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[2021] ZAGPJHC 17
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First National Nominees (Pty) Limited and Others v Capital Appreciation Limited and Another (19/41679) [2021] ZAGPJHC 17; 2021 (4) SA 516 (GJ) (5 February 2021)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
REPORTABLE: YES/
NO
OF INTEREST TO
OTHER JUDGES: YES/
NO
REVISED
5/02/2021
CASE NUMBER :
19/41679
In the matter
between:
FIRST NATIONAL NOMINEES
(PTY) LIMITED

First Applicant
NEDBANK
LIMITED

Second Applicant
ROZENDAL PARTNERS (PTY)
LIMITED

Third Applicant
and
CAPITAL
APPRECIATION
LIMITED

First Respondent
AFFECTED DISSENTING
SHAREHOLDERS

Second Respondent
JUDGMENT
INTRODUCTION
[1]
This is an application wherein the first applicant, a private
company by the name of First National Nominees (Pty) Ltd
(“Nominees”),
seeks to exercise appraisal rights afforded
to dissenting shareholders in terms of section 164 of the Companies
Act, 71 of 2008
(“the Act”).
[1]
It asks for a determination by the court of the fair value of the
shares it holds in the first respondent, Capital Appreciation
Limited
(“Capprec”), a public company listed on the Main Board of
the Johannesburg Stock Exchange.
[2]
It is common cause that, on
or about 29 July 2019, Capprec issued a
circular to its shareholders ("the Circular”). The
shareholders were advised
that Capprec would be repurchasing 245 000
000 of its shares held by specific shareholders, (defined as
"Relevant Persons"
in the Circular) for the amount of R196
000 000. The Circular further advised the shareholders that the
proposed buy-back was subject
to the provisions of sections 48, 114
and 164 of the Act in that it would “
.   result in
Capprec acquiring in excess of 5% of (its own) issued share
capital...”
The mention of Capprec acquiring in
excess of 5% of its own issued share capital, is a direct reference
to section 48(8)(b) of the
Act that provides that a decision by the
board of a company to acquire a number of its own shares “
is
subject to the requirements of sections 114 and 115 if, considered
alone, or together with other transactions in an integrated
series of
transactions, it involves the acquisition by the company of more than
5% of the issued shares of any particular class
of the company's
shares
.” The Circular informed the shareholders that the
transaction required their specific authority and would be tabled at
a
general meeting of the company to be held on 27 August 2019 at
14h30, for approval of a special resolution in 6terms of section
115
of the Act.
[3]
In accordance with section 164 of the Act, in order to enjoy
the benefits of an appraisal remedy, a dissenting registered
shareholder
is required to object in writing to the adoption of the
special resolution before the resolution in question is put to the
vote,
to attend the meeting and to vote against the resolution.
[2]
If the resolution is nevertheless adopted and the transaction
proceeds, the dissenting registered shareholder may demand that the

company acquire its shares and pay it the fair value thereof.
[3]
The company is then required to make a written offer to the
dissenting shareholder, who may either accept or reject that offer.

If the offer is rejected, the dissenting shareholder may approach the
court requesting a judicial appraisal, or determination,
of the fair
value of the shares in question.
[4]
Nominees was, as at 10 September
2019, the registered holder of
inter
alia
18 039 829 ordinary shares (hereinafter referred to as “the
shares”) in the issued share capital of Capprec. The aforesaid

shares are, beneficially owned by the second applicant, Nedbank
Limited, as envisaged in section 56 of the Act. The shares form
part
of a portfolio of assets within the Prescient Qualifying Investor
Hedge Fund Scheme, which is managed by the third applicant,
Rozendal
Partners (Proprietary) Limited, a private company registered as such
in terms of the Act .
[4]
[5]
On 21 August 2019, Nominees gave  written  notice
in  accordance  with section 164(3) and section 115(8)
of
the Act, that it objected to and intended to oppose (i.e. vote
against) the adoption of the relevant special resolution, referred
to
and set out in the Circular.
[5]
[6]
At the general meeting held on 27 August 2019, Nominees was
represented by proxy and voted against the applicable resolution, and

by extension against the transaction. On 10 September 2019, Capprec,
gave notice in terms of section 164(4) of the Act that the
applicable
resolution was adopted by the general meeting (97, 7% of Capprecs’
shareholders voted in favour thereof) and that
the buy-back
transaction had been approved. On 12 September 2019, Nominees
transmitted a demand to Capprec, in terms of sections
164(5) and
164(7) of the Act, requiring Capprec to pay to it the fair value of
its shares.
[7]
On 18 September 2019,
Capprec transmitted correspondence to Nominees
in which it informed Nominees that Capprec would provide a written
offer to pay
the fair value of its shares by 16 October 2019.
In this letter, Capprec specifically adverted to its obligations
under section
164 of the Act and more particularly subsection
164(11).
[6]
On 16 October 2019,  Capprec,  made  a  written
offer  in  terms  of section 164(11) to
acquire the
shares for an amount of R0.80 (eight cents) per share.
[8]
The applicants rejected the section 164 offer as inadequate
and accordingly brought an application within the time limit
contemplated
in section 164(12)(b) of the Act. In answer to the
application, Capprec's attorneys addressed correspondence to the
applicants'
attorneys, in which, for the first time, it was indicated
on behalf of Capprec that "
the provisions of
s 164
of the
Companies Act had
not been triggered
"; and that "
(while
Capprec had) previously suggested that
s 164
had been triggered, …
that position was based on a misunderstanding of the legal position.
"
[9]
Capprec's adopted stance (as set out above) was encapsulated
in Capprec's answering papers, and constitutes the only basis upon
which Capprec opposes the applicants' exercise of
section 164
appraisal rights and now this application. It contends that the
rights afforded to a dissenting shareholder in
section 164
is only
triggered under very specific circumstances which are set out in
section 164(2)(a)
and
(b)   of the Act. This section reads as follows:
“
164
Dissenting shareholders appraisal rights (1) ........
(2)
If a company has given notice
to shareholders of a meeting to consider adopting a resolution to-
(a)
amend its
Memorandum of Incorporation by altering the preferences, rights,
limitations or other terms of any class of its shares
in any manner
materially adverse to the rights or interests of holders of that
class of shares, as contemplated in section 37 (8);
or
(b
)
enter into a transaction contemplated in section 112, 113, or 114,
that notice must include a statement informing
shareholders of their rights under
this
section.”
(Emphasis added)
The transaction contemplated by section 112 is a “
proposal
to dispose of all or the greater part of the assets of undertaking of
a company
”; the transaction contemplated in section 113 is
a “
proposal for an amalgamation or merger of two or more
profit companies”;
and the transaction contemplated in
section 114 is “
a scheme of arrangement.”
It is
agreed between the parties that section 112 and 113 are not
applicable in the present circumstances, and that the real issue
for
determination between the parties are the interpretation of section
114 and section 48(8)(b) of the Act.
[10]
As stated earlier, the Circular advised the shareholders that
the reacquisition of the shares would result in Capprec acquiring in

excess of 5% of its own issued share capital and was subject to the
provisions of sections 48, 114 and 164 of the Act. Capprec
contends
that section 114 is only applicable to a “scheme of
arrangement” and as the proposed buy-back did not constitute
a
scheme of arrangement as envisaged in section 114 of the Act, there
is accordingly no basis upon which the applicants can rely
on section
164 of the Act. It further contends that when Capprec previously
communicated to its shareholders that section 114 was
applicable, and
if they oppose the proposed reacquisition they would have rights
under section 164 of the Act, it was made in error.
[11]
The applicant anticipated that there are other potential
parties who have not accepted an offer in terms of section 164(11).
They
have been cited as the second respondent (affected dissenting
shareholders).
[12]
Notwithstanding the above, Nominees contends that in the event
that the court determines that only a transaction which is a scheme

of arrangement would attract the appraisal remedy as set out in
section 164 of the Act, Capprec is estopped from denying the
applicants'
rights to assert a claim in terms of section 164 of the
Act. In the circumstances the only questions which call for
adjudication
in this matter are as follows:
(a)             Whether
or not Nominees, in the circumstances
pertaining to the transaction
in question, is entitled to exercise the appraisal rights afforded to
it in terms of section 164
of the Act; and if not;
(b)             Whether
or not Capprec is estopped from denying
the circumstances which have
given rise to Nominees exercising its section 164 appraisal rights.
THE
COMPANIES ACT
[13
]
The transactions which give rise to the issues for
determination in this application comprised of share repurchases by
Capprec in
terms of four Share Acquisition Agreements ("the
Relevant Transactions"). Section 48(2)(a) of the Act
specifically permits
that “
the board of a company may
determine that the company will acquire a number of its own shares.”
There is no dispute between the parties that the Relevant
Transactions constituted an acquisition by Capprec of its own shares
in
terms of section 48(2)(a) of the Act.
[14]
Prior to an amendment to the 1973
Companies Act in
1999, a
company in South Africa could not repurchase its own shares even
though expressly empowered to do so by its memorandum
of articles or
association. The rule was established in the House of Lords in
Trevor
v Whitworth
[7]
and became a fundamental rule of company law as practised in
Commonwealth jurisdictions.
[8]
The purpose of the prohibition was two-fold; its first and primary
purpose was to protect a company's creditors by preventing what
would
amount to an unlawful reduction of the capital of a company, and
secondly it protected the company's shareholders by preventing
the
company from trafficking in its own shares and from favouring one
group of shareholders over another.
[9]
[15]
In 1999, the prohibition against share repurchases was relaxed
and introduced into the 1973
Companies Act the
power to repurchase
shares through authorisation in its articles of association and by
means of a special resolution of its shareholders
approving the
acquisition and subject to a liquidity test.
[10]
When the Act was first promulgated in 2008, the power to approve the
acquisition by the company of its own shares was granted to
the board
of directors but such power was subjected to the caveats and
conditions set out in section 48(1) to 48(7) of the Act.
In 2011
sub-section 48(8) was introduced into the Act and it specifically
adverted to and circumscribed the board's power in relation
to
particular types of shares acquisitions. It provides as follows:
“
48
Company or subsidiary acquiring company's shares
(8)
A decision by the board of a company
contemplated in subsection (2) (a)-
(a)
must be
approved by a special resolution of the shareholders of the company
if any shares are to be acquired by the company from
a director or
prescribed officer of the company, or a person related to a director
or prescribed officer of the company; and
(b)
is subject
to the requirements of sections 114 and 115 if, considered alone, or
together with other transactions in an integrated
series of
transactions, it involves the acquisition by the company of more than
5% of the issued shares of any particular class
of the company's
shares.”
[16]
Two scenarios are catered for here: Firstly, if any shares are
repurchased from a director or prescribed officer of the company,
or
a person related to a director or prescribed officer, the repurchase
is subject to approval by special resolution of the company.

Secondly, when the repurchase transaction (or series of transactions)
breaches a threshold level of 5% of the company's shares
the
requirements of sections 114 and 115 of the Act are applicable to the
transaction.
[17]
It is common cause that the Relevant Transactions fall within
the scope of section 48 (8)(a) and (b), in that it involves the
acquisition
by Capprec of its own shares from,
inter alia
,
directors, and amounts to an acquisition of more than 5% of Capprec’s
issued share capital. It follows accordingly, and
on an ordinary
grammatical reading of section 48(8)(b), that the Relevant
Transactions are subject to the requirements of sections
114 and 115
of the Act.
[18]
Capprec’s contention
is that the legislature, in section
164(2)(b), only included repurchase transactions contemplated in
section 114 and did not include
repurchase transactions contemplated
in section 48. This is so because section 48 deals with the
acquisition by a company
of its own shares in a manner different from
section 114: section 48 deals with a consensual agreement between the
company and
the seller of shares, and section 114 deals with a scheme
of arrangement between the company and the holders of any class of
its
shares in a manner contemplated in paragraphs 114(1)(a) to (f),
where in all of these instances there must be the requirement of

coercion. It is contended that although section 114(1)(e)
specifically deals with a re- acquisition of shares by the company
itself,
it is different from section 48 in that a reacquisition in
terms of section 48 involves a voluntary seller. In terms of section

114, a reacquisition by the company of its securities is achieved
through a "scheme" and in such an event, in terms of

section 114(4), the provisions of section 48 apply. The reference to
section 48 in section 114(4) thus distinguishes "transaction

contemplated" in section 114(1)(e) from the "transaction
contemplated" in section 48 - if it did not, there would
be no
need for the inclusion of section 114(1)(e).
[19]
Capprec submits that the Relevant Transactions are not a
scheme of arrangement as understood in the authorities related to the
old
Companies Act. It
further submits that although
section 48(8)(b)
requires that the Relevant Transactions are subject to the
requirements of
sections 114
and
115
, it is only a reference to the
procedural requirements of
sections 114
and
115
. It does not deem a
transaction which is not a scheme into a scheme. Capprec contends
that
section 48(8)(b)
only makes reference to
sections 114
and
115
and no reference is made to
section 164.
If the legislature had
intended that
section 164
would be triggered in the circumstances
referred to in
section 48(8)(b)
, reference would have been made to it
in
section 48.
[20]
Nominees argues that the requirements
of section 114 of the Act are
not made applicable to the transaction because the transaction is a
scheme of arrangement. The requirements
of section 114 and 115 of the
Act are made applicable to the transaction because the transaction
crosses the 5% threshold for a
repurchase by the company of its own
shares and because that is what section 48(8)(b) stipulates.
Consequently, whether or not
the transaction is an "arrangement"
as provided for in section 114(1) is irrelevant because
section
48(8)(b)
of the
Companies Act makes
the requirements of
section 114
and
115
applicable.
Is Nominees entitled to
exercise the appraisal rights afforded to it in terms of section 164
of the Act?
[21]
Both sections 48 and 114 of the Act
provide mechanisms through which a company can acquire its own
shares. Section 48(2) provides
that a company may, to the extent that
it is solvent and liquid, buy back its own shares. The only
requirement is the approval
or decision of the board of the company.
It is only if the re-acquisition by the
company falls within the provisions of section 48(8)(a) and (b) that
approval by special
resolution is specifically required.
[22]
Section 114 provides for the
reacquisition  of shares through a scheme of arrangement. There
is no definition for scheme of
arrangement under the Act. Section 114
is however part of a broader category of transactions referred to in
the Act as “fundamental
transactions”. Fundamental
transactions are subject to, amongst other things, more stringent
legislative requirements for
their implementation. Common to all
fundamental transactions is that they must be approved by a special
resolution.
[23]
In terms of section 48(8)(b) of the Act,
a share buy-back is subject to the requirements of sections 114 and
115
where a
company acquires at least 5% of any class of its shares, whether in
terms of a single transaction or otherwise. The reality
is therefore
that the vast majority of share buy-back transactions
must comply with both the provisions of
section 48 and 114, and it is only a small number of share buyback
transactions which can
be implemented without having to comply with
both sections. In turn, section 114(4) of the Act provides that any
share buy-back
implemented in terms of the provisions of that section
is also subject to the provisions of section 48. Accordingly, all
share
buy-back transactions implemented in terms of a scheme of
arrangement must also comply with section 48.
[11]
[24]
The question is if a transaction falls within the ambit of
section 48(8)(b), is the transaction also deemed to be a “scheme

of arrangement” as contemplated in section 114? Or is the
repurchase merely subject
mutatis mutandis
to the requirements
of a scheme of arrangement?
[25]
Section 114(1) of the
Act characterises a scheme of arrangement as
"any arrangement between the company and holders of any class
of its securities".
As stated an “arrangement" is
not defined in the Act. Johan Latsky,
[12]
in an article, “
The fundamental transactions under the
Companies Act: A
report back from practice after the first few
years”,
opines that if one however compares the arrangement
in terms of the Act with an arrangement in terms of a section 311
scheme under
the 1973 Act, the objective of an arrangement in terms
of section 114 is to affect the respective rights and obligations
inter se
of the company and its holders of securities in a
manner which cannot otherwise be conveniently achieved by independent
agreement
between the company and each holder of securities. Although
one cannot use a section 311 scheme to do something that could not
have been done by agreement, its function is to take the place of an
agreement. The repurchase by agreement from a shareholder is
not such
an arrangement. It does not legally bind any holder of securities
whose agreement has not been obtained.
[26]
Yeats
[13]
opines that because a repurchase is (i) a distribution of the
company's assets and (ii) a re-organisation of issued share capital

(and hence of ownership), achieved by (iii) a transfer to the company
of its shares, it invites all the abuses associated with
each of
these three functions and may even involve abuses of all three of
these functions. Repurchase thus has significance for
corporate
governance, takeover regulation, creditor protection, discrimination
between shareholders, oppression of minorities,
and the proper
functioning of the securities market. Yeats comments as follows:
“
Although repurchase appears to have the virtue of a
voluntary transaction, in reality, because it is both a distribution
and a reorganisation,
it has a significant element of coercion. If
targeted, those to whom the offer is not made have no choice but to
accept an increase
of ownership participation. And whether targeted
or not, offeree shareholders cannot participate in the distribution
unless willing
to relinquish shares. They are forced to decide
whether to 'participate in profits and relinquish their shares or
forswear the
distribution and increase ownership participation'. 'It
is always possible that a shareholder may wish to do neither'. Many
shareholders
may not view the distribution of profits as a sufficient
reason for parting with their shares but at the same time may not
view
the alternative (in effect a further investment in the company)
as a wise investment decision. The shareholder must either sell
at a
price nominated by the company; or retain his shareholding on terms
different from those upon which he first invested in the
company
—that is to say, increase his participation without the benefit
of legal protection.”
[27]
Given the legislative history behind the section, as set out
above, and given the potential abuses, particularly of minority
shareholders,
which share repurchases can facilitate, the express
wording of section 48(8)(b) is, in my view, clear. It does not state
that the
transaction is a scheme of arrangement, but rather that it
is subject to the requirements of section 114 and 115. To put it
differently,
by merely stating that the requirements of section 114
be complied with in respect of a reacquisition of securities in
excess of
5%, does not have the effect of deeming a transaction to be
an arrangement if, by nature, the transaction is not an arrangement

as this term is interpreted in terms of our common law. One can only
accord meaning to section 48(8)(b) if it is dealing with a
situation
which would not ordinarily be subject to sections 114 and 115, and
hence the specific statutory exhortation to apply
such sections in
the particular threshold circumstances adumbrated in the subsection,
namely 5%. A section 48(8)(b) transaction
therefore remains a section
48 transaction, but because it involves the acquisition by the
company of more than 5% of the issued
shares of any particular class
of the company's shares, the legislature deemed it fit to include and
provide additional protection
to minority shareholders.
[28]
It is understandable that
the legislature saw fit to impose
particular and further conditions on the type of transaction
identified in sub-section 48(8)(b).
It recognised that not all
transactions involving a repurchase by the company of its own shares
should be subjected to further
conditions, but those which involved a
significant and substantial repurchase (more than 5%) should be. The
legislature also recognised
that, in transactions of this nature and
of this magnitude, it was minority shareholders which required
protection and this was
best achieved by imposing on the transaction,
the ready-made protections afforded and provided to minority
shareholders in sections
114 and 115 of the Act.
[29]
As stated,
sections 114
and
115
of the
Companies Act are
provisions which appear in the statute at Part A of Chapter 5, which
part deals with the approvals necessary for certain transactions

referred to as fundamental transactions. Read together they set out
various procedural requirements for transactions which fall
within
their purview and provide various rights and remedies to shareholders
affected by transactions subject to the sections.
What
section
48(8)(b)
does is to impose on transactions falling within
section
48(8)(b)
"the requirements" of
sections 114
and
115
. The
question which arises is what then is contemplated by the words
"requirements of
sections 114
and
115
”?
[30]
It is trite that a statutory
interpretation which gives meaning and
efficacy to a provision, is to be preferred to one which renders a
provision superfluous
or nugatory.
[14]
In my view, by making reference to
section 114
and
115
as a whole,
the legislature intended for all the procedural conditions and rights
set out in
section 114
and
115
to apply. From a practical procedural
perspective this would,
inter alia,
involve the appointment of
an independent expert as contemplated in
section 114(2)
(which
Capprec did), the proposing and passing of a special resolution as
contemplated in
section 115(2)(a)
(which Capprec did) and,
importantly for the purposes of this application, the condition set
out in section 115(8) of the Act entitling
shareholders to exercise
appraisal rights in terms of section 164 of the Act, which is
precisely what Capprec represented to the
applicants and indeed all
its shareholders in the Circular. Professor Cassim
[15]
in an article titled, “
The appraisal remedy and the
oppression remedy under the
Companies Act of 2008
, and the overlap
between them”,
observes that in terms of
s 114(1)(e)
, if a
re-acquisition of the securities of a company is effected in terms of
a scheme of arrangement, shareholders are entitled
to the relief
afforded by appraisal rights. This creates a perplexing anomaly:
minority shareholders are entitled to appraisal
rights protection if
the board decides to effect a (substantial) re- acquisition of the
company's shares in terms of a scheme of
arrangement but not if it
decides to do so in terms of section 48. This does not make sense,
especially if the rationale underpinning
the additional requirements
for share repurchases which exceed 5% is that such transactions merit
additional protection because
they potentially affect minority
shareholders more radically as they may amount to a restructuring of
the shares of the company.
If there was still any doubt,
section
114(3)
specifically states that the report must be distributed to all
holders of the company’s securities which must,
inter alia
,
include a copy of
sections 115
and
164
. (Emphasis added). If
the drafters did not intend appraisal rights to apply in these
circumstances, more specific cross-referencing
would have been
provided.
[31]
As stated, the
legislature was clearly particularly concerned that
adequate protection be afforded to minority shareholders. Appraisal
rights
empowers minority shareholders to withdraw from a company
while obtaining a fair value for their shares. The appraisal remedy
is
aimed at maintaining the equilibrium between minority shareholders
and controlling shareholders.
[16]
But, although
section 164
appraisal rights enable the shareholder to
"sell" her shares to the company at their fair value, it
will afford limited
protection against coercive and proportionate
repurchases, except that the shareholder will be able to ensure a
fair price. It
may be a useful remedy in the case of a selective
repurchase from which the dissenting shareholder is excluded.
[17]
The appraisal right is intended to thwart not only opportunism, but
also ill-advised business decisions by the board of directors.
In
this regard, the board will be more easily swayed to abandon an
unwise transaction if a substantial number of shareholders dissent

from it and invoke their appraisal rights. This is in view of the
cash drain that the company would otherwise face in having to
buy out
the dissenters' shares at a fair value in cash.
[18]
In essence the appraisal right enables a dissenting shareholder, in
certain statutorily prescribed circumstances, to force the
company to
purchase his shares in cash at a price reflecting the fair value of
the shares and to exit the company.
[19]
[32]
In the circumstances, regardless of whether (as a fact) the
transaction which Capprec has sought to implement was a scheme of
arrangement
or not, it was a transaction which crossed the 5% share
repurchase threshold contemplated in section 48(8)(b) of the Act,
thereby
invoking the requirements of the provisions of section 114
and 115 of the Act, which in turn have vested the applicants in this

application with the right to obtain the judicial determination of
fair value for their shares as contemplated in Section 164 of
the
Act.
[33]
In the result the following order is made:
1.1           that
an appraiser be appointed as an appraiser in terms  of
section
164(15)(c)(iii)(aa)
of the
Companies Act to
assist this Court in
determining the fair value in respect of the shares held  by the
First Applicant and the other affected
dissenting shareholders in the
First Respondent as at 27 August 2019 and as further contemplated in
the order sought;
1.2           the
appraiser shall be:
1.2.1
nominated by agreement between the Third Applicant
and the Other
Respondents by no later than 10 days after the date of the order
herein;
1.2.2
a  chartered  financial  analyst,
who  has
at  least  10 (ten) years post-qualification experience;
1.2.3
independent, as that term is understood in
section 114(2)
of the
Companies Act and
as defined in regulation 81(i) of the Company
Regulations 2011; and
1.2.4
appointed as such by this Court;
1.3           if
the parties are unable to agree on the nomination of the appraiser

within a period of 10 days of an order to that effect,  then the
appraiser shall be nominated, at the request of this Court,
by the
President for time being of the CFA Society South Africa, or the
successor body thereto;
1.4
subject to further directions of this Court, the appraiser shall
be
vested with entire discretion as to the procedure and manner to be
followed in determining a range of values that comprise fair
value;
1.5           the
appraiser shall, subject to making the necessary arrangements
with
regard to confidentiality, be  entitled  to engage and
consult any appropriately  qualified  professionals,
the
costs of which shall be paid for by the Parties in accordance with
paragraph
1.7
of the Notice of Motion. All
documents and information provided to the appraiser by any Party must
also simultaneously be provided
to all other Parties;
1.6           the
Parties shall co-operate with the appraiser and promptly provide
all
documents and information reasonably requested by the appraiser;
1.7           save
as otherwise ordered by this Court, the costs consequent upon
the
appointment of the appraiser shall be costs in the  cause;
1.8           that
the First Respondent shall provide the following documentation
to the
appraiser and the Applicants, and any other dissenting shareholders,
within 15 days of the date of this order:
1.8.1
all of the sources of information
relied upon by the Independent
Expert, referred to on pages 21 and 22 of the circular of the First
Respondent, dated 29 July 2019
("
the Circular
"),
applicable to the repurchase, including, but not limited to:
1.8.1.1
the Share Repurchase
Agreements and Umbrella Agreement;
1.8.1.2
audited annual financial
statements of the First Respondent
and
its subsidiaries
for the year ended 31 March 2019;
1.8.1.3
forecast financial
information of the First Respondent and its
subsidiaries for the financial year ended 31 March 2020;
1.8.1.4
unaudited annual
financial statements of Resonance Australia for the
year ended 30 June 2017 and 30 June 2018, and management accounts for
the 11-month
period ended 31 May 2019; and
1.8.1.5
three-year forecast
financial information (FY19, FY20 and FY21) of
Resonance Australia,
1.8.2
the corroborating  evidence
from third parties, referred to on
page 22 of the Circular;
1.8.3
all contracts which the First
Respondent concluded in the past year
insofar as they relate to the Uplink IP, the Subsidiaries and Capital
Appreciation Management;
1.8.4
the asset register of the
First Respondent, the Subsidiaries and
Capital  Appreciation Management;
1.8.5
all and any documentation
provided to the Independent Expert for the
purposes of the production of the Independent Expert Opinion; and
1.8.6
any other documents and information
reasonably requested by the
appraiser.
1.9           that
the documentation provided to the appraiser(s) is provided
on a
confidential basis and solely for the purposes of rendering the
written report as contemplated herein;
1.10        that the appraiser(s),
the Applicants and the dissident shareholders shall:
1.10.1
only use the documentation and the information therein
contained for
the purposes of  this application;
1.10.2
not disclose the contents of the aforesaid documentation
to any third
party (other than the party in question's legal representatives for
the purposes of obtaining legal advice in relation
to this
application);
1.11        that within 30 days of
the receipt of the documentation contemplated in paragraph
1.8
above, the appraiser shall  compile and provide a written report
(including working  papers)  to the Court (with
copies
thereof to  the Applicants and each of  the Respondents of
his opinion as to the fair value of the applicable
shares in the
First Respondent as of 27 August 2019;
1.12        that within 15 days of
the receipt of the appraiser' report contemplated in paragraph
1.11
above:
1.12.1
the Third Applicant shall be entitled to  supplement
its
founding papers herein;
1.12.2
the Other Respondents shall be entitled to file
papers;
1.13        that within 20 days of
the Third Applicant supplementing its founding papers and
the Other
Respondents filing  their  papers as aforesaid, the First
Respondent shall file answering papers in this application;
1.14        that within 15 days
thereafter, the Third Applicant and Other Respondents shall
file
their replying papers, if any;
1.15        that the matter shall
thereafter be set down for hearing for the purposes of this
Court
making a  determination of the fair value   of the
applicable shares in the First Respondent as at 27 August
2019;
1.16        that pursuant to the
determination referred to in paragraph
1.15
above, this Court shall:
1.16.1
allow a reasonable rate of interest on the amount
payable to each of
the Applicants and the other affected dissenting shareholders from
the date the action approved by the special
resolution adopted
by the First Respondent on 27 August 2019 become effective until the
date of final payment;
1.16.2
make on appropriate order of  costs, having
regard  to the
offer made by the First Respondent (as referred to in the founding
papers herein) and the final determination
of the fair value of
the  Applicant's and any other affected dissenting shareholders
shares in the First Respondent
as  at 27 August 2019;
2.         That the costs of
the application to date and insofar as it relates to the order

granted herein shall be paid by the First Respondent.
L. WINDELL
JUDGE OF THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
Delivered: This judgement
was prepared and authored by the Judge whose name is reflected and is
handed down electronically by circulation
to the Parties/their legal
representatives by email and by uploading it to the electronic file
of this matter on CaseLines. The
date for hand-down is deemed to be 5
February 2021.
APPEARANCES
Counsel for
applicant:

Adv R.D.E Gordan
Attorneys for
applicant:

Pike Law
Counsel for
respondent:

Adv A.E. Bham SC
Attorneys for
respondent:

Edward Nathan Sonnenbergs Inc
Date of
judgment:

5 February 2021
[1]
Section 164(15)(c)(iii)(aa) of the Act provides that a court may, in
its discretion appoint one or more appraisers to assist
it in
determining the fair value in respect of the shares.
[2]
Section 164 (3) and 164(5) of the Act. 2 Section 164(3) provides:
“
At any time before a resolution referred to in subsection
(2) is to be voted on, a dissenting shareholder may give the company
a written notice objecting to the resolution.”
Section
164(5) provides that: “
A shareholder may demand that the
company pay the shareholder the fair value for all of the shares of
the company held by that
person if-
(a)
the shareholder-
(i)
sent the company a notice of objection, subject to subsection
(6); and
(ii)
in the case of an amendment to the company's Memorandum of
Incorporation, holds shares of a class that is materially and
adversely
affected by the amendment;
(b)
the company has adopted the resolution contemplated in
subsection (2); and
(c)
the shareholder-
(i)
voted against that resolution; and
(ii)
has complied with all of the procedural requirements of this
section.
[3]
Section 164 (7) of the Act
[4]
The third applicant, Rozendal Partners (Proprietary) Limited,
manages the Rozendal World Wide Flexible Prescient Qualifying
Investor Hedge Fund, which is a portfolio of assets with the
Prescient Qualifying Investor Hedge Fund Scheme. The relationship

and nexus between the applicants are set out in detail in the papers
but are not relevant for purposes of the judgment.
[5]
Section 115(8) The holder of any voting rights in a company is
entitled to seek relief in terms of section 164 if that person-
(a)
notified the company
in advance of the intention to oppose a special resolution
contemplated in this section; and
(b)
was present at the
meeting and voted against that special resolution.
(c)
[6]
164(11) Within five business days after the later of-
(a)
the day on which the
action approved by the resolution is effective;
(b)
the last day for the
receipt of demands in terms of subsection (7)
(a)
; or
(c)
the day the
company received a demand as contemplated in subsection (7)
(b)
,
if applicable,
the company must send to each
shareholder who has sent such a demand a written offer to pay an
amount considered by the company's
directors to be the fair value of
the relevant shares, subject to subsection (16), accompanied by a
statement showing how that
value was determined.
[7]
(1887) 12 App Ca 409 (HL)
[8]
Yeats
et al
Commentary on the
Companies Act of 2008
at p2-459
to 2-460.
[9]
The many and varied harms which a company can visit on its
shareholders and particularly minority shareholders through the

mechanism of a share repurchase are well expressed and substantially
set out in Yeats et al Commentary on the
Companies Act of 2008
at
2-461-2-465.
[10]
Section 85 of the 1973 Act.
[11]
See article by Martin Mota dated 4 October 2012 “
Share
buy-backs: Interaction between sections 48 & 114”.
[12]
2014 Stell LR 361.
[13]
At 2-464.
[14]
National Credit Regulator v Opperman and Others
2013(2) SA 11
(CC) at par [41]
[15]
2017 SA Merc LJ 305 Maleka Femida Cassim “
The appraisal
remedy and the oppression remedy under the
Companies Act of 2008
,
and the overlap between them”
[16]
2017 SA Merc LJ 305 Maleka Femida Cassim “
The appraisal
remedy and the oppression remedy under the
Companies Act of 2008
,
and the overlap between them”
[17]
2010 TSAR 288.
Professor Kathleen van der Linde. “
Share
repurchases and the protection of shareholders”.
[18]
Supra
2017 SA Merc LJ at 313
[19]
MF Cassim "
The Introduction of the Statutory Merger in South
African Corporate Law: Majority Rule Offset by the Appraisal Right
(Part I)"
(2008) 20
SA Merc LJ
1 19