Ralineba and Others v Dzivhani and Another (Case No. 1005/2023, High Court of South Africa, Limpopo Division, Polokwane, 04 August 2025)
This judgment has been marked reportable because it clarifies the circumstances under which a court will recognise informal or verbal share-sale agreements in a private company, the evidential burden resting on each party when share certificates are disputed, and the approach to punitive costs where postponements are sought on inadequate grounds. It is of practical importance to commercial litigators and company-law practitioners, especially where small or family-owned companies rely on informal funding arrangements that later crystallise into shareholder disputes. It also provides guidance on the exercise of the court’s discretion to grant declaratory relief in terms of section 21(1)(c) of the Superior Courts Act 10 of 2013.
No prior authorities were expressly cited in the text of the written judgment released on SAFLII. The court relied primarily on statutory interpretation and its inherent jurisdiction to regulate its own procedure.
Companies Act 71 of 2008
Superior Courts Act 10 of 2013, section 21
Uniform Rules of Court (particularly Rules 6, 27 and 41)
Uniform Rule 6 (motion proceedings)
Uniform Rule 27 (postponements and condonation)
Uniform Rule 41 (costs on attorney-and-client scale)
The applicants sought declaratory relief confirming their respective shareholdings in Mimed (Pty) Ltd and impugning the first respondent’s management of the company. They also asked that the first respondent be compelled to issue fresh share certificates and to pay costs on an attorney-and-client scale. The respondents denied that any valid share-sale agreements ever came into existence, asserting that the applicants’ payments were mere “investments” rather than payments for equity.
When the matter was eventually set down on a preferential date, the respondents sought a last-minute postponement on the ground that counsel was unavailable. The court dismissed the postponement application, heard argument on the merits and thereafter reserved judgment.
The judgment examines whether oral share-sale agreements are enforceable, what constitutes adequate proof of share acquisition, and whether the court should exercise its discretion to grant declaratory orders in a commercial context where relationships have broken down irretrievably.
Whether the verbal agreements of 2014 between the first applicant (and a third-party investor) and the first respondent resulted in enforceable transfers of shares in the second respondent.
Whether the subsequent written contract of 4 November 2016 between the second applicant and the respondents validly transferred a further 16,19 % of the company’s issued shares.
Whether the first respondent’s continued administration of the company as sole shareholder and director is unlawful.
Whether punitive costs should be awarded for an eleventh-hour postponement attempt.
The court declared that the oral agreements were valid and that the payments evidenced in the company’s bank statements were made in part-performance thereof. Accordingly, the first, second, fourth and fifth applicants are valid shareholders in the proportions pleaded, and the third applicant is entitled to be issued with a 4,4 % share certificate. The first respondent’s management of the company to the exclusion of the other shareholders was unlawful. The respondents were ordered, jointly and severally, to pay the costs of the application on an attorney-and-client scale, including the wasted costs occasioned by the failed postponement.
The first respondent, a medical practitioner, incorporated Mimed (Pty) Ltd in July 2014 with himself as the sole shareholder. The company purchased a stand in Jane Furse, Limpopo, intending to erect a private medical facility. Lacking sufficient capital, the first respondent invited outside investors.
On 10 December 2014 he orally agreed to sell 14,28 % of the company to the first applicant for R100 000 and 42,86 % to one Maanda Nwendamutswu for R350 000, both sums payable by 31 March 2015. The first applicant thereafter paid R61 400 in tranches into the company’s FNB business account prior to 31 March, and further amounts thereafter, ultimately totalling R100 000. The company issued no formal share certificates at the time, but the first applicant participated in management decisions without remuneration.
On 4 November 2016 the respondents concluded a written agreement with the second applicant, New Heights Holdings (Pty) Ltd, for the sale of a further 16,19 % of the issued shares for R320 000. The price was paid in full into the same FNB account. Despite this, the first respondent continued to act as if he remained the sole shareholder and refused to issue share certificates or update the company register.
When relations soured, the applicants launched these proceedings on 6 June 2023 seeking declaratory relief. The matter suffered several procedural delays, mostly due to the respondents’ late filing of affidavits and a missing court bundle. Ultimately the Judge President granted a preferential date of 21 May 2025.
The court had to decide whether the impugned share-sale agreements were valid despite their informal or partly oral nature, whether the payments made constituted consideration for those sales, and whether declaratory relief compelling rectification of the share register was appropriate. A secondary issue concerned the propriety of the respondents’ application for postponement and the attendant costs.
First, the court considered section 35 of the Companies Act 71 of 2008, which recognises that shares in a company are transferable movable property unless restricted by the company’s memorandum. Nothing in Mimed’s memorandum forbade the transfer. The absence of a written instrument of transfer does not, of itself, vitiate a sale, provided there is clear evidence of consensus ad idem and performance.
Second, the court scrutinised the bank statements annexed to the founding affidavit. The payments corresponded both in timing and quantum with the agreed purchase prices. The respondents’ characterisation of the payments as “investments” was unsupported by any documentary proof and contradicted by the first respondent’s admissions in his own correspondence.
Third, the court dealt with the written 2016 agreement: its authenticity was not seriously disputed. The respondents argued, however, that no shares were “available for subscription” given the earlier alleged sales. The court rejected this circular reasoning, noting that on the respondents’ own version he remained the sole shareholder, and therefore he plainly had shares available to sell.
Fourth, turning to discretion, the court held that declaratory orders serve a valuable purpose where corporate deadlock or uncertainty exists, relying on section 21(1)(c) of the Superior Courts Act. In circumstances where the first respondent’s conduct jeopardised both governance and investment, granting certainty was in the interests of justice.
Finally, on postponement, the court invoked Uniform Rule 27. A litigant wishing to adjourn a matter must furnish full, satisfactory reasons. Knowing a month in advance that counsel would not be available, yet failing to brief alternative representatives, is inexcusable. The court therefore dismissed the postponement and, given the history of delays, mulcted the respondents in punitive costs.
The court granted a suite of declaratory orders confirming the applicants’ respective shareholdings and declared the first respondent’s unilateral administration of the company unlawful. It directed the first respondent to procure the issuance of correct share certificates within thirty days, failing which the Sheriff was authorised to sign the register. The respondents were ordered to pay the costs of the application, including the wasted costs of the aborted postponement, on an attorney-and-client scale.
A verbal agreement for the sale of shares in a private company is enforceable provided the parties’ consensus and reciprocal performance can be proved on a balance of probabilities.
Payments made into the company’s account, coupled with participation in management, constitute strong corroboration of such an agreement.
The court will readily grant declaratory relief in terms of section 21(1)(c) of the Superior Courts Act to resolve corporate uncertainty, especially where shareholders are excluded from management.
A party seeking a postponement must show good cause; failure to act diligently or to brief counsel timeously will justify a punitive costs order.