - Law 35 of 1908 (T) - Municipal Council - locus standi.
De Villiers v Jacobsdal Saltworks (Pty) Ltd 1959 (3) SA 873 (O)
- (Company) Directors - Appointment of - In absence of specific agreement such appointment subject to articles of association - Original articles appointing a director for life - Alteration of articles subjecting such director to necessity of being re-elected. - Not entitled to claim damages from company if not re-elected.
Donaldson Investments (Pty) Ltd v Anglo-Tvl Collieries Ltd 1980 (4) SA 204 (T)
- (Company) Shares - Shareholders - Remedies of - Section 252 of Act 61 of 1973 - Construction of - Onus on applicants to be discharged on a balance of probabilities.
- (Company) Shares - Shareholders - Preference shareholders - Right to participate in surplus assets on a winding-up.
No cases beginning with the letter E. For Ex Parte judgments, see party name.
Fairham v Cape Town Mutual Aid Fund 1949 (1) SA 919 (C)
- (Voluntary association) - Constitution of - Amendment of - Amendment not for benefit of the association - Intervention by Court.
Fisheries Development Corporation of SA Ltd v Jorgensen 1980 (4) SA 156 (W)
- (Company) Actions by and against - Evidence taken at an interrogation under s 415 of Act 61 of 1973 - In regard to admissibility and weight of such evidence, regard to be had to evidence as a whole including portions favourable to the witness - Rule extending to evidence admissible under s 415 (5) against the company of which the witness is an officer.
- (Company) Directors - Duties of - Nature of - In carrying out his duties and functions, he is obliged to serve the interests of the company - As a director he cannot be subject to the control of any employer or principal other than the company.
- (Company) Directors - Executive directors and non-executive directors - Difference between and functions and duties of set out - Nonexecutive director entitled to rely on judgment, information and advice of the company management - But he may not shelter behind culpable ignorance or failure to understand the company's affairs.
- (Company) Actions by and against - Defendant, in an action by company, seeking to rely on s 424 (1) of Act 61 of 1973 - Section cannot be invoked against persons not mentioned therein - Cannot be invoked against persons who might be vicariously responsible at common law for the conduct of the persons against whom the section may be invoked.
- (Company) Actions by and against - Defendant, in an action by company, seeking to rely on s 424 (1) of Act 61 of 1973 - "Recklessly" in section - Meaning of - Requirement of gross negligence - "Recklessness" connotes at the least culpa lata.
Francis George Hill Family Trust v SA Reserve Bank 1992 (3) SA 91 (A)
- (Company) Proceedings by and against - Derivative action by shareholder - Derivative action exception to rule that, when wrong done to company, company itself to sue wrongdoer - Exception arising when (1) wrong involving fraudulent or ultra vires action and (2) wrong perpetrated by directors and shareholders in control - Where 'wrongdoer' not insider in control of company, but Reserve Bank, Court holding that shareholder not entitled to proceed by way of derivative action.
- (Company) Shares - Shareholder - Whether shareholder 'person aggrieved' within meaning of reg 22D of Exchange Control Regulations (promulgated under Currency and Exchanges Act 9 of 1933) by attachment of company assets by Reserve Bank - 'Person aggrieved' signifying someone whose legal rights infringed - Notion of company as distinct legal personality a matter of substance - Shareholder having no right to any item of property owned by company - Attachment of company assets thus not invasion of shareholder's legal rights - Shareholder accordingly not 'person aggrieved' within meaning of reg 22D - Shareholder thus having no locus standi to challenge attachment.
Garden Province Investments v Aleph (Pty) Ltd 1979 (2) SA 525 (D)
- (Company) Shareholders - Remedies of - Minority shareholder invoking s 252 (1) of Act 61 of 1973 - What he must establish - "Unfairly" - Meaning of in section - Majority shareholder to act bona fide - Meaning of.
Gardner v Margo 2006 (6) SA 33 (SCA)
- (Company) Shares and shareholders - Shares - Granting of financial assistance to purchase shares in contravention of s 38(1) of Companies Act 61 of 1973 - Reiterated that transaction falling foul of s 38(1) only if 'direct object', as opposed to 'ultimate goal' of transaction to provide financial assistance for purpose of or in connection with purchase of shares - Assistance to be financial in nature and not to consist of assistance to which person concerned in any event entitled.
- (Company) Shares and shareholders - Shares - Granting of financial assistance to purchase shares in contravention of s 38(1) of Companies Act 61 of 1973 - What amounts to - Company guaranteeing payment of proceeds of sale to seller - Guarantee not in contravention of s 38(1).
- (Company) Shares and shareholders - Shares – Sale of - Principal and agent - Mandate to sell - Mandate to sell shares - Interpretation of - Alleged incorporation of oral agreement into mandate - Shares sold at price greater than sum per share payable to principal in terms of written mandate - Whether principal entitled to excess.
Gering v Gering 1974 (3) SA 358 (W)
- (Company) Separate legal personality of - Veil piercing – Wife claiming to be beneficial owner of shares in a company - Husband carrying on business under guise of limited liability companies - Discovery - Action by wife for judicial separation - Discovery of certain documents in his possession relating to such companies ordered - Proper affidavit of discovery ordered.
Gohlke & Schneider v Westies Minerale (Edms) Bpk 1970 (2) SA 655 (A)
- (Company) Director - Appointment of - Agreement between groups of shareholders that each entitled to 'appoint' two directors - Meaning E of - Articles of association providing that appointment can only be made at general meeting of shareholders - Effect - Extent to which articles can be departed from by a subsequent bona fide agreement.
Gradwell (Pty) Ltd v Rostra Printers 1959 (4) SA 419 (A)
- (Company) Shares and shareholders - Rendering financial assistance for the purpose of a purchase of shares in a company - What amounts to - Act 46 of 1926, sec. 86 bis (2), as amended.
Gundelfinger v African Textile Manufacturers Ltd 1939 AD
- (Company) Meeting of shareholders - Validity of resolution - Fraud on minority shareholders - Board of Directors - Resolution by Directors authorising payments to themselves Validity - Adoption by Company - Notice of General Meeting invalid - All shareholders in fact represented.
Hart v Pinetown Drive-In Cinema (Pty) Ltd 1972 (1) SA 464 (D)
- (Company) Winding-up - Application for by minority shareholder under sec. 111 (g) of Act 46 of 1926, as amended - Most of profit absorbed by management fee - Insufficient facts avered to establish such ontoward or unlawful - Failure to establish lack of probity - Failure to establish conduct oppressive under sec. 111 bis.
Haygro Catering BK v Van der Merwe 1996 (4) SA 1063 (C)
- (Close Corporation) Proceedings by and against - Application for members of close corporation to be declared jointly and severally liable together with close corporation for its debts – Third respondent close corporation conducted business under a name other than its registered name without giving any indication of its real name of the fact that it was a close corporation - Applicant, that conducted business without being aware of the fact that it was a close corporation issued summons using trade name and not the true of the third respondent – Court order granted useless as no business was registered under the trade name of the third respondent-Conduct of third respondent in contravention of sec 23 (provisions relating to the use and publication of names) and sec 63(a) (failure to use abbreviations ‘BK’ or ‘CC’) and sufficiently serious enough to constitute a contravention of sec 65 (abuse of separate juristic personality of corporation) of the Close Corporation Act 69 of 1984 – Application granted.
Howard v Herrigel & another NNO 1991 (2) SA 660 (A)
- (Company) Directors and officers - Director - Liability of for debts of company - Declaration of personal liability in terms of s 424(1) of Companies Act 61 of 1973 for all or any debts of company against person who knowingly carried on business of company recklessly or fraudulently - Applicant for such declaration required to prove, on balance of probabilities, that person sought to be held liable had knowledge of facts from which conclusion properly to be drawn that business of company carried on recklessly or with intent to defraud creditors of company or creditors of any person or for any fraudulent purpose - Not necessary to prove that person also had knowledge of legal consequences of such facts - Also not necessary to prove causal connection between fraudulent or reckless conduct of business of company and debts or liabilities for which person may be declared liable - Directors having duty to observe utmost good faith towards company and to exercise reasonable skill and diligence - Where director thus sought to be held liable under s 424(1), such director may be found to have been 'party' to reckless or fraudulent conduct of company's business, even in absence of some positive steps by him in carrying on of company's business - Supine attitude might even amount to concurrence in such conduct.
- (Company) Directors and officers - Director - Duties of - Duty to observe utmost good faith towards company and to exercise reasonable skill and diligence - Unhelpful and misleading to classify directors as 'executive' and 'non-executive' for purpose of ascertaining duties towards company or when any specific or affirmative action required of them - General rule is that, once person accepts appointment as director, he becomes a fiduciary in relation to company and in his dealings on its behalf - Application of rule to particular incumbent depends on facts and circumstances of each case - One such circumstance is whether he was engaged full-time in affairs of company - Not helpful to say of particular director that his duties less onerous because he was not 'executive director' - Whether enquiry be one in relation to negligence, reckless conduct or fraud, legal rules same for all directors.
Hulett & Others v Hulett 1992 (4) SA 291 (A)
- (Company) Shares - Shareholders - Relationship inter se - There is room in company law for recognition of fact that behind limited company, or amongst it, there are individuals with rights, expectations and obligations inter se which are not necessarily submerged in company structure - In casu, evidence indicating that pre-existing bonds of mutual trust and confidence between principal shareholders in small limited company imported into and sustained within company - Within external structure of company, internal relationship between principal shareholders amounting to quasi-partnership - Such shareholders describing themselves as partners and appreciating that good faith required from partner in dealings with fellow-partners - One shareholder fraudulently misrepresenting to fellow shareholders that, if they sold their shares to him, it was his intention to retain them in order to exercise control over company and to continue operating its business, for which he expressed strong affection - Actual intention to sell all shares at more advantageous price to purchaser with whom he was already secretly negotiating - Court holding that, to achieve own ends, shareholder trading upon and abusing bonds of friendship and sentiment - Concluding that fair to infer that shareholder relied on fraudulent misrepresentation to induce fellow-shareholders to sell their shares to him, and that such misrepresentation had induced them to sell their shares to him - Action for damages based on fraudulent misrepresentation accordingly succeeding.
Hulse-Reutter v Godde 2001 (4) SA 1336 (SCA)
- (Company) Legal personality of - Separate identity of - Doctrine of 'piercing the corporate veil' - Separate legal personality of company to be recognised and upheld except in unusual circumstances - Court having no general discretion to disregard existence of separate corporate identity when it just or convenient to do so - Much depending on close analysis of facts of each case, considerations of policy and judicial judgment - Some misuse or abuse to be shown of distinction between corporate identity and those controlling it, resulting in unfair advantage being afforded to latter.
Joseph Forman Holdings (Pty) Ltd & another v Forim Holdings & others  3 All SA 204 (W)
- (Company) Section 266 – Companies Act 61 of 1973 – Appointment of curator ad litem to take action against director – Whether prima facie case was made out in founding affidavit – On the merits Court will not grant appointment of curator ad litem merely because a prima facie case has been made out – Court must take into account all circumstances.
- (Company) Fiduciary duties of director – Breach of – Appointment of curator ad litem to take action against director – Whether prima facie case was made out in founding affidavit – On the merits Court will not grant appointment of curator ad litem merely because a prima facie case has been made out – Court must take into account all circumstances.
Ex parte JR Starck & Co (Pty) Ltd 1983 (3) SA 41 (N)
- (Company) Scheme of arrangement - "Expropriation" of minority shares in terms of s 311 (1) of Act 61 of 1973 - Minority shareholder controlling company competing with business of applicant company - Such shareholder refusing to sell shares - Scheme to reduce share capital and cancel shares of all minority shareholders - Invalidity thereof - Scheme to expropriate all shares of minority shareholders without regard to interests of applicant company - Semble: Procedure for "expropriation" of minority A shares of shareholder with competing business outlined.
Kirsten v Bankorp Ltd 1993 (4) SA 649 (C)
- (Company) Prohibited loans and security - Companies Act 61 of 1973, s 226(1) - Loans - Where director of A Co also in control of B Co for purposes of s 226(1A), loan made directly or indirectly by A Co to B Co not permissible in terms of s 226(1) unless made with prior consent of A Co's shareholders or in terms of special resolution of A Co - Words 'directly or indirectly' in s 226(1) not covering case where no contract, whether of loan or anything else, comes into existence - Where, as part of financing agreement in terms of which banker lent monies to A Co, banker discharged B Co's indebtedness to another banker, Court holding that such payment not constituting loan by A Co to B Co - Whatever claim A Co might as result have against B Co, such claim not based on contract, whether of loan or of anything else.
- (Company) Prohibited loans and security - Companies Act 61 of 1973, s 226(1) - Security - Where director of A Co also in control of B Co for purposes of s 226(1A), security given by A Co 'in connection with' any obligation of B Co not permissible in terms of s 226(1) unless given with prior consent of A Co's shareholders or in terms of special resolution of A Co - A Co, associated companies of A Co and B Co all belonging to same group of companies - Financing by banker to group provided by means of loan to A Co against provision of security by A Co and its associated companies - Only means by which transaction achievable was by discharging debts of group, including debts of B Co, to former banker in order to release securities held by former banker for use as security for A Co's contemplated indebtedness to new banker - Financing agreement also having as term that A Co would out of new funding from time to time lend money to B Co - Court holding that such contemplated loans so far removed from indebtedness for which security furnished that such security could not be said to have been furnished 'in connection with' loan by A Co to B Co.
Lawrence v Lawrich Motors (Pty) Ltd 1948 (2) SA 1029 (W)
- (Company) Winding up - One director committing adultery with other's wife - Whether other director entitled to apply for compulsory winding up order.
Le Roux Hotel Management (Pty) Ltd and Another v E Rand (Pty) Ltd 2001 (2) SA 727 (C)
- (Company) Judicial management - Companies Act 61 of 1973, s 427 - Nature and development of discussed - Requirements for successful application restated - Courts having adopted conservative approach - Seen as extraordinary measure - Scope limited - Adversarial process not suited to applications for judicial management orders - Negotiations between parties better than engaging in Court process - Change in legislation required - Applicant to show (1) reasonable probability that respondent will be able to survive and pay debts within a reasonable time, and (2) that just and equitable to grant order - Courts generally reluctant to grant orders against wishes of major creditors.
Le' Bergo Fashions CC v Lee 1998 (2) SA 608 (C)
- (Company) Legal personality of - Separate identity of - 'Piercing' the corporate veil - Business of fabric company sold - Sole shareholder and director undertaking not to engage 'in any business similar to that of purchaser' - After sale, company disposing of unsold fabric to purchaser's customers - Purchaser seeking to interdict both company and shareholder/director from breaching terms of restraint - Company never contemplating being bound by restraint - Nevertheless, factors present justifying conclusion that shareholder/director improperly using company as facade behind which to conduct business in breach of restraint - Company's competition with purchaser amounting to intentionally assisting shareholder/director to breach restraint - Such assistance wrongful - Interdict granted against both company and shareholder/director.
Ex parte Lebowa Development Corp Ltd 1989 (3) SA 71 (T)
- (Company) Directors and officers - Liability of for debts of company - Section 424(1) of Companies Act 61 of 1973 - Declaration of personal liability for all or any debts of company against persons who knowingly carried on company's business recklessly or fraudulently - Such remedy is additional to and supplements common law remedies available against wrongdoers who cause injury by their dolus or culpa - Statutory remedy under s 424(1) presupposes existence of debts or other liabilities on part of company - Section 424(1) cannot be brought into operation unless there is already some independent cause of action against company - When pre-existing cause of action lies against company alone, s 424 enables Court to extend company's liability to such persons as may be shown to have carried on company's business recklessly or fraudulently - Claims by persons already enjoying cause of action against company may thereby be enforced against wrongdoers personally - Where pre-existing claim lies against company and against persons qualifying to be declared as wrongdoers, s 424 provides additional (and possibly more expeditious and less costly) remedy against declared wrongdoers - Declaration under s 424(1) appears to be intended also for benefit of company itself - Intention may have been to indemnify company completely from declared wrongdoers in appropriate cases.
- (Company) Directors and officers - Liability of for debts of company under s 424(1) of Companies Act 61 of 1973 - Nature of conduct rendering person liable to be declared personally responsible for debts of company - Section specifies that conducting business of company fraudulently or recklessly may result in declaration - 'Recklessly' in context of s 424 implies existence of objective standard of care which would be observed by reasonable man conducting business of company in particular circumstances - A serious departure from such standard is recklessness.
- (Company) Compromise - Scheme of arrangement under s 311 of Companies Act 61 of 1973 - Meeting(s) of creditors to consider proposed scheme - Requirements to be met before Court will authorise summoning of such meeting(s) - Firstly, proposal to be in terms clear and comprehensible without to ordinary people without their requiring skilled professional assistance - Secondly, proposal must embody compromise or arrangement as contemplated by s 311, ie compromise or arrangement to be between company and its creditors or members - Thirdly, it must be probable that, if Court were to authorise summoning of meeting(s) of creditors, proposal will be put to them - Must also be probable that, if requisite majority were to agree to proposal, any conditions contained therein will be fulfilled - Fourthly, information required for creditors to be placed before Court to enable Court to consider its sufficiency for its intended purpose - Information should include (a) explanatory statement required by s 312(1)(a)(i); (b) disclosure of any material interest of company directors, as members or as creditors, and effect of proposal on such interests; (c) all other information required to enable creditors to assess relative merits of proposal and alternatives to it - Relevant information in regard to (c) would include proper assessment of prospect of establishing that loss suffered by company recoverable from directors or other officers personally - Fifthly, it must be shown that practical business merits of proposal such that a man of business could reasonably approve of it - Sixthly, there should be nothing in proposal or circumstances in which it is put forward to show that no Court could possibly approve of it - In this regard, Court would take into account not only wishes of majority of creditors, but also considerations of commercial morality.
- (Company) Compromise - Scheme of arrangement under s 311 of Companies Act 61 of 1973 - Commercial morality of - Scheme proposed in terms whereof company under judicial management would have assets of R71 000 and liabilities of R1 191 623 - Offeror undertook to subordinate claim for R1 191 623 to claims of all future creditors and to pay all future creditors if company unable to do so - Proposal subject to company being discharged from judicial management - Argument that proposal should be accepted because, although company's liabilities exceed its assets, company would be able to pay its debts and should therefore not be regarded as insolvent rejected as fallacious - Company whose liabilities exceed its assets so that it is actually insolvent cannot resist winding-up merely because current liabilities being met - Furthermore, mere fact that company which is actually insolvent has not yet defaulted on current liabilities does not give it right to continue trading in insolvent circumstances - In casu, Court holding that, if proposed scheme sanctioned, company would be freed to trade in insolvent circumstances - Public policy precludes Courts from condoning, encouraging or facilitating practice of trading in insolvent circumstances - Application for leave to summon meetings of creditors to consider proposed scheme rejected.
- (Company) Compromise - Scheme of arrangement under s 311 of Companies Act 61 of 1973 - Scheme proposed in terms of which company would have assets of R71 000 and liabilities of R1 191 623 - Offeror would be sole creditor and gave contractual undertaking to subordinate its claim to claims of all future creditors - Court holding that such contractual subordination effecting no permanent change to statutory ranking of claims - Subordination could be undone by contract or be overtaken by events and disappear - In any event, such subordination not converting de facto insolvency into solvency.
- (Company) Directors and officers - Liability of for debts of company - Generally - Directors and officers authorised to expose capital provided by members to normal risks attendant upon company's business - Nothing entitles them to expose assets of other persons (including creditors' claims) to such risks in absence of consent - Conduct of director or officer who exposes claim of creditor to foreseeable loss through risks attendant upon company's own business is culpable - Such conduct departs from standards of reasonable man and constitutes delict of negligence - May also amount to gross negligence or recklessness - When company is insolvent, there is always a risk that the terms of payment to creditors may not be honoured - Director or officer who obtains credit for insolvent company without disclosing such risk to creditor, commits fraud - Such fraud involves dishonest exposure of creditor's economic interest to unauthorised risk - Honest belief that creditor would not be prejudiced of no avail - Potential prejudice in exposing creditor to risk sufficient to establish fraud - At common law, anyone who injures another by fraud or negligence is personally liable to victim for resulting patrimonial loss - Companies Act 61 of 1973 offers limited protection to directors and officers from personal liability in s 248 - But Act provides no immunity from personal liability for fraud - Additional remedy in form of declaration of personal liability against any person carrying on business of company recklessly or fraudulently provided by s 424.
- (Company) Directors and officers - Liability of for debts of company - Liability for debts resulting from negligence - Section 248 of Companies Act 61 of 1973 provides only limited relief from liability for negligence - Court empowered by s 248 to grant relief to directors and officers against (i) claims by company (or its liquidator) and (ii) criminal liability - Relief against claim by company not absolute - Such relief limited to situation in which directors and officers found to have acted honestly and reasonably - Legislature intending that Court's readiness to find that negligent director or officer acted reasonably should vary inversely in relation to degree of negligence proved - Unlikely, therefore, that Court would find reasonableness where gross negligence or recklessness proved.
- (Company) Directors and officers - Liability of for debts of company - Criminal liability - In addition to common law crime of fraud, directors and officers may be charged with contravening ss 424(3) and 425 of Companies Act 61 of 1973 read with s 135(3)(a) of Insolvency Act 24 of 1936 - On charge of statutory offence, if director or officer concerned incurred debts when company's liabilities exceeded its assets, presumption that he incurred debts without reasonable expectation of being able to discharge them unless he can prove the contrary. Company - In liquidation or under judicial management - Duties of liquidators and judicial managers under ss 402(d) and 433(k) of Companies Act 61 of 1973 - Requirements for proper performance of such duties set out.
- (Company) In liquidation or under judicial management - Companies trading in insolvent circumstances - Results in companies being wound up at stage when so few assets remaining that concurrent creditors receive only a few cents in the rand for claims - Court holding that such practice unacceptable and contrary to public policy - Reduction of incidence of practice requiring more widespread enforcement of common law and statutory remedies available against directors and officers who cause loss to companies through dolus or culpa - More widespread enforcement depends upon liquidators and judicial managers performing their duties under ss 402(d) and 433(k) of Companies Act 61 of 1973 conscientiously, regularly and thoroughly - Public policy precludes Courts from condoning, encouraging or facilitating such practice - Public policy thus precluding Court from sanctioning offer of compromise which would, if implemented, free company to trade in insolvent circumstances.
Levin v Felt & Tweeds Ltd 1951 (2) SA 401 (A)
- (Company) Capital - Reduction - Reconstruction scheme involving borrowing on mortgage to pay off preference shareholders. - Scheme not unfair or inequitable - Court entitled to confirm reduction - Circular to shareholders explaining proposed reduction - Circular not to contain statements which are untrue in material respects - Scheme alleged not to be bona fide - No allegations of mala fides on part of directors made - Not duty of Court to consider what is best in interests of company - Opposition by director and shareholders to Court confirming resolution - Not a case for invoking Rule of Court 6 (1) and (11) (C.) - Court ordering unsuccessful opposing parties to pay costs of opposition - Court exercising its judicial discretion - Appeal Court not entitled to interfere - Late publication of rule nisi calling on shareholders to show cause why resolution should not be confirmed - No prejudice shown - Appeal - Costs of - Reduction not involving alteration of rights of different classes of shareholders inter se - Successful party entitled to costs.
Lewis v Oneanate (Pty) Ltd 1992 (4) SA 811 (A)
- (Company) Shares - Granting of financial assistance for purchase of its own shares in contravention of s 38(1) of Companies Act 61 of 1973 - What amounts to - B (Pty) Ltd owner of portion 1 of a certain farm and O (Pty) Ltd owner of portion 2 thereof - O (Pty) Ltd holding all shares in B (Pty) Ltd - Purchaser purchasing O (Pty) Ltd's shares in B (Pty) Ltd - Prior to sale of shares, O (Pty) Ltd transferring portion 2 to B (Pty) Ltd free of consideration - As security for balance of purchase price of shares, B (Pty) Ltd passing mortgage bond in favour of O (Pty) Ltd over portion 2 - As bond registered simul ac semel and pari passu with registration of transfer of portion 2 from O (Pty) Ltd to B (Pty) Ltd, B (Pty) Ltd's ownership of portion 2 at all times subject to bond - Bond not binding any of assets held by B (Pty) Ltd immediately prior to passing of bond - B (Pty) Ltd's financial position not altered by transaction - B (Pty) Ltd not exposed to possible risk in consequence of said transaction - Accordingly no financial assistance as contemplated by s 38 granted by B (Pty) Ltd.
Loeve v Loeve Building & Civil Engineering Contracts (Pty) Ltd 1987 (2) SA 92 (D)
- (Company) Investigation of affairs of company - Act 61 of 1973 s 266 - Only persons being examined under s 260 entitled to legal representation and then only for limited purposes set out in s 260(7) - Provisional curator ad litem interrogating a person in terms of s 267 read with s 260(2 )(b) not obliged to permit interested parties other than the person being interrogated or their legal representatives to cross-examine such person. Company - Investigation of affairs of company - Act 61 of 1973 s 266 - Scope of enquiry by provisional curator ad litem limited to investigation of prima facie grounds which applicant has set out in his application papers - Such enquiry not a general investigation of company's affairs but an enquiry to assist aggrieved shareholder by means which supplement his common law rights - Section 266(3).
McCullogh v Fernwood Estates Ltd 1920 AD 204
- (Company) Contract on behalf of company not in existence - Ratification - Written document - Variation of - Evidence – Mistake.
McKay v Stein 1951 (3) SA 1 (A)
- (Company) Shares and shareholders – Shares – Purchase of - Stock Exchange - Licensed stockbroker executing mandate of client to purchase shares - Client repudiating day after shares bought and paid for - Stockbroker refusing to accept repudiation - Client failing to comply with obligations under sec. 13 (1) of Act 7 of 1947 - Stockbroker selling shares under sec. 13 (5) but not forthwith. - Whether sec. 13 (5) requires sale 'forthwith' 14 days after the purchase - In any event stockbroker does not thereby lose his right to claim from client.
Mineworkers' Union v Prinsloo 1948 (3) SA 831 (A)
- Contract - Made on behalf of corporation - Trade Union - Constitution of - Necessary steps of internal management not taken. - Position of other party - 'Rule in Royal British Bank v. Turquand' - Effect of - Sale - Lex commissoria - Validity - 'Rouwkoop.' - Meaning.
Moosa NO v Mavjee Bhawan (Pty) Ltd 1967 (3) SA 131 (T)
- (Company) Winding-up by Court - 'Some other remedy . . . available' - Meaning of in sec 117 (2) of Act 46 of 1926, as amended - Onus - Discharge of - Stating of other remedy available - Onus - Grounds for winding-up under sec 111 (g) - Restatement of.
Moti v Moti & Hassim Moti Ltd 1934 TPD 428
- (Company) Voting – Fraudulent and oppressive majority – Rights of minority to sue – Joinder of company as co-defendant – Costs – Director’s remuneration – Company funds – Ultra vires dealing with by directors – Remedy of minority shareholders – Act 31 of 1909, Table “A”, article 95.
Movie Camera Company (Pty) Ltd v Van Wyk & another  2 All SA 291 (C)
- (Company) Directors and officers - Fiduciary duties of directors – A director of a company should not place himself in a position where his personal interests conflict with his duty to the company as a director.
Neugarten v Standard Bank of South Africa Ltd 1989 (1) SA 797 (A) 813
- (Company) Contracts by - Company providing security for another company controlled by one or more of its directors - Prohibition in s 226(1) of the Companies Act 61 of 1973 against company providing security for another company controlled by one or more of its directors not applicable where security given with consent of members of company in terms of s 226(2) - Consent required before or at time loan made or security provided - If consent not given at that stage, loan or security invalid.
Novick v Comair Holdings Ltd 1979 (2) SA 116 (W)
- (Company) Contracts by - Disclosure of interest in by directors - Tacit assertion by director - When such amounts to an express assertion - Act 61 of 1973 s 234. Company - Accounts of - How to be kept - Requirements of under s 286 (3) of Act 61 of 1973 - "Provision" in s 4 (1) of Fourth Schedule to Act - Meaning of discussed. Company - Contracts by - Disposition of greater part of its assets - Determination of value of assets - Market value the only test - Act 61 of 1973 s 228.
- (Company) Contracts by - Disposition of greater part of its assets - Act 61 of 1973 s 228 - Section not to be interpreted so that a disposal could take the form of two or more transactions between the company and other people, not being the same people in each transaction. Company - Directors - Director negotiating with company for purchase of share capital of company - No duty on director "to advise against himself".
Osry v Hirsch, Loubser & Co Ltd 1922 CPD 531
- (Company) Insolvency – Pledge of securities – Parate execution – Dutch rule in regard to – Principal and agent – Purchase by agent of principal’s goods – Public auction – “Publica auctio” – Executors and tutors – Acquiescence - Ratification
Pathescope (Union) of SA Ltd v Mallinick 1927 AD 292
- (Company) Contract to take shares. - Misrepresentation by agent. - Rescission. - Delay. - Rights of shareholder.
Peens and Swart v MKTV Beleggings Beherend BK  3 All SA 426 (T)
- (Company) Directors and officers - Resignation of directors – Resignation packages – Whether payment was affected by section 227 of Companies Act 62 of 1973, which prohibits compensation to be paid to directors for loss of office – Payments not intended to be for loss of office, with result that company bound by agreement to pay.
Peregrine Group (Pty) Ltd v Peregrine Holdings Ltd 2001 (3) SA 1268 (SCA)
- (Company) Formation and constitution - Name - Order that company change registered name because name undesirable or calculated to cause damage to applicant - Companies Act 61 of 1973, s 45(2A) - Court to decide on balance of probabilities (a) whether applicant having such vested right in name or in particular words in name that registration of new company or of amended name undesirable or (b) whether applicant showing not only likelihood of confusion or deception but that damage probable if either ensued - Introduction into s 45(2A) of 'undesirable' creating new and more liberal test than test of 'calculated to cause damage' - Thus inappropriate to circumscribe circumstances under which registration of company name might be undesirable - No difference in standard of proof applicable to each ground of challenge - Ordinary civil standard applicable to both - Test for 'calculated to cause damage' usually resolving itself into enquiry into likelihood of confusion or deception - Party seeking to prove 'likelihood' required to do so on balance of probabilities.
Philotex (Pty) Ltd & Others v Snyman & others 1998 (2) SA 138 (SCA)
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Proof of recklessness - Remedy under s 424(1) punitive - Onus upon party alleging recklessness to prove it - In civil proceedings onus to be discharged on balance of probabilities - Recklessness not lightly to be found.
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Being `knowingly a party' to carrying on of business of company recklessly - `Knowingly' meaning having knowledge of facts from which conclusion to be drawn that business being carried on recklessly - Not entailing knowledge of legal consequences of those facts - Being party to conduct of company's business not necessarily involving taking positive steps in carrying on of business - May be enough to support or concur therein.
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Carrying on of business of company `recklessly' - Word `recklessly' connoting at very least gross negligence with or without consciousness of risk-taking - In applying recklessness test, Court to have regard inter alia to scope of operations of company, role, functions and powers of directors, amount of debts, extent of company's financial difficulties and prospects of recovery.
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Proof of recklessness - Approach of Court - If company carries on business and incurs debts when in opinion of reasonable businessmen there is no reasonable prospect of creditors receiving payment when due, proper to draw inference that business carried on recklessly - Such approach an evidential test, not statement of substantive law - Director's honest belief as to prospects of payment when due not in itself determinant of whether he was reckless - Such belief irrelevant if reasonable person of business in same circumstances would not have held that belief.
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Proof of recklessness - Conduct of directors - Standard by which director's conduct to be measured an objective one - But subjective considerations such as additional knowledge, experience or qualifications possessed by director to be had regard to - Enquiry is what would reasonable businessman having such additional knowledge, or having access thereto, have done in circumstances - Where crucial decision made by unanimous decision of board, question to be posed in respect of board's decision.
- (Company) Directors and officers - Liability of for debts of company - Companies Act 61 of 1973, s 424(1) - Reckless trading - Facts establishing that at relevant time there was no reasonable prospect of payment of company's debts when due and that directors aware that trade creditors' money being unreasonably risked - Directors also wishing to prevent holding company having a liquidated subsidiary - Wilful disregard of consequences to trade creditors - Directors liable in terms of s 424(1) for company's debts to creditors.
Phillips v Fieldstone Africa (Pty) Ltd 2004 (3) SA 465 (SCA)
- (Company) Directors and officers – Fiduciary duty - Fiduciary duty of employee - When arising - Law relating to breach of fiduciary duty and its consequences set out - Employee to be approached in same way as any other supposed fiduciary - Basic principle stating that person in position of confidence involving duty to protect interests of other, not entitled to make secret profit at other's expense nor place himself in position where his interests conflicting with such duty - Present level of development of principle summarised - The lowlier and more restricted in discretion position of employee, the less likely that facts will support existence of duty - Relationship in which fiduciary duty arising identifiable, inter alia, by following characteristics: (1) scope for exercise of some discretion or power; (2) power or discretion may be exercised unilaterally so as to effect beneficiary's legal or practical interests; and (3) peculiar vulnerability to exercise of discretion or power.
- (Company) Directors and officers – Fiduciary duty - Fiduciary duty of employee - Whether fiduciary relationship established and extent thereof questions of fact to be deduced from nature of relationship between parties - Claimant not required to label claim as one based on breach of fiduciary duty, provided that pleadings, properly construed, embodying such claim.
Porteus v Kelly 1975 (1) SA 219 (W)
- (Company) Management - Shareholder applying for an interdict restraining four other shareholders from calling a meeting to pass a certain resolution - Oppression or fraud alleged - Sec. 252 of Act 61 of 1973 only applicable to acts performed, not to acts to be performed in future - Respondents not constituting the majority of the shareholders - No basis on which Court could intervene.
Ex parte Premier Paper Ltd 1981 (2) SA 612 (W)
- (Company) Shares - Defect in creation, issue or allotment of - Curing of - Power of Court - Act 61 of 1973 s 97.Company - Formation and constitution - Articles of association - Alteration of contractual relationship created thereby between company and members - Only members can effect such alteration.
- (Company) Formation and constitution - Articles of association - Amendment, alteration or rectification of - Court has no power to effect these - Act 61 of 1973 s 97.
Quadrangle Investments (Pty) Ltd v Witind Holdings Ltd 1975 (1) SA 572 (A)
- (Company) Powers and management - Condition, which could have been inserted in articles, inserted in memorandum. - Can only be altered by a special resolution - Dividend declared in contravention of such a condition - Such ultra vires and void - Cannot be validated because all its shareholders unanimously assented to it - Act 46 of 1926, secs. 9, 11 bis, 16 - Quaere: Whether, without first altering the condition, a company could by special resolution authorise or subsequently ratify the offending act.
R v Kritzinger 1971 (2) SA 57 (A)
- (Company) Directors and officers – Knowledge of board members - Criminal law - Fraud - Misrepresentation to a company - Board members aware of its falsity - Irrelevancy of.
R v Milne and Erleigh (7) 1951 (1) SA 791 (A)
- (Company) Directors and officers – Managing directors - Criminal law - Persons, Liability of - Managing directors of public companies charged with and convicted of common law crimes of theft and fraud and contraventions of the Companies Act, 46 of 1926 as amended - Incitement - Contravention of Act 27 of 1914, sec. 15 (2) (b) - What amounts to - When section applicable - Theft - Managing director of a secretarial company appropriating share certificates debited to such company and taken out of its possession as controller in its strong-room of the pool of companies to which it acted as secretary - Evidence that another company in pool obliged to deliver such shares to such director - Shares proved to have been taken for own benefit - No benefit to any company - Wide powers given to director not including power to transfer obligations and allocate profits - Defence that director thought he had such powers not a reasonable possibility - Joint managing director properly convicted as his partner - Act 31 of 1917, sec. 384 (7) - Whether incorporeals capable of being subject of theft - Whether mistaken belief in regard to facts to be a defence must be reasonable. - Whether belief in regard to question of law in same position as one in regard to fact where claim of right put forward - Removal of shares from strong-room in which shares of different companies mixed - Whether stolen from a particular company where none of companies retained real right in them - Company under duty to deliver certain shares to managing directors - Company after selling some not possessed of sufficient shares - Managing directors instructing official of company to credit them with a share of profits in lieu of such obligation - Effect - Fraud - Managing director with power to sell without consulting board selling shares at a price less than he could have obtained - Effect - Duty of managing director to exercise power honestly - Circumstances constituting a conspiracy to commit fraud - Criminal procedure - Trial - Irregularities in - Presiding Judge pronouncing on credibility of Crown witness still under cross-examination - Judge refusing to recuse himself - Accused thereafter not giving evidence - Accused giving this as their reason for not doing so - Invalidity of such reason - Absence of prejudice in circumstances - Sentence - Suspension of - No previous convictions - Ill health. - Serious offences - Refusal of - Appeal - To Privy Council - Stay of execution pending application for special leave - Principles applied by Privy Council in such applications - Privy Council unlikely to grant leave - No statutory power to grant bail - No special circumstances - Refusal of - Companies. - Contravention of sec. 84 (5) read with 84 (2) of Act 46 of 1926 as amended - Company commencing business before obtaining certificate from registrar - Sentence - Severity of - Contravention of sec. 225ter (1) - Publication of a false statement - What amounts to - Mere approval by directors of an already published statement not constituting - Contravention of sec. 70quin, sub-sec (1) read with sub-sec. (2) - Failure by director to disclose interest in a contract entered into with company - Provisions of sub-sec. (3) not an additional element in such offence - No obligation on Crown to prove general notice not given - Act 31 of 1917, sec. 127 (b), - Statute - Interpretation of - Section of Act capable of two meanings - Court to adopt less onerous one.
Rentekor (Pty) Ltd v Rheeder and Berman 1988 (4) SA 469 (T)
- (Company) Directors and officers - Directors - Election of - Validity - Private company owning controlling interest in public company - Private company owned in equal shares by two families - Two members of each family constituting board of directors - Vacancy of board caused by death of one director not filled - Family with majority in number of directors selling its 50% holding to third party and guaranteeing such party that four of his nominees would be appointed to board, and that two further nominees would be appointed as alternate directors - Declared intention of sale was.
Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168
- (Company) Directors and officers - Principal and agent - Director. - Fiduciary relationship to company.. - Sale to company by director of property acquired by him. - Remedies of company. - Claim for profit made. - Prescription. - Amendment of pleadings. - Practice.
S v De Jager 1965 (2) SA 616 (A)
- Directors and officers – Directors - Offences committed by - Fraud by director – Director acting in capacity of shareholder – Meaning of director – fiduciary duties – appointment of puppet director not absolving de facto director from directors’ duties – resignation in such situation found to be a sham.
- Directors and officers – Directors - Resignation of directors – Intention to enjoy limited liability by acting in capacity of shareholder - Resignation of director irrelevant when remaining in control of company through puppet director - director not absolved from directors’ duties – such resignation found to be a sham.
- Directors and officers – Directors – Duties - Director acting in capacity of shareholder appointment of puppet director not absolving de facto director from directors’ duties – resignation in such situation found to be a sham.
S v Pouroulis 1993 (4) SA 575 (W)
- (Company) Offences - Prohibited loans by companies - Section 226(1) of Companies Act 61 of 1973 - Proof of - Offence not one of strict liability - Proof of culpa sufficient to establish the requirement of mens rea.
- (Company) Offences - Prohibited loans by companies - Section 226(1) of Companies Act 61 of 1973 - Ambit of prohibition - Transaction not prohibited by s 226(1) unless it is shown to be a contract of loan between a company and a borrower disqualified in terms of s 226 - Does not extend to transaction in which company makes loan to its holding company which enables holding company to make further loan to a borrower who would have been disqualified by s 226(1)(b) from contracting with first lender to the second borrower directly or indirectly.
Sage Holdings Ltd v The Unisec Group Ltd 1982 (1) SA 337 (W)
- (Company) Shares - Act 61 of 1973 s 39 - Object of to prohibit a company from purchasing or trafficking in its own shares - Scope of section and of s 38 of the Act.
- (Company) Formation and constitution - Character and classes of companies - Subsidiary companies - 'Subsidiary' as defined in s 1 (3) of Act 61 of 1973 - Definition of the circumstances in which one company 'is deemed' to be a subsidiary of another exhaustive - First 'deeming' provision of s 1 (3) (b) also exhaustive - But 'shall be deemed' at end of s 1 (3) (b) does not limit the phrase 'by the exercise of some power' - Effect.
- (Company) Shares - 'Equity share capital and equity shares' as defined in s 1 (1) of Act 61 of 1973 - How to be valued or counted - Court to have regard to share capital account in the case of shares with a par value and to stated capital account in the case of no par value shares.
- (Company) Directors - Articles of association providing that half of the directors to be nominated by holders of one class of shares while the other half of the directors to be nominated by the holders of another class of shares - Directors nominated by each class of shareholder only to exercise one collective vote - Semble: such foreign to basic concepts of our law and subversive of the proper exercise of directors' fiduciary duties.
- (Company) Investigation of affairs of company - Act 61 of 1973 s 258 - Application to Court for order for such investigation - Approach of Court - Principles applicable summarised and supplemented.
Sammel v President Brand Gold Mining Co Ltd 1969 (3) SA 629 (A)
- (Company) Reconstruction of - Take-over scheme - Sec. 103 ter of Act 46 of 1926, as amended - 'Nominee.' - Meaning of - Kinds of shareholders contemplated - Court endowed with a discretion - Extent of - Transferor company insolvent - Interest of creditors paramount - Scheme unfair - Onus of proof - Test - Circulars issued - Contents of - Must not be untrue - Effect of becoming a shareholder - Capital - Reconstruction of granted by Court - Minute registered - Effect - Sec. 49 (4) of Act - Majority of shareholders in transferor company need not be independent or disinterested in transferee company - Fairness of price for shares offered in transferor company - Determination of - Opposition to take-over - Several shareholders joining as plaintiffs - Action unsuccessful - Special order as to costs made - Appellate tribunal's refusal to interfere with Court's discretion exercised judicially - Interest on payment for shares by transferee company - Refusal of.
Ex Parte Schreuder 1964 (3) SA 84 (O)
- (Company) Directors and officers – Director - Offences committed by - Application to be a director in terms of section 68 bis (1)(c) of Act 46 of 1962 – Exercise of the discretion of the court – Intention of Legislature.
Standard Bank of South Africa Ltd v Neugarten 1987 (3) SA 695 (W)
- (Company) Contracts by - Company providing security for another company controlled by one or more of its directors - Prohibition in s 226(1) of Companies Act 61 of 1973 against company providing security for another company controlled by one or more of its directors not applicable where security given with consent of members of company in terms of s 226(2) - Section 226 protecting interests of members of company but also affecting third parties - In interpreting section court to steer a course between interests of both - Word 'consent', to be given broad meaning - No reason why consent cannot be retrospective.
Standard Bank of South Africa Ltd v Ocean Commodities Inc 1983 (1) SA 276 (A)
- (Company) – Shares and shareholders – Shares - Exchange Control - Rhodesian dealers in shares, two brothers, acquiring "external securities" in South Africa - Rhodesian Exchange Control Regulations requiring scrip to be registered in name of a specified nominee bank in Rhodesia - Brothers emigrating to South Africa in June 1975 and given "emigrant status" with permission for shares to be registered in name of South African nominee bank - Brothers selling all their shares to a foreign company - Such company appointing them as its representatives in South Africa - Certain shares sold and others bought by one of brothers on its behalf - Rhodesian Exchange Control authorities requiring South African nominee bank to return all shares to Rhodesian nominee bank - Brothers bringing application for an interdict restraining South African nominee bank from acceding to Rhodesian requirement - Whatever rights brothers had were transferred to foreign company, foreign company the beneficial owner thereof - Banks contending that brothers had tacitly by their conduct given a mandate for the shares to be held by a nominee bank and that foreign company had no greater rights than they - No irrevocable mandate established - Rhodesian Exchange Control Regulations not placed before the Court - Bank's contention that brothers had agreed to hold shares subject to such regulations faling - No evidence sufficient to establish the necessary animus contrahendi for the formation of tacit contracts contended for by banks - Foreign company's claim analogous to the rei vindicatio in respect of property situated within the jurisdiction - South African law the correct lex causae - Nothing in our law to prevent foreign company as the beneficial owner having shares registered in its name. Company - Shares - Registration of - Rhodesian dealers in shares emigrating to South Africa - They selling shares to a foreign company - Right in circumstances of foreign company as beneficial owner to have shares registered in its name instead of that of a nominee bank specified by Rhodesian Exchange Control authorities. Contract - Formation of - Tacit contract - Establishment of - Proof necessary. International law - Correct lex causae - Claim analogous to the rei vindicatio in respect of property (shares) situated within Court's jurisdiction - Law to be applied the lex situs, ie that of South Africa - Even if claim one relating to the contract, and proper law that of Rhodesia, banks' defence to claim based on Rhodesian Exchange Control Regulations which had not been placed before Court and therefore had not been proved. Evidence - Foreign law - Proof of - Where foreign law of a statutory nature, Court to examine statute - Such statute (eg Rhodesian Exchange Control Regulations) should be placed before the Court.
Taylor v Welkom Theatres (Pty) Ltd 1954 (3) SA 339 (O)
- (Company) Winding up order - Application under sec. 111 bis of Act 46 of 1926 as amended - Director and shareholder alleging that a resolution oppressive - Such director displaced as the manager of a theatre - Allegation that deadlock existed between him and, two other directors - Applicant bound by allegations in petition - Company not a partnership - Still possible to carry out main or principle object for which company formed - Board of directors given power to allocate duties to applicant director - If displacement tantamount to summary dismissal, no ground for dissolving company - Director not remediless - No case made out that it was just and equitable that company be wound up.
Thurgood v Dirk Kruger Traders (Pty) Ltd 1990 (2) SA 44 (E)
- (Company) Investigation of affairs of company - Companies Act 61 of 1973 s 266 - Scope of enquiry by provisional curator ad litem limited to investigation of prima facie grounds which applicant has set out in notice served on company - This, however, not preventing curator ad litem from investigating proceedings or relief other than those mentioned in notice where grounds relied on justifying such other related relief.
TJ Jonck BK h/a Bothaville Vleis mark v Du Plessis NO 1998 (1) SA 971 (O)
- (Close corporation) Members - Liability for debts of the close corporation - Section 64 of the Close Corporations Act 69 of 1984 – Claim against liquidator of close corporation for order declaring that O, a member of the CC, is liable to plaintiff for payment in terms of provisions of sec 64 (alternatively sec 65) of the Act – O made loans to CC amounting to more than R 500 000 – appears from financial statements that CC was carrying on business under insolvent circumstances – O actively participated in conducting the business of the CC for a long period of time – Test for reckless or grossly negligent conduct an objective one – Factors that should be taken into account by the court set out – Must be determined whether the individual in question’s actions amounted to reckless disregard of the consequences thereof – A person is party to the carrying on of business if his conduct involves positive steps of some or other nature – member of CC should be held liable even in the absence of positive steps due to the fact that a member has a fiduciary duty towards the CC – O, while aware of the fact that the CC was insolvent and in his capacity as member, granted power of attorney in for the registration of a general notarial bond over all movable assets of the CC as security of his loans to the CC – O also, on behalf of the CC, distanced the latter from all rights against O – O thus manoeuvred the CC in such a manner that he could literally take over its movable assets in a matter of hours – actions by O on behalf of the CC taken to benefit him at the cost of the CC, its continued existence and its creditors – Plaintiff entitled to declaratory order in terms of the provisions of sec 64 of the Act.
- (Close corporation) Legal personality of close corporations – Members’ abuse of juristic personality of close corporation - Section 65 of the Close Corporations Act 69 of 1984 – claim against liquidator of close corporation for order declaring that O, member of the CC, be held liable toward plaintiff in terms of provisions of sec 65 of the Act (as an alternative for an order in terms of sec 64) – O made loans to CC amounting to more than R 500 000. – Clear from financial statements that CC was carrying on business under insolvent circumstances – Application in terms of sec 65 can be made by any interested party or during any proceedings involving the corporation – Concept ‘interested person’ in sec 65 must be interpreted in light of the Legislature’s intention in the drafting of the Act, namely to establish a simpler and less costly juristic entity for single entrepreneurs – Interest restricted to mere financial interest – Creditor of the corporation is such an ‘interested person’ – O registered notarial bond over movable assets of the CC while the CC was already carrying on business under insolvent circumstances – O was aware of this, creditors were not – O secured his loan to the CC by means of the registration of a notarial bond in his favour behind the corporate veil – lessened his own risk – If CC would encounter problems he would be able to take over movable assets over night and left an empty shell as consolation for creditors – O’s conduct amounts to gross abuse of the legal personality of the CC.
Trek Tyres Ltd v Beukes 1957 (3) SA 306 (W)
- (Company) Management - Authority of managing director - No authority to bring application for sequestration of debtor’s estate – Act 46 of 1926 sec 69 – Scope of – Appointment of managing director for a salary – Not allowed to vote – Quorum must exist without his vote
Unisec Group Ltd v Sage Holdings Ltd 1986 (3) SA 259 (T)
- (Company) Formation and constitution - Character and class - Class - Subsidiary companies - "Subsidiary" as defined in s 1 (3) of Act 61 of 1973 - "Some power to appoint" (directors) as intended therein may arise from source outside of articles of association - By virtue of first "deeming" provision, being exhaustive, such power includes potential power to appoint - Not limited to power immediately exercisable. Company - Formation and constitution - Character and class - Class - Subsidiary companies - Relationship between holding and subsidiary companies - Holding company "desubsidiarising" subsidiary company with object of making use of its own funds to purchase its (the holding company's) own shares - Such object unlawful - Scheme to achieve such object in fraudem legis, even if holding company had acted openly and in the belief that what it had done was correct. Company - Investigation of affairs of company - Act 61 of 1973 s 258 - Application to Court for order for such investigation - Question whether there is a well-founded suspicion that some grave impropriety exists - Thus necessary to evaluate allegations and/or denials by company whose affairs are sought to be investigated in order to decide on probabilities.
Utopia Vakansie-Oorde Bpk v Du Plessis 1974 (3) SA 148 (A)
- (Company) General meetings - Who may attend and vote – Preferent shareholders – Right to vote – Act 46 of 1926, sec. 62 quat (4) – “In arrears and unpaid” in sub-sec (4)(a)(1) – Meaning of – “Decision which directly affects a right relating to the shares or the interests of the shareholders of those shares” in sub – sec (4)(a)(ii) – When such rights and interests are affected.
Van Zyl v Loucol (Pty) Ltd 1985 (2) SA 680 (NC)
- (Company) Proceedings by and against - Initiation of proceedings on behalf of company by a member - Act 61 of 1973 s 266 - Whether director of the company can invoke assistance of section - Section mainly introduced to come to assistance of shareholders and in practice minority shareholders who are disadvantaged by virtue of having no access to records of the company - Such not meaning however that a director of a company could not avail himself of this procedure.
Wambach v Maizecor Industries (Edms) Bpk 1993 (2) SA 669 (A)
- (Company) Action against - Negligence - Action for damages - Proof that plaintiff is the owner of the damaged goods – Voorhaker and sleepwa (‘combination’) damaged in accident – Plaintiff the controlling company of a group of companies – Combination acquired by and registered in the name of a wholly owned subsidiary – Combination counted as asset of another wholly owned subsidiary for tax purposes – board of controlling company (Plaintiff) had unfettered right to dispose of assets of subsidiaries – such right does not render the combination an asset of the controlling company – combination remains an asset of the subsidiary until it is alienated to the controlling company – no evidence that the board exercised its discretion to alienate the combination – No proof that plaintiff was owner of the combination – decision in favour of application reversed on appeal.