INTRODUCTION TO MEMBERSHIP AND PROBLEM STATEMENT STEMMING FROM THE COMPANIES ACT 1973
This article considers the following problem. Person A buys shares from person B, and person A elects person C to be entered on the members’ register as their nominee shareholder.Footnote 1 Is it possible for person A to have locus standi [capacity to bring legal action] under South African law, for instance, to rely on the remedies relevant to the protection of minority shareholders’ rights as regulated in section 252 of South Africa's Companies Act 1973 (1973 Act)? Person A is generally referred to in company law as the beneficial shareholder. Person A is the rightful owner of the shares due to the contract of sale (ie under the operation of the law) but their details or identity are not entered in the register, perhaps for personal reasons or due to financial implications.
In Smyth and 40 Others v Investec Bank Ltd and Another (Smyth v Investec), 41 appellants who were beneficial members or shareholders of the respondent (this article refers to the respondents in the singular) approached the court for relief under section 252 of the 1973 Act.Footnote 2 The appellants were beneficial members, since their appointed nominees’ names had been entered in the respondent's register. The legal question was therefore whether a nominee should be the only person to approach a court of law as a member, or whether a member with beneficial ownership of shares could approach the court instead to rely on relief regulated under section 252.Footnote 3 This is an easy question, but, as stated by the court, the answer is fraught with pitfalls.Footnote 4 First, in Smyth v Investec the appellants’ application referred to two contracts adopted by the respondent on the basis of a simple majority vote of the members in a general meeting, as a result of which the contracts were binding on the appellants as minority shareholders. The appellants argued that the future prospects of these contracts were oppressive and, for this reason, they relied on the provisions of section 252.Footnote 5 Before focussing on the provisions of section 252, the court stated very simply and clearly that this section requires that only members who are recorded in the register may rely on section 252.Footnote 6 Under section 105, the term “member” refers to the date when that person's name or identity was recorded in the register; section 1 and sections 103,105 and 109 make no reference to ownership of shares as a qualification for membership or for being able to enjoy locus standi under South African law.Footnote 7 Section 252 also does not refer to ownership of shares as a pre-requisite for using the section; it only makes reference to holders of shares, as referred to in section 102 of the 1973 Act.Footnote 8 In the 1973 Act it is trite law that membership of a company or the definition of membership is regulated by section 103.Footnote 9 The predominant deciding factor is the recording of the name of a member or shareholder in the register of members.Footnote 10
Section 103 of the 1973 Act also states who the members are, including members who incorporated a company and members who received issued shares or an allotment of shares subject to the recording of their names in the register. In addition, section 103(3) declares that a name in the register is assumed to indicate membership; this is explained further in section 109 as prima facie evidence of membership.Footnote 11 This assumption is further elaborated to include individuals acting in an official capacity for members. For example, if a member dies, then for all practical purposes the administrator or executor of the estate is the new member and his or her details should be included in the register.Footnote 12 Although the deceased is no longer a member, at face value, he or she remains a member until such time as the register is updated by the company. If the register is not updated, then section 103(3) makes it very clear that the administrator of an insolvent estate or executor of a testamentary will is neither a member nor a prima facie member of the company.Footnote 13 The date of entering the name in the register is important because the administrator or executor becomes a member of the company on that date, rather than on the date of sequestration, death or otherwise (ie on transfer of the shares to the administrator). Compare this to a share warrant where the holder becomes a shareholder on the date of receiving the share warrant. This latter example falls outside the scope of this article.Footnote 14
This article now considers why holders of shares should include beneficial shareholders. It compares the latter's position in Australia to understand whether or not Australian case law supports this proposition. Finally, the article then discusses South Africa's new Companies Act 71 of 2008 (2008 Act) to understand whether a member could include a beneficial shareholder under that act.
COUNSEL'S ARGUMENTS IN SMYTH V INVESTEC AS TO WHY BENEFICIAL SHAREHOLDERS SHOULD HAVE LOCUS STANDI
The beneficial shareholders in Smyth v Investec (acting as co-appellants or otherwise) argued that, being the rightful owners of the shares, they had an interest or a legal interest to utilise section 252 of the 1973 Act.Footnote 15 In brief, they argued that they, not their individual nominees, would suffer patrimonial loss as a result of the two contracts. It could also be argued that only the beneficial shareholders are the signatories to the company's constitution and the signatories are therefore the actual members of the company. In addition, they argued that section 252 used the words “any member of a company” and that the word “any” implied either nominees and / or beneficial members (as holders of the shares). Rabie J in the lower court held that the word “any” does not include beneficial members, but that it has a specific meaning in law, since it refers solely to those members who are registered as such.Footnote 16 Counsel also argued that a nominee is merely an agent of his principal or the beneficial shareholder and takes instructions from that beneficial shareholder, for example regarding how to vote during company meetings.Footnote 17 The appellants argued further that, under common law, an agent or nominee shareholder has no locus standi to sue or be sued in law and as a result only beneficial members should be allowed to use section 252.
CONSEQUENCES FOR UNREGISTERED MEMBERS IN A PRIVATE COMPANY
Under the 1973 Act, Table B, article 11 merely stated that, if a member of a private company sells his or her shares to another person and ownership has been transferred, the directors of the company may elect to register the person as a member without being obliged to provide reasons should they decide not to do so, ie exercising a pre-emptive right. This may cause difficulty for a person who is the rightful owner of shares but is technically not a member of the company, since there is no registration as such. The consequences of such a refusal are that the person cannot use the section 252 remedy in South Africa. In Australia, derivative or class actions and actions relating to oppressive conduct (where the latter is similar in nature to section 252 of the 1973 Act) allow a member to enforce his or her rights in respect of such conduct on the part of the company. What is clear is that both class and oppressive conduct actions are relevant to former members of the company: members who are no longer registered on the members’ register as members, etc.Footnote 18 In South Africa, section 252 uses the term “member”; as a result, beneficial shareholders and / or former members will simply have no locus standi in South Africa, contrary to the situation in Australia. The reason for this was stated (perhaps obiter) by the South African Supreme Court of Appeal, which held that granting such members locus standi would cause absurdity under South African law.Footnote 19 To rephrase the last sentence, would it really cause absurdity in the law to extend the statutory definition of a member? To answer this question, this article now focusses on the legal principles relevant to a member in Australia.
A BRIEF OVERVIEW OF THE LEGAL PRINCIPLES IN AUSTRALIA FROM 1984 TO THE PRESENT
In Australia, minority protection of members is simply known as oppression. Although the Australian Corporations Act 2001 (Corporations Act) defines a member as a person whose name has been entered on the members’ register, a shareholder who is not duly registered as such may still continue to enjoy locus standi under the law, for example as a former member.Footnote 20 A former member is regulated by section 234 of the Corporations Act: such a member may make use of the remedies relevant to minority protection.Footnote 21
Before focussing on section 234, this article presents a brief history of the Australian court's reasoning, to clarify why the members’ register is not so important for establishing locus standi in Australia.Footnote 22 This is a unique circumstance when one considers the South African legal position under the 1973 Act and its emphasis on a members’ register. In 1990, minority protection or oppression was regulated in Australia under section 320 of the National Uniform Companies Code (WA) 1984 (NUCC, consisting of 581 sections). Before considering section 320, it should be noted that section 256 of the NUCC regulated members’ registers and the like. Section 256(1) states: “[a] company shall keep a register of its members …”, while section 320(2) states:
“If the Court is of opinion -
(a) That affairs of a company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members … or in a manner that is contrary to the interest of the members as a whole;
(b) … the Court may … make such order or orders as it thinks fit, including, but without limiting the generality of the foregoing, one or more of the following orders: …
(e) an order of the purchase of the shares of any member…”.
Section 320 refers to “members” and the order a court may make when a member is oppressed by the affairs of a company. The following section focusses on the importance of a members’ register in respect of locus standi.
The importance of a members’ register in Australia to allow for locus standi
Section 320 uses the term “member”. Should “member” be interpreted under section 256 for a person to enjoy locus standi pertaining to oppressive company conduct? To consider the meaning of “member” it is also important to make reference to the Common Wealth Act or the Companies Act 1961 relevant to Western Australia, while furthermore keeping in mind the Companies (Applications of Law of Australia) Act 1981. Although these pieces of legislation are all highly technical in their individual applications, they remain relevant to a discussion of the oppressive remedy. The Common Wealth Act regulates members in section 16(5), which clearly states that the name of a member of the company must be entered on the members’ register and that they shall be a member of that company.
Section 96 places no duty on the company to update its members’ register; only upon receiving a written request from the transferor of shares will the company update its register with the name of the transferee. It seems that the members’ register is not the sole instrument to identify a company's members. The true members of a company are regulated under section 92(1) of the Common Wealth Act, under which the possession of the share certificate is prima facie evidence of membership and as a result gives the possessor of the shares locus standi under the law. These latter statements were not discussed in Re Spargos Mining NL (Spargos),Footnote 23 highlighting the fact that a members’ register should not be the most important document to determine locus standi. When one reads this case, it is clear that the court never mentioned the relevance of a members’ register to enjoying locus standi when using section 320 of the NUCC.Footnote 24 Although the Spargos report consists of approximately 54 pages, these pages illustrate whether or not the different Spargos share dealings or transactions were oppressive to its members. The member or applicant under section 320 was supported by the National Companies and Securities Commission.Footnote 25 Murray J did not dismiss the commission as an intervener or co-applicant in this regard and it is clear that the commission was not a member of Spargos. For example, the commission relied on previous Spargos share transactions with Horizon Ltd during 1989 that were perceived to be oppressive due to a stock exchange rule that was being formulated at that time by the Australian Stock Exchange.Footnote 26
Other Australian case law that supports locus standi without reference to a members’ register
Spargos therefore serves to exemplify the point that it was not a requirement under section 320 that the applicant should have been a registered member, or member, during the time the oppression took place (from 1987 onwards) to enjoy locus standi in an Australian court.Footnote 27 Another example is David Jenkins v Enterprise Gold Mines (Jenkins v Enterprise), where Jenkins used the oppression remedy (section 320) when he was not yet a member of the company; in other words he made use of section 320 for transactions that had happened in the past although his name had not yet been recorded as a member in the register at that time.Footnote 28 He argued successfully that those company transactions had been oppressive.Footnote 29
In brief, Jenkins held 27,000 shares in Enterprise Gold Mines, of which he had purchased 2,000 in October 1987 and 25,000 in March 1988. Between 1987 and 1989 the board of directors lost approximately AUD 45m in business transactions. Jenkins argued that the loss in value of his 27,000 shares was the result of oppressive conduct from the 1987 transactions.Footnote 30 It is clear that Jenkins had not been a former member or registered member of the Enterprise Gold Mines company in 1987, yet the Supreme Court of Appeal granted Jenkins locus standi to argue section 320 successfully.Footnote 31
From these cases, it is evident that inclusion in a members’ register was not a pre-requisite for an applicant to make use of section 320 of the NUCC.Footnote 32 As a result of these cases, the Corporations Act was promulgated in 2001 and clearly reflects these cases in providing that emphasis should not be placed on a members’ register per se. For example, section 231 of the Corporations Act defines a “member”, while the persons who may use the oppressive remedy are further regulated in section 234. Section 231 states: “[a] person is a member of a company if they: … (b) Agree to become a member of a company … and their name is entered on the register of members …”. Section 234 states:
“An application for an order under section 233 in relation to a company may be made by:
(a) A member, even if the application relates to an act or omission that is; (i) Against the member in a capacity other than as a member; …
(b) A person who has been removed from the register of members …
(c) A person who has ceased to be a member of the company …
(d) A person to whom a share in the company has been transmitted by will or operation of the law;
(d) A person whom ASIC thinks appropriate having regard to investigations … into the company's affairs.”
It is therefore clear that an oppressive remedy is not restricted to the members on the members’ register. ASIC is the acronym for the Australian Securities and Investment Commission, previously known as the National Companies and Securities Commission, and ASIC may make use of section 234 as an applicant to investigate oppressive company affairs.Footnote 33 The next section examines the implications for a person who is a director of the company and relevant oppressive remedies.
A director and the relevance of a members’ register
Besides ASIC, the identity of the other applicants who may use section 234 is also largely based on the House of Lords judgment in Ebrahimi v Westbourne Galleries (Ebrahimi).Footnote 34 In this case two directors were managing the company until they transferred some shares to a third person nearly 30 years after they had started the business.Footnote 35 The third person and one director voted the other director off the board, effectively removing him as a director of the company. The appellant requested the court to rule that the current two directors should purchase his shares (oppressive remedy) or alternatively that the company should be wound up.Footnote 36 The House of Lords referred to the UK Companies Act 1948 (the UK 1948 Act),Footnote 37 section 26 of which defines a “member” as a person who is entered as such on the members’ register.Footnote 38 What is interesting is the fact that the appellant was effectively sidestepped and thereby prevented from participating in the company's profits, or from taking part in its management or future management. Although the respondent argued a difference between the terms “member” and “director” to avoid the company being wound up, the House of Lords held that, under these circumstances, it was just and equitable to wind up the company.Footnote 39 It is unreasonable for a member or director of such a company to have no prospect of managing or sharing in the company's profits, especially if the shareholder was one of the founders of the business.Footnote 40
For this reason, to buy back shares and not participate in the future profits or management of the company was not the appropriate remedy for this type of oppressive conduct.Footnote 41 In this regard, the appellant was more affected in his capacity as a director of the company than as a member or shareholder; therefore winding up was the appropriate remedy, and the House of Lords did not place any emphasis on a members’ register.Footnote 42 Furthermore, section 233(1) of the Corporations Act makes provision for the winding up of a company as part of the oppressive conduct remedy and it is not separately regulated as in the UK 1948 Act.
Section 233 contains no “just and equitable” terminology, as in the UK 1948 Act. Today, it is simply left to the discretion of the Australian courts to wind up a company based on oppressive conduct.Footnote 43 The oppressive conduct remedy in Australia is not only intended for members who are listed in the register but also applies, for instance, to a director who experiences oppressive conduct in his capacity as a director instead of as a member, even if the director is not a member of the company. This gives meaning to section 234(a), as set out above.Footnote 44
AN EXAMPLE OF UNSUCCESSFUL OPPRESSIVE CONDUCT IN A CAPACITY OTHER THAN A MEMBER
In Re Bellador Silk Ltd Footnote 45 the applicant was a director and member of Bellador Ltd who relied on the oppressive remedy under section 210 of the UK 1948 Act to remove certain co-directors from office. In addition, the applicant also insisted on managing Bellador and on making sure that another company would receive payments for loan agreements entered into with Bellador. What is strange about this case is the fact that the other company was also managed by the applicant. In short, the applicant's petition to remove certain directors of Bellador was based on oppressive conduct whereby he would manage the company in order to make payments to the other company.Footnote 46 It is interesting that Plowman J also considered, obiter, winding up the company on the basis of principles relevant to justice and equity.Footnote 47 The court held that a winding up order would have been successful since it was no longer possible for the directors to work together. However, during cross examination the actual reason why the applicant relied on section 210 of the UK 1948 Act emerged: it was to make sure that the other company (of which he was also a director) would receive payment as a collateral capital purpose. For this reason, the court held that the section 210 application was made in bad faith as it was used to secure future payments of loans.Footnote 48 This loan had to be paid by Bellador to the other company because of an agreement the company had entered into with the Inland Revenue to settle a tax claim. If this company did not pay the tax on a certain future date, the applicant would suffer financial ruin.Footnote 49 The court held that section 210 could not be used for reasons other than oppressive conduct and that this application was, in short, an abuse of legal process.Footnote 50 On this basis (and the underlying intention to compel payment to another company as a method for the latter to honour the Inland Revenue tax claim), the court had no difficulty in dismissing the application.Footnote 51
Beneficial shareholder under the Corporations Act
It should be noted that section 234 of the Corporations Act makes no reference to a beneficial shareholder or beneficial member. This terminology is also used in Australia and is applied in the same way as in South Africa, ie by entering the name of the nominee member in the register. The wording of section 234(a) is so inclusive that it could include beneficial shareholders in making use of oppressive conduct remedies.
A practical example would be that of infants who cannot by law enter into valid contracts, but nevertheless their names could be entered in the register as members of a company while the beneficial member or shareholder is the parent, since this action depends solely on the family estate planning needs of the infant's parents. If one follows the South African approach in the 1973 Act, this would simply mean that, in the event of oppressive conduct, the infant (not the parent) would have locus standi in the law in circumstances where the name of the infant appears in the register.Footnote 52
From this explanation of the Australian legal principles, it is difficult to understand why Smyth v Investec held that extending locus standi to members other than registered members would lead to absurdity in the law: in Australia a shareholder can make use of relevant remedies even if the shareholder's name is not recorded in the register (as discussed above in Jenkins v Enterprise) and the court did not consider it an absurdity in law. In fact, as observed above, the Australian approach is neither absurd nor has it caused any absurdity in its legal system. In addition, the Australian government is currently exploring options for a separate beneficial ownership register for companies to disclose the names of beneficial shareholders.Footnote 53
However, the legal implications for beneficial shareholders, unlike in South Africa, are further regulated in section 232 of the Corporations Act. This section states that, even if a person inherits a share or acquires one by operation of the law (such as in a contract of sale) and even if their name does not appear on the members’ register, that person is simply taken to be a member of that company to allow a court to make an appropriate order related to oppressive company conduct.Footnote 54
Furthermore, a trustee of a trust could also make use of the oppressive conduct remedy even if the trustee is not a shareholder of the company per se, but is acting on behalf of a shareholder trust as a result of oppressive conduct towards the trust.Footnote 55
Can a majority shareholder make use of the oppressive conduct remedy?
It is also possible for a majority shareholder to make use of the oppressive remedy if he or she is oppressed by a minority shareholder in the company.Footnote 56 In Vujnovich v Vujnovich (Vujnovich), three brothers managed a company in New Zealand; one of the brothers was involved in the daily management of the company, while the other two were passive.Footnote 57 The brother who actively managed the company diverted the company's profits to another company and effectively excluded the other brothers from sharing in any company profits. The applicant argued that this was done to put pressure on them to sell their shares to the brother who actively managed the company.Footnote 58 This case constitutes an example of where the majority shareholders relied on the oppressive conduct remedy.Footnote 59
THE RELEVANCE OF SMYTH V INVESTEC IN THE 2008 ACT
Section 1 of the 2008 Act defines a “member” as well as a “shareholder”. A “member” has reference to close corporations and / or not for profit charity companies etc, while a “shareholder” is defined as a person who is entered as such in the certificated or uncertificated register of shareholders.Footnote 60 Further, section 57(1) states that the term “shareholder” also includes any person who is entitled to exercise any votes in relation to a company.
Section 163 of the 2008 Act (equivalent to section 252 of the 1973 Act) regulates minority protection remedies relevant to oppressive or prejudicial conduct and is relevant to shareholders and / or directors of a company. A director does not necessarily own shares in a company unless his or her position requires the acquisition of shares. In this regard, it is possible to argue that a director will have locus standi to use section 163 of the 2008 Act even if he or she is not a shareholder of the company and his or her name has not been entered in the register of shareholders. It is also possible to use section 57(1) to argue why a beneficial shareholder has locus standi to use section 163, since it relates to “any person”.Footnote 61
Although section 57(1) deals with the governance of companies, it could be used to indicate the intention of the legislature to include beneficial shareholders to give meaning to “shareholders”. Furthermore, section 163 states:
“(1) A shareholder or a director of a company may apply to a court for relief if -
(a) any act or omission of the company, or a related person, has had a result that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant;
(b) the business of the company, or a related person, is being or has been carried on or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant; or
(c) the powers of a director or prescribed officer of the company, or a person related to the company, are being or have been exercised in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the applicant.”
It is thought-provoking as to why the legislature included a director, since a director is not always a shareholder of a company. In this regard, a non-shareholder may make use of the oppressive remedy in the 2008 Act. The consequences of the latter interpretation are discussed in the following section.
Beneficial shareholder or director and other possible interpretation options for section 163
In addition, it seems that a shareholder register will play a less important role in the future to establish locus standi for beneficial shareholders in South Africa. It is possible that a director could be a beneficial shareholder and enter the name of a nominee shareholder in the register.Footnote 62 In this regard, the director would have locus standi to make use of section 163(1)(a).Footnote 63 In addition, a beneficial shareholder is entitled to vote, since section 57(1) makes provision for “any person”. In this regard, a nominee shareholder and / or beneficial shareholder should be interpreted as “any person” since the intention of the legislature, in this regard, is not to differentiate between a beneficial shareholder and a shareholder on the basis of a register. If this interpretation is acceptable from a South African perspective, it could imply that the term “shareholder” in section 163 could also include beneficial shareholders to make use of the provisions of section 163.Footnote 64 This would be similar to the Australian position under section 234(a) of the Corporations Act, as discussed above. To explain the latter interpretation further, section 163(2) states:
“(2) Upon considering an application in terms of subsection (1), the court may make any interim or final order it considers fit, including - …
(b) An order appointing a liquidator, if the company appears to be insolvent; …
(f) An order -
(i) appointing directors in place of or in addition to all or any of the directors then in office; or
(ii) declaring any person delinquent or under probation, as contemplated in section 162;
(g) an order directing the company or any other person to restore to a shareholder any part of the consideration that the shareholder paid for shares, or pay the equivalent value, with or without conditions …”
Section 163(2)(g) states that a court has the power to restore the value of the shares paid by a shareholder. It is clear that only a beneficial shareholder will have paid for shares, not a nominee shareholder. It is unclear whether the court would be willing to interpret section 163(2)(g) for past or previous transactions in a fashion similar to Jenkins v Enterprise discussed above. But this case could be relevant, since section 163(2)(g) relates to the value of shares, which could be influenced by past oppressive conduct. Furthermore, section 163(1) applies the word “interest” to the applicant.Footnote 65 In this regard, only the interests of a beneficial shareholder could be oppressed or disregarded by a company; the term is not relevant to a nominee. A nominee is not the rightful owner of the shares and therefore has no interest, legal, financial or otherwise, in those shares.Footnote 66
The author hopes that a South African court will focus on the legal position in Australia to grant a section 163 remedy to the company's beneficial shareholders, since section 163 also makes provision for a director who is not a shareholder of the company. It is clear that, contrary to Smyth v Investec, such an interpretation would not lead to absurdity when referring to the case law of Australia, as discussed above.Footnote 67 Section 163 (it seems) is not only relevant to minority shareholders; a majority shareholder could also make use of section 163, since section 163(1) uses the term “shareholder” and not “minority shareholder”, as long as the conduct of the company or a related person is oppressive with respect to the interests of the shareholder(s), ie under section 163(1)(b).Footnote 68
In this regard, the interests of majority shareholders as illustrated in Vujnovich Footnote 69 could be accommodated by section 163 of the 2008 Act, if employed by an applicant(s) for a remedy against oppressive conduct. Although section 163(2)(b) is relevant to winding up, it is dissimilar to the circumstances explained above as illustrated in Ebrahimi.Footnote 70 Section 163 could only be used as an oppressive remedy to wind up a company if the company is insolvent, not when a director is excluded from future management or future prospects of sharing profits on just and equitable grounds.
The author cannot identify a valid reason as to why only insolvency should be statutorily regulated in section 163, nor why just and equitable winding up has been excluded. Possibly section 163(2)(f)(i) could be used, instead of the principle of just and equitable grounds (as discussed earlier in Ebrahimi, in which the company was wound up), to re-appoint the person as a director of the company following oppressive conduct, and / or even to appoint additional directors (or the board), but the content of this sub-section is not entirely clear. Only time will tell whether the latter interpretation would hold sway. In general, a more conservative interpretation is preferred for section 163(2)(f)(i).Footnote 71
CONCLUSION
This article has attempted to explain why the term “member” in South Africa's previous 1973 Act, which included a “shareholder” (as defined in the new 2008 Act), should be extended to include a beneficial shareholder.Footnote 72 The article has indicated the relevance of section 57(1) as a reason or guiding principle why “shareholders” should include beneficial shareholders in the 2008 Act. Also, 163(2)(g) of the 2008 Act makes provision to restore any consideration paid for shares; it is clear that only beneficial shareholders, not nominee shareholders, will have paid for company shares. If this reasoning is to be followed, the arguments presented by counsel in Smyth v Investec as to why beneficial shareholders should enjoy locus standi because they are the ones who enjoy financial, legal or other interests would be more relevant to support section 163(2)(g) to allow for an oppression remedy.Footnote 73 The latter interpretation is also not contrary to the Australian case law examples discussed in the article.Footnote 74
On the other hand, it is unclear from a South African perspective why a liquidator should be appointed as part of an oppression remedy when the company is insolvent. In this regard, the reasoning in Ebrahimi is preferred due to the directors’ inability to work together as one team in the future. The working together principle is more important than insolvency as a reason to wind up a company, as illustrated in Ebrahimi.
Section 163 should be able to allow a majority shareholder to make use of its provisions in times of oppression, since the 2008 Act does not define a “shareholder” with exclusive reference to his being a minority shareholder.Footnote 75 It is also unclear whether section 163 could be used for past oppressive company decisions or conduct; Jenkins v Enterprise could convince a South African court otherwise.
CONFLICTS OF INTEREST
None
