COMPANY

Facts: KMSG Outsourced Services CC was the supplier of KN95 face masks. Lluvia (applicant) ordered a large quantity of these face masks for which it paid KMSG the amount of R5,079,619. The face masks were sold without any regulatory approval, which is required for KMSG to have sold the face masks. Lluvia instituted an application against KMSG to recover the said amount. The court granted summary judgment against KMSG in the amount of R5,079,619. When the Stassens (the only two members) did not honour the court order, Lluvia instituted liquidation proceedings against KMSG. The liquidation application was heard and granted. Unbeknown to Lluvia, KMSG had, in the meantime, applied for its own voluntary winding up by means of a resolution. It was indicated that KMSG had no assets other than stock valued at R10,000. It is self-evident that, with that being the only asset in the estate and Lluvia’s claims amounting to R5,079,619, there is no prospect of any dividend.

Application: Lluvia instituted the present application to hold the Stassens liable in terms of section 64 of the Close Corporations Act 69 of 1984. Section 64(1) of the Act contemplates three standalone grounds upon which a person can be held personally liable for a close corporation’s debts, i.e. if he/she acted recklessly, with gross negligence or with the intent to defraud. It is emphasised that the Stassens have conceded that their conduct was negligent, albeit that they deny that they were grossly negligent.

Respondent’s recklessness: It is not disputed that the face masks sold by KMSG did not carry the necessary regulatory approval. The Stassens concede that KMSG was at least required to determine whether the importer of the face masks had the necessary authority to import, sell and supply the face masks. KMSG did not have a permit to on-sell the masks. Due to KMSG’s non-compliance with the statutory provisions, the NRCS subsequently ordered the face masks’ destruction, rendering them worthless. The respondents, having conceded that they were negligent, do not agree that they were grossly negligent. They style their conduct to have been an “oversight on their part”. It was submitted that KMSG held themselves out as specialist suppliers of face masks and personal protection equipment in general. The Stassens’ liability is aggravated given that they were transacting with, and in fact profited from, much needed and lifesaving medical equipment. Aside from the statutory provisions, it was submitted that, from a moral and ethical perspective, anybody who deals with medical products has an elevated duty to ensure that those medical products are safe and compliant. To sell such equipment as an aid to prevent Covid-19 in the middle of the epidemic adds insult to injury.

Findings: The respondents’ non-compliance with the statutory provision amounts to criminal conduct, which carries with it a fine and even imprisonment. KMSG was part of a group that specialised in protective equipment and this was at the core of its business for quite some time. They should have satisfied themselves that they were entitled to import, or sell, or supply the K95 face masks. The conduct of the Stassens did not equate to that of mere negligence. They should have acquainted themselves with the statutory provisions pertaining to their business before they embarked thereon. Taking into account every aspect of the Stassens’ conduct cumulatively, including the strategic delays, they certainly conducted the business of KMSG recklessly, not only in the sense that they did not comply with the law with regard to the K95 face masks, but also in that they strategically delayed the hearing of every facet of the matter from the company level to the present level, so as to avoid liability and to minimize the assets available for distribution upon liquidation.

Order: The respondents, in their personal capacities are jointly and severally liable for the debts of KMSG owing to the applicant. The respondents are to pay the applicant the amount of R5,079,619.

VAN NIEUWENHUIZEN AJ

Facts and issue: The applicants seek an order on an urgent basis setting aside the resolution adopted by the respondents dated in which 3rd and 4th respondents were appointed directors of the company; setting aside the resolution in terms of which the first applicant was purportedly removed as a director of the company; and that the company be placed under supervision and business rescue in terms of Section 131 of the Companies Act number 71 of 2008.

Removal: It is the applicant's case that a shareholders meeting was called which did not comply with the Act read with the MOI also that Paladar as a shareholder did not waive the irregular status of that meeting. In their answer the respondents say that the meeting was convened in terms of section 60 of the Act. At paragraph 201, Buthelezi says that no shareholders meeting was convened but that a resolution was submitted to Paladar and Muzweni for consideration. The response by the respondent is contradicted by the wording of the notice calling for that meeting it refers to a shareholders meeting and nothing else. The notice sent to Paladar and to the third and fourth respondents called for a shareholders meeting. It did not require their shareholders to consider a resolution and vote thereon. Section 60 is not applicable. The respondents are trying desperately to avoid the consequences of an unprocedural and invalid meeting. The shareholders meeting that took place, at which meeting a resolution was adopted removing the first applicant as a director was unprocedural. The resolution taken at that meeting is set aside and declared null and void.

Appointment and business rescue: The respondent recommended the third and fourth respondents for appointment as directors. The applicant knew what his right were and decided not to lodge an objection towards the appointment of the third and fourth respondents. He embraced their appointment by his further conduct post their appointment. He did not act swiftly and as he did with his removal as a director of the company. The appointment of Brews and Packham, despite having taken place at an improperly convened meeting, has now been ratified by the silence and acquiescence of Paladar. Their appointment must stay. The applicant failed to prove that the company is financially destressed and can therefore not be placed under business rescue. The IPP agreement has been in place for over three months with the applicant wilfully participating. It was only after his removal as a director that he now says that the IPP contract is causing financial loans to the company. He does not explain why he did not see that earlier. Quite to the contrary, the respondents have been able to demonstrate that the company’s financial position is healthier than before.

Order: The resolution in terms of which the applicant was removed as a director is declared invalid and is set aside. The sixth respondent is directed to amend its records to reflect the first applicant as a director. The application to declare the appointment of the third and fourth respondents as directors is dismissed. The application to place the fifth respondent under business rescue is dismissed.

Facts and issue: Desert Oil issued an application for interlocutory interdictory relief on a truncated timeline. In its notice of motion, Desert Oil requests that the court interdicts and restrains the respondents from entering into a fuel supply agreement with Total and/or with any person other than the applicant; implementing any fuel supply agreement which may have already been concluded with Total or with any other party; and in any way interfering with, hindering or preventing the ongoing supply of fuel by the applicant to the business, including but not limited to, ceasing the operations of the business.

Discussion: Desert Oil asserts that it has a prima facie right on the basis that the agreement with the Old OP company affords it the exclusive right to supply fuel at the OP Filling Station, for a period of 20 years, with the agreement expiring in 2036. It furthermore contends that the agreement was revived after the caretaking periods came to an end. The sending out of the RFP is indicative of conduct that may be proven to be unconscionable abuse as no other inference can be drawn as that the respondents are intent to secure a benefit by entering into an agreement with another wholesaler. That much is clear from the wording of the RFP. Desert Oil has furnished proof which, if uncontradicted at trial, would entitle it to the final relief that the respondents’ conduct could amount to an unconscionable abuse of the juristic personality of the first respondent as a separate entity, as contemplated in section 20(9) of the Companies Act 71 of 2008. The respondents’ version does not cast serious doubt on Desert Oil’s case.

Findings: Desert Oil satisfied the requirement that it has a clear right to the relief it seeks. According to Desert Oil, it would suffer irreparable harm if the relief were not granted as a new agreement between the New OP company and Total (or any other oil major) will defeat Desert Oil’s rights under the agreement. The respondents do not contest Desert Oil’s assertions, save to insinuate that a damages claim would be adequate redress. Desert Oil convincingly satisfies the second requirement that it would suffer irreparable harm if the relief were not granted as an order in the action would not undo Desert Oil’s harm. The court is not persuaded that damages would be an appropriate remedy.

Order: The respondents are interdicted and restrained.

Facts and issue: The applicant brought an application for the winding-up of the respondent in terms section 344(f) read with section 345(1)(a)(i) and section 345(1)(c) of the Companies Act, 61 of 1973, on the grounds that the respondent is deemed to be unable to pay its debts or is commercially insolvent. The genesis of the respondent’s alleged insolvency may be traced from an agreement which was concluded between the parties, wherein the applicant agreed to rent out buses to the respondent to transport scholars and non-scholar passengers.

Discussion: The applicant demanded through a letter sent to the respondent, payment of the outstanding amounts. The respondent only made its first rental payment three months after the applicant had issued its first invoice to the respondent. The applicant served a letter to the respondent in terms of subsection 345(1)(a) and 345(1)(c) of the Act, demanding payment of the debt. The respondent failed to settle the debt owed to the applicant, despite the demand to do so. The applicant contended that it does not hold security for the debt owed by the respondent and the respondent does not seem to possess movable assets exceeding the claimed amount. It would be to the benefit of other creditors if the respondent is liquidated. The respondent failed to advance a bona fide explanation on why it did not offer to tender security or make good of the debt, even after it was invited by the applicant to provide security.

Findings: The applicant has established the respondent’s indebtedness, and the respondent has failed in rebuttal, to show that its indebtedness is indeed disputed on a bona fide and reasonable grounds. The applicant has established that, it is a creditor of the respondent in the sum of no less than R100. There is also no dispute that the respondent has not paid or secured any amount to the applicant after receiving the demand in terms of s 345(1)(a) for more than three weeks. All the requirements for a liquidation order have been met, including the formalities prescribed by section 346 of the Act.

Order: The respondent is placed under provisional winding-up in the hands of the Master.

Facts: Routemaster (applicant) relies on a series of written loan agreements with Retro Active (respondent). Under an initial agreement, Routemaster advanced R12,5 million. Under a further agreement, Routemaster advanced a further amount of R9,057,289.25 for other business interests of Retro Active. Routemaster provided Retro Active with a total capital amount of R21,557,289.25. The loans are unsecured. Retro Active made two repayments to Routemaster, totalling R230,000. Retro Active’s indebtedness was further reduced when Routemaster credited it R728,000 for a separate property transaction. The parties also agreed to reduce the return on the loan from 35% to 30% per annum. Accounting for the repayments and the agreed reduction in return, Routemaster’s profit and loss statement shows that Retro Active owes it R29,493,130.09. In a series of emails and a draft agreement to consolidate their transaction, Retro Active’s sole member, Mr Boolay, accepted the accuracy of Routemaster’s calculation of the amount owing. While the consolidation agreement was not concluded, the draft terms are an admission by Mr Boolay of Retro Active’s liability for R29,493,130.09, which was payable by December 2022. By May 2022, relations soured, with Retro Active refusing to repay anything but the capital and refusing to sign the consolidation agreement.

Application: This is the return date of a provisional order of winding-up of the respondent. The application is made by Routemaster, supported by the intervening party, SJP Investments CC (SJP) and opposed by Retro Active.

Discussion: Mr Boolay’s subsequent affidavit compounds his dishonesty with implausible excuses and falsehoods. For example, he claims that the amount Retro Active owes to SJP "does not represent an actual debt". In fact, SJP’s uncontested claim is that it lent Retro Active R90 million, of which R59,396,918 is secured, and that the debt is "due, owing and payable". Mr Boolay also stated that SJP intends to intervene on the return date to oppose the winding up of Retro Active. In fact, SJP intervened to seek a final order of winding-up against Retro Active if Routemaster’s provisional order is not made final. After the provisional liquidation order had been granted, the joint liquidators of Retro Active applied to the Master of the High Court for an extension of their powers to proceed with certain incomplete sales of immovable property. As a prerequisite to consenting to the transfers in the absence of a final order, the Master requested Mr Boolay to confirm that Retro Active will not oppose a final order. Mr Boolay gave the Master written confirmation that Retro Active will not oppose the granting of the final order. That undertaking was false. Two days earlier, Mr Boolay had filed an opposing affidavit in this application. At the hearing, Retro Active’s attorney continued to argue in opposition to a final order.

Findings: Perjury is the unlawful and intentional making of a false statement by a person who has taken the oath or made an affirmation in a judicial proceeding. It is a serious offence against the administration of justice. Retro Active says it can pay its debts when they become due. It denies that its debt to Routemaster is not owing. However, Routemaster has established that Retro Active’s admitted indebtedness for the capital of R21,557,189.25 has been owing since the end of December 2022. The failure of a debtor to pay an admitted debt is sufficient to demonstrate the insolvency of the respondent, such failure being prima facie proof of an inability to pay its debts. Retro Active’s own management accounts show its inability to pay its debts. Retro Active has not provided credible evidence that it can pay its debts. Retro Active’s management accounts are unsubstantiated and inconsistent with the facts before the court. None of the claimed asset values are supported by an independent valuation. They appear inflated. It has been proved that Retro Active cannot pay its debts. SJP’s intervention was reasonably necessary to protect its interests, and it is entitled to a costs order.

Order: Retro Active CC is placed under final winding up. The costs of the application are to be costs in the liquidation, to be recovered by the applicant and the intervening party (SJP) on a scale as between attorney and client. The Registrar is directed to refer the matter to the Director of Public Prosecutions to investigate Mr Boolay, the member of Retro Active CC, for the offence of perjury.

PASCHKE AJ

Facts and issue: The applicant brought an urgent application to place the respondent under business rescue as envisaged by section 131 of the Companies Act 71 of 2008. Unbeknown to the court, the intervening party was a creditor of the respondent, and the court granted the application placing the respondent under business rescue. The affected party (Standard Bank) filed a notice in terms of Rule 6(12)(c) of the Uniform Rules of Court for the reconsideration of the order. Mr Du Preez for the affected party, stated that the Bank is an affected party and ought to have been given notice of the application to place the respondent under business rescue.

Discussion: The fact of the matter is that the Bank is an affected party who was not given notice of the application to place the respondent under business rescue. In terms of section 131 of the Companies Act 71 of 2008, an affected person may apply to a court at any time for an order placing the company under supervision and commencing business rescue proceedings. An applicant must serve a copy of the application on the company and the Commission; and notify each affected person of the application in the prescribed manner. In this context, the Bank was denied its audi alteram partem right to participate. Accordingly, the overarching interests of justice dictate that the order ought to be set aside on this basis alone. It is therefore not strictly necessary for the court to pronounce authoritatively whether the Bank was a party whom an order was granted for purposes of setting aside the order.

Findings: The court is entitled in terms of Rule 42 to mero motu rescind its order if it was erroneously granted. The order is susceptible to be recalled and set aside because of the failure by the applicant to give the Bank notice as envisaged by Section 131(1) read with Section 128(1) of the Companies Act. Concomitant with the fact that the Bank was denied its audi alteram partem.

Order: The order is recalled and set aside.

Facts: The applicant had received a notice of the meeting of the Board of directors in terms of section 71(2)(a) of the Companies Act 71 of 2008 accompanied by the Board’s resolution in terms of section 71(3). It was discussed and agreed that the applicant would procure quotations for renovations intended for the reception area of Mimosa Court. The applicant emailed three quotations from three contractors. It then came to light that Mr Higgins of Joinery Marble Worx had procured a quotation from The Design Empire (as opposed to the applicant procuring it himself) and that Mazz Interior and Projects was a company based in Thailand. The second respondent (Fanaroff) requested an explanation as to why the quotations presented and provided by the applicant were obtained by Mr Higgins, and why Joinery Marble Worx was suggested as the preferred contractor. The applicant informed the Board members of his denial of the allegations that the quotes were manipulated or influenced, and furthermore, denied that he had committed any unethical or dishonest conduct.

Application: The Board of Directors held a meeting on the Zoom platform at 16h00 on 11 March 2024 whereby it was resolved to remove the applicant as a director of the company. The applicant seeks a review of the Board's decision as well as reinstatement as director of the company and further relief. The respondents raise that the application is brought out of time in that section 71(5) requires that an application for review must be brought within 20 business days after the Board has determined that the director was negligent or derelict. Fanaroff states that the decision was taken by the Board on 11 March and the application was brought on 16 April, outside the 20 business day period, which would have lapsed on 11 April.

Discussion: The discussion commences with a consideration of the wording of section 71(5), which clearly states that once a Board of a company determined, in terms of section 71(3), that the director is ineligible or disqualified or, inter alia, negligent or derelict, the director concerned may apply within 20 business days to a court to review the determination. The applicant’s reply to the averment that the application is out of time is that the application was indeed launched within 20 business days of it coming to his notice that the Board had apparently resolved to remove him as a director. Counsel for the applicant argued that the 20 business days commence to run from the time that the applicant obtains formal knowledge of the Board’s decision and this would only occur once he received the resolution and deliberations or record of the meeting. Until the formal notification occurs, so the argument goes, the 20 day period referred to in section 71(5) is not triggered. The applicant’s counsel motivated this submission on the basis that if the applicant is unaware of the outcome or determination of the meeting, then he would not know whether to take the decision on review or not.

Findings: The language of the sub-section makes it quite clear that the significant moment or event which triggers the commencement of the time is the determination or decision of the Board of the company as referred to in section 71(3) to remove the director. The applicant is afforded the benefit of the doubt and in all probability, he obtained knowledge of the Board’s determination the day after the meeting. In the ordinary determination of section 71(5), the 20 business day period is triggered on the Board’s determination (11 March 2024) and the calculation of the period thus commenced on 12 March 2024. Thus, having regard to section 5(3), the last day to have delivered the review application was 11 April 2024. The application was delivered late and thus outside the prescribed 20 business day period, and as the section and the Act do not afford the court a discretion to condone the non-compliance, the argument by counsel for the respondents that the application falls to be dismissed is thus sustained.

Order: The application is dismissed with costs.

PANGARKER AJ

Facts and issue: Application for the final, alternatively provisional winding up of the respondent, Expert Machining and Engineering. The applicant, Ridgeback Engineering Supplies, is a creditor of the respondent. The debt arose from goods sold and delivered to the respondent in terms of an oral and /or tacit agreement that was concluded between the parties. The applicant bases its application on section 344(f) read with section 345(1)(a)(i) of the Companies Act 61 of 1973 in that the respondent is unable to pay a debt owed to the applicant despite statutory demand made to the respondent.

Discussion: The respondent submits that the letter purporting to be a demand is not a demand as contemplated in section 345(1)(a)(i) as the demand was not served on the respondent’s registered address; does not state the sum so due; and accordingly, the respondent was not afforded the 3 weeks’ notice period from date of service of the demand. As a result, the applicant failed to comply with the provisions contained in section 345(1)(a)(i) of the Act. The letter send to the respondent does not comply with the requirements of section 345(1)(a)(i) of the Act. The respondent denies that it is unable to pay its outstanding debt. It states that it is managing its contingent and prospective liabilities and has raised a dispute with the applicant regarding the claimed debt, which remains unresolved. The respondent asserts that it can meet its day-to-day liabilities in the ordinary course of business and is not commercially insolvent. It further claims to have sufficient liquid assets or readily releasable assets to meet its obligations as they become due and to continue its normal trading operations

Findings: The applicant failed to make out a prima facie case for the winding up of the respondent. The grounds advanced by the respondent in disputing the debt are reasonable and bona fide. The dispute raised by the respondent cannot be dealt with in motion proceedings. It follows that a winding-up application is not the appropriate machinery for the applicant to use to enforce its claim. The respondent has provided reasons for its temporary cash flow issues and has submitted supporting documents demonstrating that it is neither factually nor commercially insolvent. The evidence shows that the respondent remains capable of conducting its business and meeting its current expenses as they fall due to its other creditors.

Order: The application is dismissed with costs.

Facts and issue: The applicant seeks an order placing the respondent under final liquidation. The order placing the respondent under a provisional liquidation order was granted. The applicant has complied with the terms of the provisional order. The main grounds of the respondent’s opposition are that the applicant’s claim against the respondent is not a liquid claim and is disputed on bona fide and reasonable grounds. The respondent failed to effect payments timeously and in terms of the agreement between the parties.

Discussion: The claim is a liquidated debt sounding in money, the agreement sets out all the costs to be included in the calculation of the claim, including insurance, recovery costs, the value of the unexpired term of the lease as well as the arrears and interest to date of payment. Therefore, the prompt ascertainment of the debt cannot be difficult to achieve. The respondent’s allegation that the plaintiff is trying to recover ‘contractual damages’ seems intended to persuade the court that the claim is not liquidated as the term ‘damages’ does not usually denote a liquidated sum of money. However, the court is unable to find any genuine disputes of fact on the issue of whether the claim is liquid in the affidavits. The applicant has shown clearly that the debt is liquid and due and payable. The liquidity of the claim is disputed mala fide, and the allegations made by the respondent must be rejected as they are spurious and undermine its assertion that it is disputing the claim on bona fide and reasonable grounds.

Findings: The respondent breached the agreement when it failed to pay the instalments, and subsequently informed the applicant that it could not pay the monthly instalments. The respondent also did not return the vehicle as it was obliged to, and the vehicle was repossessed almost six months later after the applicant resorted to litigation for its recovery. The agreement is a consensual one and the allegations of unconstitutionality and contra bonos mores are unfounded. There is no genuine dispute of fact. The respondent is not bona fides in its resistance to the application. Its conduct is merely dilatory and has prejudiced the rights of the applicant as a proven, bona fide creditor to apply for the final liquidation of the respondent.

Order: The rule nisi is confirmed. The respondent is placed under final liquidation.

Facts and issue: Application for the winding up of the respondent who is alleged to have been unable to pay its debts when they fell due. The application for winding up is sought in terms of sections 344(f) and (h) as well as 345(1)(c) of the Companies Act, 61 of 1973 (the Old Act) which relate to the respondent who is unable to pay its debts and section 163(2)(b) of the Companies Act, 71 of 2008 (the New Act), which relates to winding up on the grounds of alleged oppressive behaviour of a member of a company by other members.

Discussion: The applicant relies on the financial statements the last of which on papers are for the year February 2016. There is indeed reference to a loan to Amakhosi in the annual financial statements of that year. The court considered the contention by Wescott that as Lipton was the managing director of the respondent before he resigned, he excluded other directors from the financial activities of the respondent. The contention is without merit. Both Wescott and Ritchie signed off the annual financial statements referenced to various loans including the loan from Amakhosi. The respondent raises a point that it was never put in mora regarding the loan and that the loan has in any event prescribed. There may well be merit to this contention because if regard is had to the fact the loan goes as far back as 2009, absent any proof from the applicant that the prescription was interrupted, this is reasonable grounds of disputing the liability and liquidation proceedings should not be used as a debt recovery process where a valid defence exists.

Findings: The applicant has not succeeded to establish a case for liquidation of the respondent on the ground of an alleged debt. The applicant claims that Lipton is being stone walled and locked out from the activities of the respondent. The question is whether the applicant is being stone walled and locked-out of the business of the respondent and whether the alleged conduct constitutes an oppressive conduct. It does not, especially given that despite his resignation as a director, Lipton still has access to the bank account of the respondent and knows how the respondent is transacting its business. The winding up sought by the applicant is pursued for an ulterior motive. The relief sought cannot be justified under the circumstances.

Order: The application is dismissed with costs.

Facts: Rand Airport Holdings is the owner of the immovable property from which the Rand Airport operates. Rand Airport Management, a wholly-owned subsidiary of Holdings, manages and operates the Rand Airport. The shareholders of Holdings are Rand Operators, holding 50% of the issued shares, Mayondi Investments, holding 30% of the issued shares, and Ekurhuleni Metropolitan Municipality, holding 20% of the issued shares. The approximately 38 shareholders of Operators are occupants of properties at the Rand Airport and conduct business from the Rand Airport. Stuart Colin Coetzee (Coetzee) was employed by Management as airport manager. He was also a director of Operators and the companies. An investigation followed on the companies becoming aware of irregularities and the boards of the companies adopted unanimous round-robin resolutions to proceed with civil action against Coetzee regarding alleged financial mismanagement, fraud and theft.

Application: The board of the companies, other than the applicants, adopted resolutions that the applicants had neglected, or been derelict in the performance of their functions as directors and they were accordingly removed as directors of the companies with immediate effect. It was perceived that the applicants supported Coetzee and his alleged unlawful activity against the companies. It was alleged that it was the intention of the applicants to change the composition of the boards of the companies to enable the new boards to withdraw the criminal charges against Coetzee and to terminate the legal action against him. The applicants have launched a review in terms of section 71(5) of the Companies Act 71 of 2008.

* See the discussion at paras [32]-[40] on the nature of the section 71(5) review.

Discussion: The applicants were appointed as directors of Operators and thus became directors of the companies on 1 June 2023. The conduct of the applicants in supporting Coetzee on 28 April 2023 to demand that a shareholders meeting of Operators be held for the purpose of removing the first and second respondents as directors of Operators was done in their capacities as representatives of shareholders of Operators. In view of the fact that the applicants had not been appointed as directors of the companies at that stage, this conduct is irrelevant and cannot support allegations of neglect or dereliction in terms of section 71(3)(b). The conduct of the applicants on which reliance is placed by the respondents did not amount to the exercise of powers and the performance of functions of directors of the companies. The applicants did not breach their duties.

Findings: The fact that the applicants supported legal action against Coetzee approximately six weeks after they had indicated that the first and second respondents should be removed as directors of Operators and the fact that the legal action against Coetzee is ongoing without any evidence of interference by the applicants therein, support the applicants' allegation that they do not have the intention to terminate the legal action against Coetzee. There is no reason why the applicants cannot simultaneously support legal action against Coetzee and the removal of the first and second respondents as directors of Operators and the companies. The applicants were not negligent or derelict in the performance of their functions of directors of the companies, within the meaning of section 71(3)(b), and the first to sixth respondents could not validly determine to remove the applicants as directors of the companies.

Order: The determinations of the boards of directors to remove the applicants as directors of Holdings and Management are reviewed and set aside. The applicants are forthwith reinstated as directors. The first to eighth respondents are directed to pay the costs of the application on scale B.

OOSTHUIZEN AJ

Facts and issue: The appellant instituted an application against the respondent, the Companies and Intellectual Property Commission (CIPC), for the reregistration of a close corporation of which he is the sole member. The relief which he sought was, to declare the dissolution of the close corporation to be void; an order directing that the respondent restore the close corporation’s name to the register of companies and thirdly an order declaring that the assets of the corporation to be no longer bona vacantia and revested in the close corporation. The application was dismissed by the court a quo. This is an appeal against that decision.

Discussion: The appeal falls to be decided on two issues. The first is whether the non-joinder of the Minister of Finance and the Department of Public Works is fatal to the case of the appellant. The second is, whether the court a quo was correct in dismissing the application because it found that it did not have the necessary jurisdiction to hear the application in the court. Whilst the court agrees with the sentiments expressed by the appellant’s counsel that the new Act brought about a change in the legislative scheme of our corporate law at variance with the 1973 Act, it did not usher in a change concerning the property or assets of the deregistered company or close corporation being automatically declared bona vacantia, thereby attracting the interest of National Treasury as a party with a direct ad substantial interest.

Findings: The non-joinder of the Minister of Finance and the Treasury is an essential requirement and such non joinder was fatal to the appellant’s case. Especially in the light of the admission by the appellant that the assets in the form of the claim against the firm of attorneys and the claim in the insolvent estate of Machin became bona vacantia. Absent that, the court is unable to find that the relief the applicant sought in the court a quo in terms of section 83(4) of the new Act should have been granted. The court a quo had misdirected itself in finding that it did not have the necessary jurisdiction to adjudicate the matter.

Order: The appeal, insofar as the ground of appeal that challenges the court a quo’s finding on lack of jurisdiction, succeeds. The appellant is granted leave to serve the papers on the Minister of Finance within 21 days of the order.