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[2014] ZAGPJHC 137
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Moodley v On Digital Media (Pty) Ltd and Others (20456/2014) [2014] ZAGPJHC 137; 2014 (6) SA 279 (GJ) (11 July 2014)
REPUBLIC
OF SOUTH AFRICA
HIGH
COURT, SOUTH GAUTENG LOCAL DIVISION (JOHANNESBURG)
Case No. 20456/2014
Date: 11 July 2014
Reportable
Of interest to other
judges
In the matter
between:
ATCHUTHANANDAN
NADARAJA
MOODLEY
.
.........................................................................
Applicant
and
ON DIGITAL MEDIA
(PTY)
LTD
........................................................................................
First
Respondent
PETRUS FRANCOIS
VAN DEN STEEN N.O.
…...........................................................
Second
Respondent
STARTIMES
COMMUNICATIONS
TECHNOLOGY
COMPANY LTD
….................................................................................
Third
Respondent
FIRST AONE TRADE
AND INVEST 12 (PTY)
LTD
......................................................
Fourth
Respondent
NATIONAL
EMPOWERMENT
FUND
...............................................................................
Fifth
Respondent
REDGOLD
INVESTMENTS 16 (PTY)
LTD
.......................................................................
Sixth
Respondent
SES GLOBAL AFRICA
SA
..............................................................................................
Seventh
Respondent
INDUSTRIAL
DEVELOPMENT CORPORATION OF
SA
.
..........................................
Eighth
Respondent
FIRST NATIONAL
MEDIA INVESTMENT
HOLDINGS (PTY)
LTD
.......................................................................................................
Ninth
Respondent
COMPANIES AND
INTELLECTUAL
PROPERTY
COMMISSION
................................................................................................
Tenth
Respondent
HANTEX
INTERNATIONAL COMPANY
LTD
..........................................................
Eleventh
Respondent
2012/200078/07
(SOUTH AFRICA) (PTY)
LTD
.............................................................
Twelfth
Respondent
DIDUSCAN (PTY)
LTD
.................................................................................................
Thirteenth
Respondent
DEVELOPMENT BANK
OF SA
LTD
........................................................................
Fourteenth
Respondent
Case Summary:
Companies Act 71 of 2008
- Business Rescue Proceedings -Whether the
general moratorium on legal proceedings against a company in business
rescue provided
for in
s 133
of the
Companies Act finds
application
in legal proceedings against a company in business rescue and its
business rescue practitioner in connection with the
business rescue
plan, its interpretation and execution towards implementation -
Whether the adopted business rescue plan has been
executed according
to its terms and in accordance with the applicable provisions of the
Companies Act.
JUDGMENT
MEYER, J
[1]
In this application a minority shareholder of a company in business
rescue seeks leave (if it is required in terms of
s 133
of the
Companies Act 71 of 2008
) to proceed with the remainder of the
application against the company and its business rescue practitioner
in terms whereof declaratory
reiief is sought that certain
transactions (a share buy-back, an issue of new shares and the
adoption of a new memorandum of incorporation
and a draft
subscription agreement) are not in accordance with the adopted
business rescue plan and/or certain provisions of the
Companies Act,
and
accordingly unlawful, and for the company and its business rescue
practitioner to be interdicted from implementing the transactions
or
that they be set aside insofar as they have been implemented.
1
[2] On 10 June 2014,
Twala AJ granted an order in terms of prayer 1 of the notice of
motion herein (the customary prayer in respect
of urgency). The
application was postponed for hearing on 25 June 2014. By agreement
between the parties the following undertaking
by the company and its
business rescue practitioner was made an interim order pending the
return day:
‘
Without
prejudice to any of the parties' rights and without conceding any
obligation to do so, the First and Second Respondents
undertake until
the hearing on 25 June 2014, not to take any further steps to
implement any of the transactions contemplated in
the documents and
the correspondence (as defined in paragraph 56.1 of the founding
affidavit of ATCHUTHANANDAN NADARAJA MOODLEY)
which includes an
undertaking not to take the First Respondent out of business rescue.'
[3] The first issue
that presently requires determination is whether the general
moratorium on legal proceedings against a company
in business rescue
provided for in
s 133
of the
Companies Act finds
application in this
case (prayer 2 of the notice of motion).
Section 133
reads:
'(1) During business
rescue proceedings, no legal proceedings, including enforcement
action, against the company, or in relation
to any property belonging
to the company, or lawfully in its possession, may be commenced or
proceeded with in any forum, except-
(a) with the written
consent of the practitioner;
(b) with the leave
of the court and in accordance with any terms the court considers
suitable;
(c) as a set-off
against any claim made by the company in any legal proceedings,
irrespective of whether those proceedings commenced
before or after
the business rescue proceedings began;
(d) criminal
proceedings against the company or any of its officers;
(e) proceedings
concerning any property or right over which the company exercises the
powers of a trustee; or
(f) proceedings by a
regulatory authority in the execution of its duties after written
notification to the business rescue practitioner.
(2) During business
rescue proceedings, a guarantee or surety by a company in favour of
any other person may not be enforced by
any person against the
company except with leave of the court and in accordance with any
terms the court considers just and equitable
in the circumstances.
(3) If any right to
commence proceedings or otherwise assert a claim against a company is
subject to a time limit, the measurement
of that time limit must be
suspended during the company's business rescue proceedings.'
[4] The applicant
argued that the requirements of
s 133(1)
do not apply to proceedings,
such as these, which are aimed at enforcing the implementation of an
adopted business rescue plan
consistently with its terms and in
accordance with the provisions of the
Companies Act. The
opposing
respondents, on the other hand, argued that
section 133(1)
affords a
company in business rescue protection against any conceivable type of
proceedings.
[5]
Authority for the contention of the opposing respondents is to be
found in
Redpath
Mining South Africa (Pty) Ltd v Marsden NO and Others,
2
a
matter in which the setting aside of an adopted business rescue plan
was sought. Kgomo, J held that the provisions of
s 133
also apply to
litigation against a business rescue plan or related thereto’
and that such litigation may ‘[o]nly in
exceptional
circumstances’ be permitted by a court.
3
This judgment has elicited the following comment from the authors of
Henochsberg
on the
Companies Act 71 of2008
4
'It is respectfully
doubted that
s 133
is intended to operate also in this category as
opposition to a business plan is not legal proceedings against the
company or property
belonging to the company or lawfully in its
possession.’
[6]
The present state of the law as to the correct approach to
interpretation was stated by Wallis JA, in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA), to be the following:
5
‘
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration must
be given to
the language used in the light of the ordinary rules of grammar and
syntax; the context in which the provision appears;
the apparent
purpose to which it is directed and the material known to those for
the production. Where more than one meaning is
possible each
possibility must be weighed in the light of all these factors. The
process is objective, not subjective. A sensible
meaning is to be
preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent purpose of the
document. Judges must be
alert to, and guard against, the temptation to substitute what they
regard as reasonable, sensible or
businesslike for the words actually
used. To do so in regard to a statute or statutory instrument is to
cross the divide between
interpretation and legislation; in a
contractual context it is to make a contract for the parties other
than the one they in fact
made. The 'inevitable point of departure is
the language of the provision itself, read in context and having
regard to the purpose
of the provision and the background to the
preparation and production of the document.’ (Footnotes have
been omitted.)
[7]
Section
128(1)(b)
of the
Companies Act defines
‘business rescue’
as meaning-'... proceedings to facilitate the rehabilitation of a
company that is financially distressed
by providing for-
(i) the temporary
supervision of the company, and of the management of its affairs,
business and property;
(ii) a temporary
moratorium on the rights of claimants against the company or in
respect of property in its possession; and
(iii) the
development and implementation, if approved, of a plan to rescue the
company by restructuring its affairs, business, property,
debt and
other liabilities, and equity in a manner that maximizes the
likelihood of the company continuing in existence on a solvent
basis
or, if it is not possible for the company to so continue in
existence, results in a better return for the company’s
creditors or shareholders than would result from the immediate
liquidation of the company;
[8]
Section 140(1
)(d) of the
Companies Act enjoins
the business rescue practitioner
during a company’s business rescue proceedings to ‘develop
a business rescue plan
to be considered by affected persons' and to
'implement any business rescue plan that has been adopted’.
Section 152(5)
requires that ‘[t]he company, under the
direction of the practitioner, must take all necessary steps to- (a)
attempt to satisfy
any conditions on which the business rescue is
contingent; and (b) implement the plan as adopted.’
Section
152(4)
provides that '[a] business rescue plan that has been adopted
is binding on the company, and on each of the creditors of the
company
and every holder of the company’s securities, whether
or not such a person- (a) was present at the meeting; (b) voted in
favour of adopting the plan; or (c) in the case of creditors, had
proven their claims against the company.'
[9] Thus,
s
128(1)(ii)
imposes a temporary moratorium on the rights of claimants
against the company or in respect of property in its possession. The
purpose of
s 133(1)
in prohibiting (subject to the stated exceptions)
the commencement or continuation of any legal proceedings against the
company
or in relation to its property or property lawfully in its
possession, is to give effect to the temporary moratorium that is
provided
to a company during business rescue proceedings in terms of
s 128(1
)(ii).
Section 133(1)
is not concerned with temporary
supervision
(s 128(1)(i))
or the development and implementation of
the business rescue plan
(s 128(1
)(iii)), which, in addition to the
temporary moratorium, form part of business rescue proceedings.
[10]
The language of
s 133
, when read in context with the other relevant
provisions in Chapter 6 and having regard to its purpose, does not
include within
its ambit proceedings relating to the development,
adoption or implementation of a business rescue plan. It is the
business rescue
practitioner who must develop a business rescue plan
and implement it if adopted and the company, under the direction of
the practitioner,
must take all necessary steps to attempt to satisfy
any conditions on which the business rescue is contingent and
implement the
plan as adopted. Legal proceedings, such as the present
case, which seek that an adopted business rescue plan be executed and
implemented
strictly according to its terms and in accordance with
the applicable provisions of the
Companies Act, are
legal proceedings
against the business rescue practitioner
and
the
company in business rescue in connection with the business rescue
plan. They are not legal proceedings against the company or
property
belonging to the company or lawfully in its possession within the
meaning of
s 133(1).
[11]
Section 133
, therefore, finds no application in legal proceedings
against a company in business rescue and its business rescue
practitioner
in connection with the business rescue plan, including
its interpretation and execution towards implementation, i
respectfully
consider the contrary finding in
Redpath
to
be clearly wrong and decline to follow it. The applicant does not
require the leave of this court as contemplated in
s 133(1
)(b) of
the
Companies Act to
proceed with the present proceedings.
[12] Apart from
costs, the other pertinent prayers contained in the notice of motion
are these:
'3 declaring that
the transactions contemplated in the Documents and the Correspondence
(as defined in paragraph 56.1 of the founding
affidavit of
ATCHUTHANANDAN NADARAJA MOODLEY) are not in accordance with the
Business Rescue Plan dated 30 April 2013 ("the
BR Plan”)
and/or the
Companies Act and
are unlawful;
4 interdicting and
restraining the first and second respondents from taking any steps to
implement any of the aforesaid transactions
and, to the extent that
any such transactions have been implemented, setting those
transactions aside.
5 directing the
first and second respondents to implement the BR Plan in respect of
the first respondent dated 30 April 2013 in
its terms and
consistently with the
Companies Act.
[13
]
The relief in terms of the notice of motion is claimed as final
relief or as interim relief pending the final determination of
this
application. An amendment to the notice of motion introduced a
further alternative basis upon which the relief is claimed
as interim
relief pending the final determination of this application (only
certain of the relief claimed in this application should
then be
determined)
and
the
finalisation of dispute resolution proceedings under clause 6.5 of
the business rescue plan (for the determination of the balance
of the
relief claimed), which are to be initiated within 25 days of the date
of final judgment in this application. The amendment,
counsel For the
applicant informed me from the bar, was a cautionary measure taken in
the event of the opposing respondents raising
the dispute resolution
mechanism provided for in the business rescue plan as a bar to final
relief being granted to the applicant.
The dispute resolution
mechanism does not '... preclude any party from seeking urgent
interim relief from any Court of competent
jurisdiction.’
6
Other than in argument, none of the respondents have raised the
dispute resolution mechanism substantively nor did they apply for
the
stay of the proceedings for final relief.
7
I accordingly agree with the submission of counsel for the applicant
that the dispute resolution mechanism is in this instance
no bar to
final relief being granted to the applicant.
[14] The interim
relief sought has thus become irrelevant. The notice of motion does
not contemplate the institution of other court
proceedings pending
the finalisation of which proceedings interim relief is sought. This
is the return day for the final determination
of this application.
The respondents who oppose the application have filed their answering
affidavits and the applicant his replying
affidavit. The application
is voluminous comprising almost a thousand pages and was argued over
two court days.
[15]
It is convenient to dispose of prayer 5 of the notice of motion
before turning to the relief claimed in prayers 3 and 4 thereof.
The
applicant claims that the company and its business rescue
practitioner be directed to implement the business rescue plan in
its
terms and consistently with the
Companies Act. This
relief is
impermissibly wide and should for this reason be refused. I have
referred to the provisions of the
Companies Act that
deal with the
binding nature (on the company, its creditors and holders of its
securities) of a business rescue plan that has been
adopted, the
obligation on the business rescue practitioner to implement the
business rescue plan and that of the company, under
the direction of
the practitioner, to take all necessary steps to implement the plan
as adopted.
8
An order in terms of prayer 5 of the notice of motion would merely
direct the company and its business rescue practitioner to do
what
the relevant provisions of the
Companies Act in
any event prescribe
them to do. An interdictory order of court, such as the one in
question, must inform the party against whom
or against which it is
given in clear and precise terms what that party is enjoined to
refrain from doing or compelled to do. It
is the infringement of the
specific right that has been established which is interdicted, either
by means of a prohibitory or a
mandatory interdict.
[16] The factual
matrix within which the issues to be decided in this application
arose, is essentially uncontroversial. The first
respondent, On
Digital Media Proprietary Limited (ODM), was formed to operate a
satellite pay television service (a multi-channel
subscription
television broadcasting service). The Independent Communications
Authority of South Africa (ICASA) issued the required
licence to ODM.
It began broadcasting by offering a satellite television service to
subscribers, under the brand name of ‘TopTV’,
on 1 May
2010.
[17] ODM required
substantial funds to commence and undertake its broadcasting
operations. It is stated in the answering affidavit
of the fourteenth
respondent, Development Bank of Southern Africa Limited (DBSA), that
the '[t]he total project cost for ODM based
on a 36 month
construction funding period was estimated at R1 billion, split into
R800 million equity and R200 million debt from
the DBSA.
1
DBSA provided a loan in that amount to ODM. It is the only secured
creditor of ODM and holds a general notarial bond over all the
movable property of every description owned by ODM.
[18] According to
DBSA its ‘... investment in ODM was motivated by Government’s
drive to widen the competitive landscape
in the Pay TV market,
increase consumer choice and more importantly make Pay TV accessible
to those previously excluded from watching
Pay TV because of
prohibitive pricing.’ It states that ‘[t]he increased
competition would help reduce the costs of
Pay TV services to the
consumer thereby unlocking financial resources which would augur well
for the consumer.'
[19]
Shareholders’ funding was either by way of direct loans or
preference share subscription. The eighth respondent, Industrial
Development Corporation of South Africa (IDC), made direct and
indirect loans to ODM and it also provided funding to the fourth
respondent, First Aone Trade and Invest 12 Proprietary Limited
(Aone), the sixth respondent, Redgold Investment 16 Proprietary
Limited (Redgold), and the ninth respondent, First National Media
Investment Holdings Proprietary Limited (FNMIH), to enable them
to
acquire shares in ODM.
9
IDC and these entities acquired shares in ODM and those of Aone,
Redgold and FNMIH were pledged to IDC as security for the loans
IDC
advanced to them.
[20] According to
IDC the rationale for its investment of substantial amounts of money
in ODM was to support the establishment of
a second pay-tv operator
in the country, thereby creating a choice for South African consumers
in a market dominated by MultiChoice.
Furthermore, an extremely
important factor in creating a second operator was to widen the
market for local film production.’
It states that ‘[t]he
IDC has found, in its market research, that there is a significant
demand for pay-tv services in the
lower end of the market, consisting
of the poorer people of South Africa’ and that ‘[t]his is
the very market in which
ODM is providing a competitive service.'
This ‘social need’, it states '... is a major part of
what motivated the IDC
to invest substantial funds into ODM.
”
[21] The fifth
respondent, the National Empowerment Fund (NEC), the seventh
respondent, SES Global Africa SA, a company registered
in Luxembourg
(SES), and the applicant, Mr AN Moodley (‘Moodley’) also
acquired shares in ODM.
[22]
ODM was unable to secure funding for its continued working capital
requirements. The security which DBSA held under the notarial
bond
over the movable assets of ODM was perfected. On 29 October 2012, the
board of ODM resolved to commence business rescue proceedings.
This
step was taken after it had become clear to the board that ODM was
financially distressed (as contemplated in Chapter 6 of
the
Companies
Act) but
that it was capable of being rescued through the business
rescue regime. The resolution adopted by ODM's board was filed with
the
tenth respondent, the Companies and Intellectual Property
Commission (CIPC), on 31 October 2012, the effective date of the
commencement
of ODM’s business rescue proceedings.
10
The second respondent, Mr PM van den Steen, was appointed as the
business rescue practitioner of ODM on 5 November 2012 (the
practitioner).
[23] The
practitioner published a business rescue plan in respect of ODM on 17
April 2013. The support both at creditor and shareholder
level in
favour of adopting the business rescue plan was overwhelming. It was
supported by the holders of more than 75% of creditors’
voting
interests that voted at the meeting, with at least 50% thereof
representing independent creditors’ voting interests.
A vote of
93.9%, of which 52.9% represented independent creditors’ voting
interests, voted in favour of its adoption. It
received the support
of 100% of the preference shareholders and 99.3% of the voting rights
of holders of other securities. Moodley,
who held a 0.7% voting
right, was the only shareholder who voted against its adoption. I
refer to the adopted business rescue plan
for ODM as the ‘ODM
rescue plan’.
[24]
The offer of the third respondent, StarTimes Communications
Technology Company Limited (StarTimes),
11
of becoming a strategic shareholder and of discharging the already
reduced claims of creditors has been accepted by virtue of the
adoption of the ODM rescue plan.
12
It is stated in the ODM rescue plan that-
13
'StarTimes are
already committed to the operation of subscription television in
other countries in Africa. They operate digital
television services
(with packages of up to 140 channels) for 1.4 million families across
13 African countries. The stated aim
of the President of StarTimes is
to enable “... every African Family to afford, (have) access
and watch good digital TV and
build the firm into Africa’s most
influential digital TV operator".
[25]
The ODM rescue plan envisages for creditors to receive higher
dividends in respect of their claims compared to liquidation,
for
existing shareholders (excluding SES whose participation would cease
after the business rescue) to remain with restructured
equity
interests in ODM, and for the preservation of jobs and the creation
of job opportunities.
14
ODM
is profoundly insolvent. Liquidation will be severely prejudicial to
ODM, its creditors, employees (according to the practitioner,
over
200 job losses and the loss of 150 employment opportunities) and
shareholders. Upon liquidation, only DBSA, which has a secured
claim
pursuant to the perfection of its notarial bond in relation to its
claim in excess of R200 million, will receive a dividend
of R12.50 on
its claim against ODM. No other creditor, nor any shareholder,
preference or otherwise, will receive any benefit or
dividend
distribution on their rights or claims. Apart from the movable assets
hypothecated and secured in favour of DBSA, ODM
owns no other assets.
IDC’s exposure to risk of loss is almost R900 million and that
of NEF, R120 million.
[26]
Clauses 4.1 to 4.6 of the ODM rescue plan oblige StarTimes to pay an
amount of R30 million to DBSA and to offer it an equity
opportunity
of 1.99% of the issued share capital in a new company that is to be
incorporated (NEWCO); an amount of R37,5 million
to all creditors
(other than DBSA, preference shareholder claims and shareholder
claims), which amount is subject to monthly escalation
depending on
when the implementation date occurs; an amount equivalent to 3.45
cents in the Rand, subject to a maximum amount of
R9, 332 million, in
discharge of preference shareholder claims; and an amount equivalent
to 2.25 cents in the Rand, subject to
a maximum amount of R21, 596
million in discharge of shareholder claims. StarTimes is to acquire
20% of the shares in ODM and 20%
of the equity interest in NEWCO.
15
[27]
Provision is made for a two-tiered management and ownership
structure, with ODM’s shareholding being altered and the
incorporation of NEWCO, which new company is intended to be a
parallel company to ODM with a different shareholding and management
structure. Other agreements are also envisaged to be concluded
between NEWCO and ODM.
16
NEWCO’s operations as a trading entity are to be regulated
under the NEWCO shareholders’ agreement.
17
NEWCO is to take transfer from ODM of its licence issued by ICASA as
well as the transmission fixed assets infrastructure.
18
Clause 4.6 provides that the amounts paid to shareholders in terms of
the ODM rescue plan are to ‘... be reinvested by way
of a
subscription by the NEWCO shareholders.’ ‘NEWCO
shareholders’ are defined in clause 2.1 as ‘... the
initial shareholders of NEWCO as listed by name and percentage of
equity interest in Appendix D\ Appendix D lists StarTimes (65%),
FNMIH (2.31%), NEF (1.45%), Aone (1.19%), Redgold (2.38%), ÍDC
(5.67%), Moodley (0.001%), New BEE (20%) and DBSA (1.99%).
[28] Clause 4.12.3
of the ODM rescue plan is central to the issues that have arisen
between the parties. It contemplates the restructuring
by way of
reduction of the shares belonging to the shareholders of ODM and the
acquisition of these shares by StarTimes and a new
black economic
empowerment investor. The twelfth respondent, 2012/200078/07 (South
Africa) (Pty) Ltd, and the thirteenth respondent,
Diduscan (Pty) Ltd,
are the new BEE shareholders who are to hold 65% shares in ODM.
Clause 4.12.3 reads as follows:
'4.12.3 StarTimes
will acquire 20% of the Shares of the Company on the Implementation
Date, with the remaining shares to be held
as follows-
4.12.3.1 as to 15%
between IDC, the NEF and other Shareholders of the Company at the BR
Commencement Date (other than SES SA);
4.12.3.2 as to 65%
by a new black economic empowerment investor whose shareholding,
economic interest and control is held directly
or indirectly by
persons or categories of persons who are historically disadvantaged
persons.
[29] ‘Shareholders’
in terms of clause 2.1 of the ODM business rescue plan ‘means
the shareholders of the Company
[ODM] at the BR Commencement Date [31
October 2012] as listed by name and percentage of Shares held in the
Company in Appendix
F’. Appendix F lists SES (14.7%), FNMIH
(20.4%), NEF (11.4%), Aone (7.3%), Redgold (14.7%), IDC (30.8%) and
Moodley (0.7%).
These shareholders, other than SES, are the
shareholders referred to in clause 4.12.3.1 (the ODM commencement
date shareholders).
IDC has exercised the pledges in its favour of
the shares of Aone, Redgold and FNMIH in ODM as security for the
loans advanced
to them and IDC is accordingly the beneficial owner of
73.2% of the ODM shareholding. Moodley ceded his shareholder loan
claim
against ODM to MSG Afrika Proprietary Limited ‘for value
received’ and he ceded his present and future right, title
and
interest of any nature whatsoever to all distributions and amounts
standing to the credit of his shareholder’s loans
in ODM to
IDC. He consequently divested himself of the economic benefits of his
shareholding in ODM.
[30] The ODM rescue
plan is subject in its entirety to the fulfillment or waiver, as the
case may be, of the suspensive conditions
listed in clause 5.3.
Presently relevant are the following suspensive conditions contained
in clauses 5.3.2.6, 5.3.27, 5.3.2.8,
5.3.2.10 and 5.3.2.11:
‘
5.3.2.6
StarTimes shall acquire 20% of the Shares from the Shareholders;
5.3.2.7
StarTimes and the other shareholders identified in clause 4.12.3
shall enter into a shareholders' agreement in respect of
the Company
to regulate
inter
alia -
5.3.2.7.1 the new
shareholding in the Company with effect from the Implementation Date;
5.3.2.7.2 the
ability of StarTimes to participate in 65% of the profits of the
Company such that the effective economic interest
of StarTimes in the
Company shall be equal to 65%;
5.3.2.7.3 the
ability of the group of shareholders in clause 4.12.3.1 to between
them and in such proportions as they may agree
to participate in 15%
of the profits of the Company such that their effective economic
interest in the Company shall be equal to
15%;
5.3.2.7.4 the
ability of the shareholders in clause 4.12.3.2 to participate in 20%
of the profits of the Company such that the effective
economic
interest of the Shareholder in the Company shall be equal to 20%;
5.3.2.7.5 the right
of StarTimes and other shareholders of the Company to appoint
directors to the Company,
5.3.2.7.6 the right
of StarTimes to nominate the Chief Executive Officer of the Company,
such person to be a former employee of
StarTimes and his appointment
to be on terms and conditions agreed upon in an employment agreement
to be concluded.
5.3.2.8the Company
shall adopt a memorandum of incorporation on terms consistent with
what is set out in clause 5.3.2.7;
5.3.2.9 ...
5.3.2.10 StarTimes
and the other shareholders identified in clause 4,12.3 shall enter
into a shareholders' agreement in respect
of NEWCO providing for-
5.3.2.10.1 the
operation of NEWCO as a trading entity allowing it to invest in
setting up the transmission network, providing TV
signal transmission
services to subscribers in South Africa and the rest of Africa and
charging a fee to the Company for such services;
5.3.2.10.2 the
collection of subscription fees from the Company subscribers and
charging a fee for such service;
5.3.2.10.3 the
shareholding and distribution of effective economic interest as set
out in clause 5.3.2.7.2 and 5.3.2J.4 (both inclusive);
5.3.2.11 NEWCO shall
adopt a memorandum of incorporation on terms consistent with what is
set out in clause 5.3.2.10 and to the
satisfaction of StarTimes;
'
[31] The waiver
provisions are contained in clause 5.6 of the business rescue plan.
It reads as follows:
‘
5.6
It is specifically recorded that the Suspensive Conditions -
5.6.1 are stipulated
for the benefit of StarTimes who alone shall be entitled, in writing
only (by way of written notice to that
effect addressed to the BR
Practitioner and Bowman Giffillan Inc. prior to the Implementation
Date) to waive compliance with the
Suspensive Conditions or extend
the date by which any of them are to be fulfilled;
5.6.2 are separate,
divisible and distinct from one another;
5.6.3 are to be
fulfilled (unless waived by StarTimes in the manner stipulated in
clause 5.6.1) and if the Suspensive Condition
remains unfulfilled and
fulfillment thereof is not waived by StarTimes in the manner
stipulated in clause 5.6.1 then the BR Plan
shall not come into force
or effect.'
[32] After StarTimes
had reached agreement with NEF, IDC and DBSA, shareholders’
agreements in respect of ODM and NEWCO were
concluded amongst those
parties. It is common cause that Moodley did not participate in the
negotiation and conclusion of any such
shareholders’
agreements. (He was precluded as a result of mistrust of his
motives.) Once the shareholders’ agreements
were concluded
amongst the major shareholders, StarTimes waived the conditions of
implementation contained in clauses 5.3.2.7 and
5.3.2.10 requiring it
to conclude shareholders’ agreements with all the shareholders.
The written waiver occurred on 17 June
2014.
[33]
The ‘transactions’ in respect of which Moodley seeks
declaratory and interdictory relief in terms of prayers 3
and 4 of
the notice of motion are those 'as defined in paragraph 56.1 of the
founding affidavit’. The transactions relate
to ODM only and
are defined in paragraph 56.1 of the founding affidavit to be a share
buy-back, an issue of new shares and the
adoption of a new memorandum
of incorporation and a draft subscription agreement.
19
[34] On 30 April
2014, the practitioner’s attorneys inter alia submitted for
consideration to all the shareholders (including
Moodley) written
shareholders’ resolutions authorising the cancellation of the
existing memorandum of incorporation of ODM
in its entirety and, in
its stead, adopting a new memorandum of incorporation for ODM,
authorising the buy-back and cancellation
of existing ODM shares,
authorising the issue of new shares in ODM ‘as per the business
rescue plan and the shareholders’
agreement’ and the
shareholders were requested to sign the subscription agreement in
relation to the subscription of new
shares in ODM. The subscription
agreement inter alia records that there will be 1 000 000 new issued
shares in ODM in classes A
to E and that Moodley is to receive 1 230
class E shares, which translates into a shareholding of 0.123% in ODM
as reconstituted
pursuant to the ODM rescue plan.
[35] Moodley did not
vote in favour of the adoption of any of the resolutions. He was
notified on 2 May 2014 that the resolutions
had been adopted. The
resolutions received the support of all the other shareholders. He
was furnished with copies of his new share
certificates which reflect
the position as envisaged in the shareholders’ resolution,
subscription agreement and memorandum
of incorporation of ODM. He was
informed that the new memorandum of incorporation for ODM had been
lodged at the CIPC. He was also
informed that the ‘... business
rescue of ODM is in its final stages and final implementation of the
BR Plan is imminent’.
(In his answering affidavit the
practitioner states that the business rescue plan is now '... on the
brink of implementation’.)
[36]
The actions of the practitioner in preparing and circulating the
resolutions for consideration and adoption by the shareholders,
Moodley contends were unlawful actions, contrary to the provisions of
the ODM rescue plan and in breach of certain provisions of
the
Companies Act, including
those requiring implementation of a business
rescue plan, as adopted.
20
He contends that the ODM rescue plan, read as a whole, contemplates
that the ODM shareholders are to
negotiate
their
new shareholding and economic interest in the restructured ODM. He
complains that he has been excluded from the process and
his
shareholding percentage and other rights have been determined by the
majority shareholders without his participation or agreement.
[37]
Moodley asserts that he has a right to the proper implementation of
the ODM rescue plan and a right not to have his shareholding
altered
except in strict compliance with the plan. It is his right not to
have his shareholding of 0.7% in ODM altered other than
by
negotiation and agreement amongst all the shareholders, which Moodley
asserts has been infringed. He states that there is no
way of knowing
what economic interest would have been allocated to him had he
participated in the negotiation of the ODM shareholders’
agreement and that he would never have agreed on a shareholding and
economic interest of only 0.123% in the restructured ODM. In
his
replying affidavit he states that had he participated in the
shareholders’ agreement, he could have negotiated a greater
economic benefit and shareholding, and he could have secured
appropriate minority protections.
21
[38] The ODM rescue
plan, Moodley argues, does not itself fully regulate the
restructuring of the shareholding in ODM, but leaves
it to all the
shareholders and StarTimes to reach an agreement acceptable to them
all in terms of clauses 5.3.2.7 and 5.3.2.10.
It is only unanimous
shareholders’ agreements as contemplated in those clauses, he
argues, which may deal with the issues
enumerated in them, such as
the regulation of the new shareholding in the restructured ODM, the
ability of StarTimes to participate
in 65% of the profits of ODM, and
the proportions in which the ODM commencement date shareholders are
to participate in 15% of
the profits of ODM, the appointment of
directors and the nomination of the chief executive officer.
[39] A memorandum of
incorporation, his argument continues, may not be used to circumvent
the provisions of clauses 5.3.2.7 or 5.3.2.10
and, ‘... to the
extent that it purports to regulate the aspects which should properly
be regulated under the shareholders’
agreement’, is
contrary to the ODM rescue plan and unlawful. Moodley argues that
clauses 4.3.2.8 and 5.3.2.11 imply that
the memoranda of
incorporation of ODM and NEWCO can only be concluded after (and not
at all in the absence of) the conclusion of
the shareholders’
agreements. If fulfillment of the condition included in clause
5.3.2.7 is waived, the business rescue plan,
he argues, ‘...
must either be implemented without the benefits conferred under that
clause or, if it is incapable of implementation
without the
fulfillment of that condition, then the Plan must be changed or
fail’. The ODM rescue plan, on Moodley’s
interpretation,
cannot be implemented, irrespective of the waiver of the conditions
contained in clauses 5.3.2.7 and 5.3.2.10,
unless and until he has
been included in negotiations and agreement in respect of his
participation in the post-rescue level of
shareholding in ODM.
[40] I disagree with
Moodley's interpretation of the provisions of the ODM rescue plan to
which I have referred. It is not correct
that the ODM rescue plan
does not in its own terms regulate the post-rescue level of
shareholding or that the restructuring of
the shareholding, or indeed
any other matters referred to in clauses 5.3.2.7 or 5.3.2.10, can
only be determined by way of a shareholders’
agreement to which
all the shareholders have agreed. There is also no basis for the
contention that memoranda of incorporation
cannot be lawfully adopted
in terms of the ODM business rescue plan in the absence of
shareholders’ agreements being concluded
pursuant to clauses
5.3.2.7 and 5.3.2.10.
[41]
Clause 4.12.3, on a proper interpretation in accordance with the
approach laid down in
Natal
Joint Municipal Pension Fund,
22
provides
for a proportional reduction of the percentage shareholding of the
ODM commencement date shareholders in order to accommodate
the 20%
and 65% shareholdings to be acquired by StarTimes and the new black
economic empowerment investor respectively Their reduction
in
shareholding must by necessary implication be proportional:
shareholders are to be treated fairly and equally, unless otherwise
agreed. Importing the words ‘pro rata’ or ‘proportional’
into clause 4.12.3.1 accords with the test ordinarily
applicable in
the determination whether a proposed unexpressed term forms part of a
contract, which test was thus concisely stated
by Brand JA in
City
of Cape Town (CMC Administration) v Bourbon-Leftleyh and Another NNO
2006
(3) SA 488
(SCA):
'A
proposed tacit term can only be imported into a contract if the court
is satisfied that the parties would
necessarily
have
agreed upon such a term if it had been suggested to them at the
time.
'
[42]
In the absence of a shareholders’ agreement binding Moodley,
his economic interest is represented by his right to dividends
payable to him from the profits of ODM in his capacity as a
shareholder. The reduction of his shareholding pursuant to clause
4.12.3.1 necessarily reduced his economic interest in ODM
concomitantly Clause 5.3.2.7 contemplates that the ODM commencement
date
shareholders may agree on their rights
inter
se
to
participate in 15% of the profits of ODM in a manner which does not
reflect their respective shareholdings. Because Moodley has
not
entered into such an agreement, his economic interests are reflected
by his shareholding. Not being permitted to participate
in the
negotiation and conclusion of the shareholders’ agreement did
not adversely affect his economic interests.
[43] Clause 5.3.2.8
includes a condition that ODM ‘...shall adopt a memorandum of
incorporation on terms consistent with what
is set out in clause
5.3.2.7’ and clause 5.3.2.11 includes a similar condition in
respect of NEWCO. The requirements of clauses
5.3.2.8 and 5.3.2.11
are accordingly that the memoranda of incorporation must be
consistent with the items set out in clauses 5.3.2.7
and 5.3.10
respectively. It is not required that the memoranda of incorporation
must be consistent with the provisions of the shareholders’
agreements envisaged in clauses 5.3.2.7 and 5.3.2.10. Clause 5.6.2
provides that all the conditions ‘are separate, divisible
and
distinct from one another.’ There is nothing in the ODM rescue
plan which limits the matters which may be dealt with
in the
memoranda of incorporation envisaged in clauses 5.3.2.7 and 5.3.2.10.
It follows that the memoranda of incorporation may
validly deal with
any matter provided for in
s 15
of the
Companies Act, including
the
aspects enumerated in clauses 5.3.2.7 and 5.3.2.10, whether or not
the requirements of unanimous shareholders’ agreements
contemplated in clauses 5.3.2.7 and 5.3.2.10, have been waived. A
memorandum of incorporation is, in terms of
s 15(6)(b)
of the
Companies Act, binding
‘between or among the shareholders of
the company’.
[44] The
shareholding and the rights attaching to the holders of the different
classes of shares, and indeed all the matters enumerated
in clause
5.3.2.7, are dealt with in the ODM memorandum of incorporation.
Moodley’s shareholding and economic interest in
ODM are
reflected as being 0,123%. This is the percentage contemplated by
clause 4.12.3.1. Also the adoption of the ODM memorandum
of
incorporation, therefore, has not prejudiced any of his rights.
[45] The condition
that StarTimes concludes shareholders’ agreements with the
other ODM shareholders (clause 5.3.2.7) or NEWCO
shareholders (clause
5.3.2.10) is accordingly not a necessary precondition to the
effectiveness of the ODM rescue plan. Otherwise
the ODM rescue plan,
in clause 5.6, would not have provided that these conditions are
stipulated for the sole benefit of StarTimes
nor would the conditions
have been made capable of waiver at the exclusive election of
StarTimes. If these conditions are waived,
the aspects that would
otherwise have been regulated by the shareholders’ agreements
contemplated therein will be regulated
in accordance with the other
provisions of the ODM rescue plan, viz clauses 4.12.3, 5.3.2.8 and
5.3.2.11, supplemented insofar
as may be necessary by certain
provisions of the
Companies Act.
[46
] Moodley’s
assertion, which is fundamental to his claim in this application,
that his shareholding cannot be ascertained
in the absence of his
participation in the negotiation and conclusion of shareholders’
agreements, is, therefore, wrong.
The relative holdings of the
shareholders in ODM and NEWCO after implementation of the ODM rescue
plan is regulated by the ODM
rescue plan, without the necessity of
any unanimous shareholders’ agreements being concluded.
[47] Moodley also
raises other alleged failures by the practitioner to comply with the
ODM rescue plan and certain provisions of
the
Companies Act. With
reference to clause 4.12.3, read with clause 2.1, he contends that
the ODM rescue plan contemplates the acquisition by StarTimes
of
‘existing’ shares from the commencement date shareholders
and not a buy-back of the existing shares and the issue
of newly
created classes A to E shares. A buy-back and issue of newly created
classes of shares, he contends, could only have been
achieved in
terms of a unanimous shareholders’ agreement contemplated in
clause 5.3.2.7. The buy-back of the shares, he contends,
also
contravened the provisions of
sections 46
,
48
(8) and
114
of the
Companies Act. There
is no merit in these contentions.
[48] The ODM rescue
plan expressly provides for the cancellation of existing ODM
preference shares and shares and for the re-issue
of shares in
accordance with the percentage shareholdings contemplated in clause
4.12.3. It is also clear from the provisions of
clauses 5.3.2.7 and
5.3.2.8 as well as those of clauses 5.3.2.10 and 5.3.2:11 that the
ODM rescue plan was adopted on the basis
that the effective economic
interest of StarTimes and of the BEE investors would not equate their
shareholdings. Clauses 4.5 and
4.6 provide that the preference
shareholder and shareholder claims shall be discharged inter alia on
the basis that the preference
shares (clause 4.5.4) and the shares
(clause 4.6.4) are to be cancelled on the implementation date. Once
cancelled, new shares
have to be issued in order to give effect to
the dictates of the ODM rescue plan.
[49] The
practitioner states that the buy-back of existing ODM shares and the
issue of new ODM shares is the only practical manner
in which to give
effect to the cancellation of shares. Even if the restructuring of
the shareholding in ODM could be achieved in
some manner other than
the buy-back and issue process chosen by the practitioner, that would
not render the procedure adopted by
him invalid. It was merely a
mechanism used in order to implement the cancellation and new
shareholding requirements of the ODM
rescue plan. Moreover, Moodley’s
position as a shareholder has not been shown to have been adversely
affected by the use
of such mechanism.
[50]
Moodley’s contention that the provisions of
s 114
of the
Companies Act were
contravened is founded on the premise that the ODM
rescue plan does not contemplate a cancellation (the buy-back
procedure used)
and re-issue of shares. The premise is wrong. There
was no contravention of
s 114.
Moodley’s contention that the
practitioner failed to comply with
sections 46
and
48
(8) of the
Companies Act, is
also wrong. The provisions of
s 48(2)
, requiring
compliance with the liquidity and solvency requirements of
s 46
, are
inapplicable to business rescue proceedings where the company in
business rescue is under the control of a business rescue
practitioner and not its board. Moreover,
sections 137(1)
3>
23
and
152
(6)
3>
24
of the
Companies Act give
express recognition to the business rescue
practitioner’s power to effect the issue of securities, and the
alteration in
the classification or status thereof, in accordance
with the business rescue plan. Clause 2.4(4) of the ODM memorandum of
incorporation
also specifically provides for the practitioner's power
to-
“
...in terms
of
section 152(6)(b)
amend this Memorandum of incorporation to
authorise, and determine the preferences, rights, limitations and
other terms of any
securities that are not otherwise authorised, but
are contemplated to be issued in terms of the business rescue
plan...”
[51] Moodley
contends that the business rescue plan does not afford a power of
nomination to StarTimes and that its nomination of
Hantex to hold its
shareholding is accordingly unlawful. This contention disregards the
fact that the nomination of Hantex is permissible
in terms of
s 56(1)
of the
Companies Act, which
reads:
‘
Except
to the extent that a company’s Memorandum of Incorporation
provides otherwise, the company’s issued securities
may be held
by, and registered in the name of, one person for the beneficial
interest of another person.'
Clause 3.4 of the
ODM memorandum of incorporation specifically preserved the provisions
of
s 56(1)
of the
Companies Act. Clause
4.3 provides that-
'[t]he authority of
the Board to allow the Company's issued securities to be held by, and
registered in the name of, one person
for the beneficial interest of
another person, is not restricted or varied by this Memorandum of
Incorporation.'
[52] A further point
raised is that there had been a change in the economic interests and
shareholding percentages of StarTimes
or its nominee, Hantex, and the
BEE shareholders after their negotiations and agreement to which
Moodley was not privy. Moodley
argues that ‘a change in one
shareholder’s percentage has an effect on all’ and in
particular that the ownership
of ODM by historically disadvantaged
South Africans will as a result of the variation be less than the 30%
requirement of ICASA
and its ‘foreign control’ greater
than the legally prescribed restriction of 20%. This contention is
premised on the
bold assertion that the ownership and control
requirements ‘obviously require both formal and substantive
ownership (in the
form of economic interest)’. This assertion
(and therefore that ownership and control do not depend on the voting
rights
attached to the shareholding) and how an unanimous
shareholders’ agreement would have made any difference to the
local ownership
minimum requirement and foreign control restriction,
are matters, apart from any discernable adverse impact on Moodiey's
rights
as a shareholder, that have not been established.
[53]
Moodley contends that the shareholders’ agreement concluded by
the other shareholders is invalid and unenforceable and
does not
qualify as a shareholders’ agreement envisaged under
s 15(7)
of
the
Companies Act. He
also avers that the memorandum of incorporation
of NEWCO was adopted without prior notice to him and that its
adoption is consequently
irregular and falls to be set aside. I need
not decide these issues. The shareholders’ agreement and the
NEWCO memorandum
of incorporation, even though they may have been
referred to in the documents and correspondence annexed to the
founding affidavit,
are not amongst the transactions ‘defined
in paragraph 56.1 of the founding affidavit’ and therefore not
included in
the declaratory and interdictory relief sought in terms
of prayers 3 and 4 of the notice of motion.
25
[54]
In conclusion, as far as the declaratory relief is concerned, not one
of the ‘transactions’ included in prayer
3 of the notice
of motion has been shown to be unlawful, and, as far as the
interdictory relief is concerned,
26
no
right that has been infringed has been established. Moodley has no
right to more or a different class of shares than those
allotted to
him in terms of the ODM memorandum of incorporation and he has, by
virtue of StarTimes’ waiver of clause 5.3.2.7,
no right to
negotiate for more shares or a higher percentage economic interest in
ODM. His shareholding was proportionately reduced
in exactly the same
manner as that of all the other ODM commencement date shareholders.
[55] Finally, the
matter of costs. Moodley and the opposing respondents, except the
fourteenth respondent, were all represented
by two counsel. No reason
is advanced why the costs of two counsel for each of the opposing
respondents {other than the fourteenth
respondent) should not be
allowed. I consider the employment of two counsel by Moodley and the
opposing respondents to be prudent
and not over-cautious or
extravagant. The opposing respondents further seek punitive costs
orders against Moodley. Although cogent
reasons have been advanced in
support of higher costs awards, I nevertheless consider it just to
award costs on the usual party
and party scale. The issues raised in
this application are substantial.
[56] In the result,
the following order is made:
1. The application
is dismissed.
2. The applicant is
ordered to pay the costs of the first and second respondents, of the
third and eleventh respondents, of the
fifth and the eighth
respondents, and of the fourteenth respondent, such costs in each
instance, other than the fourteenth respondent,
to include the costs
consequent upon the employment of two counsel.
P.A. MEYER
JUDGE OF THE HIGH
COURT 11 July 2014
Date of Hearing:
25-26 June 2014
Date of Judgment: 11
July 2014
Counsel for
Applicant: Adv AE Franklin (with him Adv AC Botha)
Attorneys for
Applicant: Webber Wentzel, Johannesburg
Counsel for 1
st
and 2
nd
Respondents: Adv DM Fine SC (with him Adv J
McNally SC) Attorneys for 1
st
and 2
nd
Respondents: Bowman Gilfiltan, Johannesburg
Counsel for 3
rd
and 11
th
Respondents: Adv CDA Loxton SC (with him Adv G
Goedhart Attorneys for 3
rd
and 11
th
Respondents: ENSAFRICA, Johannesburg
Counsel for 5
th
and 8
th
Respondents: Adv R Hutton SC (with him Adv TB
Hutamo) Attorneys for 5
th
Respondent: Hogan Lovells (South
Africa)
incorporated as
Routledge Modise Inc, Johannesburg
Attorneys for 8
th
Respondent: Werksmans Attorneys, Johannesburg
Counsel for 14
th
Respondent: Adv P Daniels SC
Attorneys
for 14
th
Respondent: Baker & McKenzie, Johannesburg
1
The application is opposed by the first and second respondents, the
third and eleventh respondents, the fifth and the eighth
respondents
and the fourteenth respondent.
2
Redpath
Mining South Africa (Pty) Ltd v Marsden NO and Others
18486/2013
14 June 2013 (GSJ).
3
Kgomo, J said the following:
‘
[70]
Section 133(1)
of the Act calls for a complete moratorium in the
clearest and unambiguous terms. During the moratorium no legal
proceedings,
including any enforcement action concerning the
business under the rescue plan is countenanced. The only exceptions
allowed are
set out in the provisos (a) to (f) of subsection (1) of
section 133
as quoted above. One of the objects and/or objectives of
the new
Companies Act in
this regard are to provide for efficient
rescue of
f
nancially
distressed companies in an atmosphere that is not hindered or
cluttered with or by litigation.
[71]
Only in exceptional circumstances may a Court permit litigation
against a business rescue plan or related thereto. I have
listened
attentively to the submissions made before me by counsel for the
applicant. I am not persuaded that the applicant has
made out a
cogent case for such leave to litigate. It is my further finding
that the application for leave of the Court to litigate
here was not
sufficiently motivated to convince this Court to indulge the
applicant
4
Vol
1 at 478(5)
5
Para
18.
6
Clause
6.5.17 of the adopted business rescue plan.
7
The
effect of an arbitration clause concisely stated by LTC Harms
Amler’s
Precedents of Pleadings
(7
th
Ed) thus:
7
‘
An
agreement to arbitrate does not deprive the court of its
jurisdiction over the dispute covered by the agreement. Therefore,
sn arbitration agreement is not an automatic bar to legal
proceedings in ordinary courts. Should a party institute proceedings
in a competent court, in spite of the arbitration agreement, the
defendant has one option: either:
(a)
apply for a stay of the proceedings in terms of
section 6
, which
application must be brought before the delivery of any pleadings by
the defendant or the taking of any other step in the
proceedings; or
Conress
(Pty) Ltd v Gallic Construction (Pty) Ltd
[1981]
3 All SA 337
(W),
1981 (3) SA 73
(W)
(b)
pray in a special plea in the nature of a dilatory plea for the stay
of the proceedings pending the final determination of
the dispute by
the appointed arbitrator.
Yorigami
Maritime Construction Co Ltd v Nissho-iwai Co Ltd
[1977]
4 All Sa 733
(C),
1977 (4) SA 682
(C)GK
Breed
(Bethlehem)
(Edms) Bpk v Martin Harris S Seuns (OVS) (Edms) Bpk
1984 (2) SA 66
(0)’
8
Para
8 supra.
9
The
shareholding in these entities are owned by historically
disadvantaged individuals.
10
Section
129{2)(b)
of the
Companies Act.
11
StarTimes
is a Chinese company.
12
Clause
3.4.1 of the ODM rescue plan.
13
Clause
3.4.2 of the ODM rescue plan.
14
It
is stated in clause 1.5 of the ODM rescue plan that:
'1.5
StarTimes intends to compromise the Claims of Creditors, restructure
the Shares of the Sharehgolders and inject the Company
with
sufficient capital to enable it to implement a complete
restructuring of the Company's affairs, business, debt and equity
in
a manner that will-
1.5.1
give Creditors a better return than would result from a liquidation
of the Company;
1.5.2
maximise the likelihood of the Company continuing in existence on a
solvent basis after the Impfementation Date, á
result that
will be beneficial to Creditors and Employees going forward; and
1.5.3
preserve jobs and create a sustainable platform for further job
opportunities,’
15
Clause
5.2.5 of the business rescue plan.
16
Clauses
5.3.2.13 and 5.3.2.14 of the business rescue plan.
17
Clause
5.3.2.10 of the business rescue plan.
18
Clause
5.3.2.12 of the business rescue plan.
19
Paragraph
56.1 of the founding affidavit reads as follows:
‘
BG’s
[Bowman Gilfillan’s] correspondence of 25 April, 30 April and
2 May 2014, as well as the documents attached to
this correspondence
(“tie Documents and Correspondence
1
'),
appear to contemplate a share buy-back, an issue of new shares, and
the adoption of a new Mol and a draft subscription agreement,
all
purportedly in terms of the BR Plan:'
20
Para
8 supra.
21
The
allegation-that he could have secured appropriate minority
protections is not only unsubstantiated, but does not form part
of
the case made out in the founding papers. See:
Titty’s
Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd and Others
1974
(4) SA 362
(T) at 369A-B;
Shephard
v Tuckers Land and Development Corporation (Pty) Ltd (1)
1978
(1) SA 173
(W) at 177G-H;
Le
Roux v Direkteur-Generaal van Handel & Nywerheid
1997
(4) SA 174
(T) at 185B-C.
22
Para
6 supra.
23
Section 137(1)
reads as follows:
'During
business rescue proceedings an alteration in the classification or
status of any issued securities of a company, other
than by way of
transfer of securities in the ordinary course of business, is
invalid except to the extent-
(a)
that the court otherwise directs; or
(b)
contemplated in an approved business rescue plan,'
24
Section
152(6)
reads as follows:
‘
To
the extent necessary to implement an adopted business rescue plan-
(a)
the practitioner may, in accordance with that plan, determine the
consideration for, and issue, any authorised securities
of the
company, despite
section 38
or
40
to the contrary; and
(b)
if the business rescue plan was approved by the shareholders of the
company, as contemplated in subsection (3)(c), the practitioner
may
amend the company's Memorandum of Incorporation to authorise, and
determine the preferences, rights, limitations and other
terms of,
any securities that are not otherwise authorised, but are
contemplated to be issued in terms of the business resue
plan,
despite any provision of
section 16
,
36
or
37
to the contrary,’
25
Joffe,
J, in
Swissborough
Diamond Mines (Pty) Ltd and Others v Government of the Republic of
South Africa and Others
1999
(2) SA 279
(T), at 324F-H, said this:
'Regard
being had to the function of affidavits, it is not open to an
applicant or a respondent to merely annexe to its affidavit
documentation and to request the Court to have regard to it. What is
required is the identification of the portions thereof on
which
reliance is placed and an indication of the case which is sought to
be made out on the strength thereof. If this were not
so the essenoe
of our established practice would be destroyed. A party would not
know what case must be met. See
Lipschitz
and Schwarz NNO v Markowitz
1976
(3) SA 772
(W) at 775H and
Port
Nolloth Municipality v Xahalisa and Others; Luwalala and
Others
v Port Nolloth
Municipality
1991
(3) SA 98
(C) at 111B--C
26
The
requisites to be established for the granting of a final interdict
are trite: an infringement (actually committed or reasonably
apprehended) of á clear right with resultant prejudice and
the absence of another adequate remedy.
LAWSA
Vol
11 (First Reissue) paras 307-313.