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[2010] ZAECPEHC 37
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Louw and Others v SA Mohair Brokers Ltd and Others (3682/09) [2010] ZAECPEHC 37 (24 June 2010)
IN THE
HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE HIGH COURT, PORT ELIZABETH)
CASE NO: 3682/09
Date heard: 20 May 2010
Date delivered: 24 June 2010
In the
matter between:
DOUGLAS
CHRISTOPHER LOUW First Applicant
ANDRE
HERMANN DANKWERTS Second Applicant
ARTHUR
OLIVER RUDMAN Third Applicant
GEOFFREY
GEORGE VAN COLLER Fourth Applicant
JOHANNES
THEUNIS VILJOEN Fifth Applicant
BKB
LIMITED Sixth Applicant
RONALD
JOHN SMITH Seventh Applicant
and
SA
MOHAIR BROKERS LIMITED First Respondent
THE
REGISTRAR OF COMPANIES Second Respondent
OOS
VRYSTAAT KAAP OPERATIONS LIMITED Third Respondent
CMW
OPERATIONS (PROPRIETARY) LIMITED Fourth Respondent
ARTHUR
MARTIN SHORT Fifth Respondent
IGNATIUS
ROTHNER BEKKER Sixth Respondent
JAN
MARAIS VAN DER WESTHUISEN Seventh Respondent
PETER
LOGIE CAWOOD Eighth Respondent
THEUNIS
MARTHINUS LAAS Ninth Respondent
HERMANUS
WILHELM BOTHA Tenth Respondent
ARTHUR
BLAKE HOBSON Eleventh Respondent
FRANCOIS
MICHAU Twelfth Respondent
PIERRE
DU PLESSIS VAN DER VYVER Thirteenth Respondent
NIGEL
CLINTON HAMILTON SMITH Fourteenth Respondent
______________________________________________________________________
JUDGMENT
Y
EBRAHIM J:
The applicants seek
an order in the following terms:
‘
1. Setting aside ordinary
resolution number 1.4 passed at the annual general meeting of the
First Respondent held on 4 December
2009;
2. Setting aside the special
resolution passed at the annual general meeting of the First
Respondent held on 4 December 2009;
3. Interdicting the Second
Respondent from registering the special resolution passed at the
annual general meeting of the First
Respondent held on 4 December
2009 in terms of Section 200 of the Companies Act 1973;
4. Interdicting the First
Respondent from taking any further steps to implement ordinary
resolution number 1.4 passed at the annual
general meeting of the
First Respondent held on 4 December 2009;
5. Interdicting the First
Respondent from taking any further steps to register the
special resolution passed at the annual
general meeting of the
First Respondent held on 4 December 2009;
6. Interdicting the First
Respondent from taking any further steps to implement the sale of the
Sale Shares and Sale Claims to the
Third Respondent as contemplated
in the special resolution passed at the annual general meeting of the
First Respondent held on
4 December 2009
.’
The First to Fifth
Applicants, who are shareholders in the First Respondent (‘SAMB’),
and the Sixth and Seventh Applicants
aver that they are entitled to
the relief they seek as the Fifth Respondent, ‘
in
his capacity as chairman of SAMB and the AGM acted improperly and
unlawfully:
‘
(a) in ruling that
proxies granted by 706 shareholders of SAMB (“the Proxy
Grantors”) in favour of Smith (the Seventh
Applicant), Wolf
Edmayr and Michael Nurse (“the Proxy Holders”) to attend
the AGM and to speak and vote thereat on
their behalf as they deem
fit, were invalid;
(b) in evicting the Proxy
Holders from the AGM at the commencement of the AGM
.’
The respondents
oppose the application and dispute that the Fifth Respondent acted
improperly and unlawfully in issuing the aforesaid
ruling. It is
common cause that the genesis of the decision to exclude the proxy
holders from participating in the Annual General
Meeting (‘AGM’)
was a series of events preceding the AGM.
The following is a
brief summary of the pertinent facts that are at the centre of the
dispute between the parties. On 27 October
2009 the Third
Respondent (‘OVK’), which held 34% of the shares in the
Fourth Respondent (‘CMW’), concluded
an agreement with
the directors of SAMB for the purchase of SAMB’s 66%
shareholding in CMW. Since this was the major asset
of SAMB its
shareholders were required to approve the sale to OVK in a special
resolution.
1
Consequently, the members of SAMB were given notice that a special
resolution
2
to this effect was being tabled for adoption at the AGM scheduled
for 4 December 2009.
The Sixth Applicant
(‘BKB’), a competitor in the mohair industry, was
opposed to SAMB selling its 66% shareholding
in CMW to OVK since it
would result in OVK acquiring the entire shareholding in CMW. In
the view of BKB and the other applicants
this was not in the
interests of the mohair industry as a whole as OVK operated in the
grain farming industry.
On 11 November
2009 BKB wrote to SAMB to advise that it was BKB’s ‘intention
to submit an offer to SAMB
for the acquisition of its shares in CMW’
and that the offer would be delivered to the registered offices of
SAMB the next
week. It is common cause that the offer never
materialised. BKB, in the weeks prior to the AGM of SAMB, concluded
agreements
with numerous shareholders in SAMB for the purchase
of their shares. BKB also obtained a proxy from each of these
shareholders
to attend the AGM and vote on the shareholder’s
behalf, the intention being to vote against the adoption of the
special
resolution.
3
On 2 December
2009 the attorneys representing BKB wrote to SAMB to inform it that
certain shareholders of SAMB had sold their
shares to BKB and ‘
in
the agreements of sale concluded with BKB granted BKB an irrevocable
authority to exercise the voting rights attaching to the
Sold
Shares
’. A specimen of the agreements of sale
4
was attached to the letter. Transfer of the shares had however not
been registered yet as the share register of SAMB had closed.
5
Accordingly, the shares remained registered in the names of the
selling shareholders.
6
Copies of the proxy forms were annexed and the original proxy forms
lodged timeously at the registered office of SAMB prior
to the AGM.
The first applicant,
who had not sold his shareholding in SAMB, also appointed a proxy
and authorised the proxy holder to attend
the AGM and vote on his
behalf.
A special meeting of
the directors of SAMB was convened on 3 December 2009 at which
the letter from BKB’s attorneys
was considered. The chairman
referred to section 15.2
7
of the Articles of Association of the company and thereafter the
meeting, acting on legal advice that had been obtained from
senior
counsel, resolved
inter alia
:
‘
That
the purported sales to BKB by members of the company recorded by
Attorneys Pagdens for BKB be disallowed and that they are
hereby not
approved.
That
the proxies produced by BKB be regarded as part of an indivisible
transaction of sale of shares and as such are not recognized.
That
representatives of BKB are accordingly not entitled to attend the
Annual General Meeting to vote and be required to leave the
meeting.
…………….
’
8
After opening the AGM
on 4 December 2009 the chairman raised the issue of the eligibility
of certain proxy holders to attend the
meeting and referred to what
had taken place in the meeting of the directors the previous day.
He informed the AGM that as the
prior approval of the directors had
not been requested by shareholders for the sale of their shares the
directors had ‘
decided
that they are unable and unprepared to approve these sales
.’
Further, they had taken ‘
Senior
Counsel, Mr R van Rooyen SC, [
sic
]
opinion with effect to the sales and that the sales were accordingly
invalid. Senior counsel has advised further that because
the sales
are invalid and the proxies are given in pursuance of the sales
as one indivisible transaction the said proxies
are similarly
invalid and cannot be entertained. I as the Chairman rule that the
proxies are invalid as is the reported [sic]
sale of the shares
accordingly the representatives of BKB have no standing to be
present at this meeting and are required to
leave the meeting at
once as also any of their representatives if any. So I therefore
request that those who are here representing
those proxies would
then leave the meeting
.’
9
The proxy holders thereupon left the meeting which continued in
their absence with the items of business enumerated on the agenda.
In due course the special resolution was adopted by the members
present.
The attack directed
by the applicants at the ruling that excluded a number of proxy
holders from participating in the AGM and
at the decision of the
directors of SAMB (which the AGM endorsed) that the sale agreements
concluded by BKB with certain shareholders
of SAMB was invalid, is
premised on various grounds.
The respondents have
not disputed that the proxy holder of the First Applicant should
have been allowed to remain in the AGM and
that he was entitled to
participate in the meeting but dispute that his shares carried
sufficient votes to prevent the special
resolution from being
approved by the requisite majority. Insofar as the other applicants
are concerned the respondents deny
that they are entitled to the
order sought.
Mr Odendaal SC who,
with Mr Rorke, appeared for the applicants submitted that in terms
of the provisions of s 252 of the
Companies Act the applicants
were entitled to approach the Court for relief. Section 252
permitted any member of a company to
apply for an order not only if
the act or omission or the conduct of affairs was unjust or
inequitable towards him but also if
it was unjust or inequitable
towards other shareholders. The conduct of SAMB in excluding proxy
holders, representing 706 shareholders
of SAMB,
10
from participating in the AGM was oppressive towards the proxy
grantors. If these proxy holders had not been excluded the special
resolution would not have attained the requisite majority of votes.
Mr Odendaal contended that by not disclosing their intention
to
exclude the proxy holders the conduct of the directors lacked
probity and smacked of
mala fides
.
Mr Buchanan SC, with
Mr Brookes, appeared for the respondents. He submitted that if one
shareholder at a shareholders meeting
was prevented from casting his
vote against a resolution that the other shareholders had voted in
favour of it was a technical
irregularity and inappropriate to set
aside the proceedings because of this. Such a dispute had to be
resolved according to
the Law of Meetings which had developed in
regard to meetings of voluntary associations and companies both here
and in England.
11
In the
Garment Workers Union
case the Court held that an
applicant who sought relief on this basis had to show that his
rights had been violated by a diminution
of the effect of his votes
through the failure to vote of a substantial number of persons who
were entitled to vote by reason
of the irregularity complained of.
These basic principles had been followed in a number of cases over
many years
12
and the correct enquiry was always whether the excluded votes would
have affected the end result.
13
In response to the
submissions by the respondents, Mr Odendaal submitted that the case
of the
Jockey Club of South Africa
was inapposite in relation
to the present application. It did not deal with s 252 or the Law
of Meetings but with review proceedings
prior to the advent of the
Promotion of Administration of Justice Act.
14
The other cases cited by counsel for the respondents, save for the
Garment Workers Union
case, referred to the issue addressed
in
Jockey Club of South Africa
and were similarly inapposite.
In regard to the
Garment Workers Union
case counsel for the
respondents had incorrectly summarised what had been said by the
Court. What the Court said was, ‘
that
an applicant must show that its rights have been violated “by
a diminution of the effect of its votes through the voting
of a
substantial number of persons who were not entitled to vote ……”
.’
The
Gerber
case also did not deal with the Law of Meetings
or s 252 but entailed review proceedings in respect of the
provisions of
an Ordinance. None of the cases cited were authority
for the proposition that if one could not show that the result would
have
been different that relief cannot be granted. These cases did
not address what the applicant had to show in terms of s 252,
which revolved around fair play, probity and equity.
The argument advanced
by the respondents is, in my view, misplaced. The issue is not
whether sufficient votes attached to the
shares of the First
Applicant to alter the outcome of the vote but whether the decision
to exclude him from participating in
the AGM was justifiable or not.
As a registered shareholder the First Applicant was entitled to be
present at the AGM and to
participate fully in its proceedings. He
was denied this right when his proxy was evicted and it constituted
a violation of
his rights. He had not sold his shares in the
company and the ruling to eject shareholders, who had sold their
shares, from
the AGM should not have been applied against him. The
first Applicant’s right to speak on and debate any matter on
the
agenda, more particularly the special resolution, prior to
members being required to vote was denied him and violated the
audi
alteram partem
rule. In the circumstances the exclusion of the
First Applicant from the AGM was manifestly unlawful.
An issue that the
exclusion of the proxy holders from the AGM (and in effect therefore
the proxy grantors) raises in respect of
all the applicants is the
right of a member of a company to participate in the affairs of the
company. Subject to any justifiable
limitation imposed by the
Articles of Association regarding a member’s rights
vis a vis
the company, every member is vested with the right to attend the
meetings of members of the company, to participate in its
proceedings and, in particular, to address members present and to
speak for or against any motion tabled for adoption and to register
his vote for or against the motion. Although it falls within the
realm of speculation whether or not a speaker may have persuaded
others to accept his/her viewpoint the uncertainty of the outcome
thereof cannot clothe an improper and unlawful deprivation
of a
shareholder’s right to speak at a meeting of shareholders with
the cloak of legality. The ruling that excluded certain
proxy
holders from participating in the AGM offended the
audi alteram
partem
rule and denied the proxy grantors, who were still
registered shareholders in the company, from the full enjoyment of
their rights.
This was not a situation where a minority was
refusing to accept the decision of the majority which, as
shareholders, they were
contractually bound to do by the Articles of
Association,
15
but a violation of their right as members of the company to
participate in the decision making process.
I do not agree with
the contention by the respondents that the issue of the chairman’s
ruling is one that must be resolved
in terms of the Law of Meetings.
What occurred did not amount to a technical irregularity that could
be put right without any
undue prejudice to the members of the
company who had been adversely affected by the ruling. It was an
act that was manifestly
‘
unfairly
prejudicial, unjust or inequitable
’ to them and their
interests as shareholders as stipulated in s 252.
16
It needs to be
emphasised that irrespective of whether the ruling was valid or not
it certainly could not have operated against
the First Applicant who
retained all the rights vested in him as the registered owner of
shares in SAMB.
It is not in dispute
that registered shareholders were never advised prior to the AGM
that their proxies would not be recognized
as valid. On 28 November
2009 the Fourteenth Respondent, in his capacity as company
secretary, dispatched a telefax
17
to shareholders wherein he drew attention to the provisions of
Article 15.2 of the Articles of Association regarding the sale
of
shares and warned that the failure to comply therewith would result
in the shares not being transferred to the purchaser.
No mention
was made of the fact that if the shareholder had already given a
proxy that it would be regarded as invalid. Shareholders
were
informed, however, that if they had already granted ‘
a
proxy to another party [it] could be over ridden by a signed
one at a later date
’ and a proxy form appointing the
Fifth Respondent, alternatively the Ninth Respondent, as proxy of
the shareholder was
attached. The applicants have submitted that
the proxy form failed to comply with s 189(5)
18
since it did not contain ‘
adequate
blank space immediately preceding
’ the names already
reflected therein to allow the member to insert the name, and an
alternative name, of a proxy of his/her
own choice.
The purpose of this
letter, it is apparent, was to persuade shareholders who had sold
their shares and granted proxies to BKB
to resile from the
agreements or, at the very least, to replace the proxies they had
given with proxies in favour of the person(s)
named in the form. It
needs to be noted that both the Fifth and Ninth Respondents were in
favour of the sale to OVK of SAMB’s
66% shareholding in CMW.
It is clear that the directors were concerned that if BKB acquired
sufficient shares and, thereby a
sufficient number of votes to
oppose the adoption of the special resolution, the sale to OVK would
not be approved.
It is evident that
the directors never conveyed to proxy grantors that the proxies
granted by them were considered invalid and
would not be recognized.
Even after the Board of Directors took the crucial decision to
exclude the proxies they made no effort
to inform the proxy grantors
of this. ‘
It is a well
established rule of company law that the directors have a fiduciary
duty to exercise their powers in good faith and
in the best
interests of the company.
’
19
Accordingly, the directors should have taken suitable steps to
convey their decision in an expeditious manner to shareholders,
despite the lateness of the hour, since it adversely affected their
rights and interests in the company. These shareholders
should have
been afforded the opportunity of taking appropriate measures to
safeguard their rights and interests by either authorising
another
proxy or even attending the AGM personally, instead of being
informed only at the commencement of the AGM that the proxies
could
not represent them. The conduct of SAMB in failing to alert
shareholders to their decision and in denying a substantial
number
of shareholders the right to participate in the AGM, speak on issues
and, importantly, to vote on any motions, prejudiced
them and was
‘
unfairly prejudicial,
unjust or inequitable
’ to shareholders, more
specifically the First, Second, Third, Fourth and Fifth Applicants.
One of Mr Buchanan’s
submissions was that the respondents unequivocally denied that
a number of proxies (under the
letter ‘J’) had been
delivered to the First Respondent and consequently, so he argued,
even though the applicants
contended the contrary, in accordance
with the
Plascon Evans
20
rule it had to be accepted that these proxies were not delivered.
On the issue of the
disputed proxies Mr Odendaal contested the contention that the
denial created a proper dispute of fact. The
respondents had merely
denied receiving these proxies without directly answering the
averments of K M Riga (a chartered
accountant) that all the
proxies, which included the disputed proxies, had been collated and
filed in alphabetical order with
a schedule. All these proxies had
been delivered to the Fourteenth Respondent at the registered
offices of SAMB.
There is merit in Mr
Odendaal’s contention. The bare denial by the respondents is
not such ‘
as to raise a
real, genuine or bona fide dispute of fact
’
21
and I accordingly accept the version of that of the applicants.
Moreover, it is not in dispute that BKB acquired at least 28%
of the
shareholding in SAMB. Accordingly, if the votes of the proxies
opposed to the special resolution had been taken into
account the
votes in favour, as recorded at the AGM, would in all probability
not have reached a majority of 75%.
The decision to
exclude certain proxy holders from the AGM was premised on the
interpretation that the directors of the company
placed on the
agreements of sale BKB had concluded with various shareholders.
Their view, reinforced by the opinion obtained
from senior counsel,
was that the failure to comply with the requirements of Article 15.2
resulted in the sale agreements being
invalid. The respondents
contend that the agreement of sale and the grant of the proxies are
not severable and formed a single
indivisible agreement. The
agreement was intended to vest BKB with the rights of a principal
and the proxy was granted to enable
BKB to exercise such rights
pending registration of transfer of the shares into its name.
Mr Buchanan submitted
that in a complex transaction containing a number of parts and one
part was void, the question was whether
the void part could be
severed from the contract and the remainder of the contract
enforced. This depended on the nature of
the transaction and the
intention of the parties. If the unenforceable part of the contract
embodied the main purpose of the
transaction, the whole was
unenforceable.
22
If it had not been for the agreements of sale the sellers would not
have given any proxy. Accordingly, as the agreement was
invalid the
granting of the proxies was similarly invalid and had been correctly
excluded.
The applicants
contest the respondents’ interpretation of the agreement of
sale. They dispute that non compliance
with Article 15.2
rendered the agreements and the proxies invalid. Mr Odendaal
submitted that since the Articles of Association
constituted a
written contract between the company and its shareholders, the
normal principles of interpretation applied in interpreting
the
Articles.
23
It is trite that when interpreting a clause (in this instance
Article 15.2) in an agreement, it must be read in conjunction
with
the rest of the clauses and the contract interpreted as a whole.
24
Article 15.2 did not stipulate that a sale of shares, without the
prior approval of the directors, is void. It was apparent
from the
provisions of Article 43.2
25
that a different result was intended, as it stipulated that an
‘
owner of shares received
contrary to the provisions of Article 15
’ did not have
a vote unless this was authorized by the directors.
It is the contended
by the respondents that Article 43.2 dealt with the situation where
beneficial ownership had passed but, since
this had not occurred in
the present instance, its provisions were not applicable.
26
The interpretation
contended for by the applicants is, in my view, correct. I accept
that, even if the agreements of sale were
concluded contrary to the
provisions of Article 15.2, the directors were not entitled to
exclude a proxy for this reason. The
decision of SAMB to debar the
proxies from the AGM was improper and unlawful. The penalty such a
transaction attracted was stipulated
in Article 43.2, namely that
the owner who acquired the shares was denied a vote. The fact that
transfer of the shares had not
taken place does not assist the
respondents since the registered shareholder remained the owner of
the shares until the completion
of the registration process and
retained the right to exercise his/her vote, whether personally or
via a proxy. For the same
reason Article 15.3
27
did not assist the respondents either. I am accordingly satisfied
that the exclusion of the proxies was improper and unlawful.
In regard to the
question of severability Mr Odendaal submitted that while the
agreements were obviously linked the agreement
of sale and the proxy
were separate and distinct from each other and each served a
separate and specific purpose.
28
The agreement of sale, even though it referred to the granting of a
proxy, did not confer a right on the proxy holder to vote
on behalf
of the proxy grantor. This required the completion of a separate
proxy form conferring such rights and in the form
prescribed in the
Articles of Association, specifying the meeting it was for, the
authority of the holder of the proxy and the
number of votes that
could be exercised.
29
I am not persuaded
that the granting of the proxy is not severable from the agreement
of sale. It does not appear that the shareholders
(as the sellers)
and BKB (as the purchaser) were unaware that transfer of the shares
would only be finalized once registration
of transfer to the
purchaser had been entered in the share register of SAMB. Since the
sellers of the shares remained the registered
shareholders thereof
until transfer had been properly finalized the votes attaching to
the shares could not be exercised by anyone
other than the
shareholder except if duly authorized by proxy granted by the
shareholder. The granting of a proxy was not dependent
on the
conclusion of an agreement for the sale of the shares but was
collateral thereto. The two transactions, in my view, are
separate
with distinctly different purposes and accordingly the granting of
the proxy is severable from the sale of the shares.
30
But, even if the transactions are not severable, the agreement did
not provide for SAMB to become a party to it and any question
regarding its validity was a contractual issue confined to the
contracting parties and open to one of them to canvass.
Although the
respondents have disputed the
locus standi
of certain
applicants, I did not gain the impression from Mr Buchanan’s
submissions that this was being pursued with any
great fervour. Be
that as it may, all the applicants have shown that their interests
were affected and therefore have the necessary
locus standi
.
Even if it could be said that some of the applicants lack
locus
standi
, which I consider not to be the case, the First Applicant
is manifestly entitled to the relief sought. However, since the
conduct
of SAMB also affected the Second, Third, Fourth and Fifth
Applicants as members of the company I am, in the circumstances,
satisfied
that they should be granted the same relief. In my view,
it is just and equitable to grant the order sought by the
applicants.
31
Even if the Sixth
Applicant did not acquire any rights under s 252 its direct
interest in the issue of the validity of the
agreements of sale
entitled it, and the Seventh Applicant, to join as applicants to
protect its rights. Finally, the adverse
consequences that flowed
from the unlawful conduct permeated the AGM as a whole and I
consider it just that ordinary resolution
1.4 also be set aside.
In regard to costs,
it is trite that in the absence of cogent reasons to order
otherwise, that costs should follow the result.
Such reasons have
not been advanced and the applicants are accordingly entitled to an
order for costs in their favour.
In the result the
following order shall issue:
The ordinary
resolution number 1.4 passed at the annual general meeting of the
First Respondent held on 4 December 2009 is hereby
set aside;
The special
resolution passed at the annual general meeting of the First
Respondent held on 4 December 2009 is hereby set aside;
The Second Respondent
is interdicted from registering the special resolution passed at the
annual general meeting of the First
Respondent held on 4 December
2009 in terms of Section 200 of the Companies Act, No. 61 of 1973;
The First Respondent
is interdicted from taking any further steps to implement ordinary
resolution number 1.4 passed at the annual
general meeting of the
First Respondent held on 4 December 2009;
The First Respondent
is interdicted from taking any further steps to register the
special resolution passed at the annual
general meeting of the
First Respondent held on 4 December 2009;
The First Respondent
is interdicted from taking any further steps to implement the sale
of the Sale Shares and Sale Claims to
the Third Respondent as
contemplated in the special resolution passed at the annual general
meeting of the First Respondent held
on 4 December 2009; and
The First to
Fourteenth Respondents are liable jointly and severally, the one
paying the other to be absolved, for the costs of
the application
which costs include the costs of two counsel.
_________________________
Y EBRAHIM
JUDGE OF THE HIGH COURT 23 JUNE 2010
Counsel for the Applicants: F H Odendaal SC with S C Rorke
Attorneys for the Plaintiff: Pagdens Attorneys
PORT ELIZABETH
Counsel for the Respondents: R G Buchanan SC with R W N Brooks
Attorneys for the Defendant: Spilkens Inc.
PORT ELIZABETH
LOUW & OTHERS V SA MOHAIR
BROKERS LTD & OTHERS.CVJ
1
Companies
Act, No. 61 of 1973 – s 228 stipulates that:
‘(1) Notwithstanding anything contained in it’s
memorandum or articles, the directors of a company shall not have
the power, save by a special resolution of its members, to dispose
of –
the whole or the greater part of
the undertaking of the company; or
the whole or the greater part of
the assets of the company.’
2
‘
SPECIAL RESOLUTION
1
‘Resolved that in terms of Section 228 of the Companies Act,
as amended (“the Act”), the shareholders adopt,
ratify
and confirm the disposal of the whole or the greater part of the
assets of the company, namely the Company’s shareholding
in
CMW Operations Proprietary Limited Registration Number
1964/000925/07 (“CMW”) constituting 66% of the entire
issued share capital of CMW (“Sale Shares”) and all
amounts of any nature whatsoever owing by CMW to the Company on
the
effective date, (“Sale Claims”) to Oos Vrystaat Kaap
Operations Limited, Registration Number 1999/004069/06 (“OVK”)
on the terms and conditions as set out in the Sale of Shares and
Claims Agreement dated 27 October 209 (“the Agreement”),
with effect from 1 July 2009 (“the Effective Date”)
.…………………….’
3
Companies Act, 61 of 1973 – Section 199 specifies that a
resolution shall be a special resolution if it ‘has been
passed, on a show of hands, by not less than three fourths
of the number of members of the company entitled to vote
on a show
of hands at the meeting who are present in person or by proxy or,
where a poll has been demanded, by not less than
three fourths
of the total votes to which the members present in person or
by proxy are entitled.’
4
‘I, the undersigned (“
the
Seller
”), hereby sell my all my shares
in SA Mohair Brokers Limited (“
SA
Mohair
”) (“
the
Shares
”) and cede all my claims in and
against SA Mohair (whether on loan account or otherwise, “
the
Claims
”) to BKB Limited or its nominee
(“
the Purchaser
”),
as reflected in the attached CM42 transfer form, which I have duly
signed.
I accept in full and final payment for the sale of the
Shares and of the Claims the sum of R2, which shall be paid to me by
the
Purchaser within 3 days of this undertaking.
I hereby give BKB Limited (or its nominee) (“
BKB
”)
my irrevocable proxy to vote the Shares as it in its sole discretion
deems fit at the Annual General Meeting of Shareholders
of SA Mohair
which has been called for 4 December 2009 and any adjournment or
postponement of that meeting. My signed proxy
to that effect is
attached hereto.
I further undertake to forthwith provide BKB with a
signed proxy to vote all the Shares at any meeting of shareholders
in SA
Mohair (as it in its sole discretion deems fit) which is
called prior to the registration of transfer of the Shares to into
the
Purchaser’s name.
I also undertake to forthwith on receipt to pay to the
Purchaser any distribution or divided or any other payment which I
may
receive from SA Mohair in the period from the signature of this
undertaking to the date of transfer of the Shares to the Purchaser,
up to the amount of R2 per share. ……………….’
5
Article 21.2
of the Articles of Association of
SA Mohair Board provides that the directors may suspend registration
of the transfer of shares
during the 14 days immediately preceding
the AGM
6
Article 14.2 reads: ‘The transferor shall
be deemed to remain the holder of the share until the name of the
transferee
is entered in the register of members as holder thereof.’
7
‘
15.1 Any decision by the directors of the
company shall be final and binding on a shareholder of the company
for the purposes
of this clause 15.
15.2 A shareholder of the company may not sell, alienate, donate or
burden in any manner whatsoever the shares that he is the
owner of,
without prior approval of the directors of the company.’
8
Page
292 of the papers - Annexure ‘AMS14’
9
Page
293
of the papers - Annexure ‘AMS15’
10
Mr Odendaal submitted that approximately 14 million votes were
eligible for consideration. The total number of votes at
the AGM
was 6.7 million of which 3.2 million, on the version of the
respondents, was excluded whereas on the version of
the applicants
4.2 million had been excluded.
11
Jockey Club of
South Africa and Others v Veldman
1942
(A) 340 at 351 and 359;
Garment Workers
Union v De Vries and Others
1949 (1)
SA 1110
(W) at 1123
12
Chetty v Tamil
Protective Association
1951 (3) SA 34
(N) at 39;
De Vos v Ringkommissie van
die Ring van die N G Kerk, Bloemfontein and Another
1952 (2) SA 83
(O) at 94;
Motaung v
Mukubela and Another, N.O.
;
Motaung
v Mothiba, N.O.
1975 (1) SA 618
(O) at
626-627;
Williamson and Another v
Durban City Council
1977 (3) SA 342
(D
& C.L.D) at 342 at 348B-C and 348 E-F;
Jonker
v Ackerman and Others
1979 (3) SA 575
(O) at 583
13
See, Lewin:
Law, Procedure and Conduct of Meetings
(5
th
Ed.);
Gerber v Stander and Hall
N.O.
1960 (4) SA 480
(C) at 488-489
14
Act No. 3 of 2000
15
Sammel & Others
v President Brand G.M. Co Ltd
1969 (3)
SA (A) at 678G-H;
Donaldson Investments (Pty) Ltd v
Anglo Tvl Collieries Ltd
1980 (4) SA 204
(T) at 209G
16
See note 1
supra
– ‘Section 252 reads:
252
Member’s
remedy in case of oppressive or unfairly prejudicial conduct
Any member of a
company who complains that any particular act or omission of a
company is unfairly prejudicial, unjust or inequitable,
or that the
affairs of the company are being conducted in a manner unfairly
prejudicial, unjust or inequitable to him or to
some part of the
members of the company, may, subject to the provisions of
subsection (2), make an application to the Court
for an order under
this section.
……………………….
……………........
…………………..
…………………..
…………………..
If on any such
application it appears to the Court that the particular act or
omission is unfairly prejudicial, unjust or inequitable,
or that
the company’s affairs are being conducted as aforesaid and if
the Court considers it just and equitable, the
Court may, with a
view to bringing to an end the matters complained of, make such
order s it thinks fit, whether for regulating
the future conduct of
the company’s affairs or for the purchase of the shares of
any members of the company by other
members thereof or by the
company and, in the case of a purchase by the company, for the
reduction accordingly of the company’s
capital, or
otherwise.’
17
Page 186
of the papers – Annexure ‘DL19’
18
See note 1 supra – Section 189(5)
stipulates:
‘(5) If for the purposes of any meeting of a company
invitations to appoint as proxy a person, or one of a member of
persons, specified in the invitations or the instruments appointing
a proxy, are issued at the company’s expense, any such
invitation or instrument appointing a proxy shall –
contain adequate
blank space immediately preceding the name or names of the person
or persons specified therein to enable a
member to write in the
name and, if so desired, an alternative name of a proxy of his own
choice;
………………
(6) (a) ……..……….
(b) ...................
(7) In the event of a failure to comply with any requirement of
subsection (5), every director or officer of the company who
authorizes, knowingly permits or is party to the failure, shall be
guilty of an offence.’
(N.B. During the course of argument counsel for the respondents
conceded that the proxy forms did not comply with the provisions
of
s 189(5) and informed the Court that the Fifth Respondent
accepted that the defective proxy form constituted an offence
in
terms of the Companies Act.)
19
Da Silva and Others v CH Chemicals (Pty) Ltd
[2008] ZASCA 110
;
2008 (6) SA 620
(SCA) at para
[18]
20
Plascon Evans
Paints v Van Riebeeck Paints
1984 (3) 623 (AD)
21
Ibid
at 634I
22
Cameron v Bray Gibb & Co (Pvt) Ltd
1966 (3) SA 675
(R)
at 676-677;
Nedbank Ltd v Abstein Distributors (Pty) Ltd &
Others
1989 (3) SA 750
(T) at 754 and Kerr:
The Principles of
the Law of Contract
(6
th
Ed) at p 162 and following.
23
Ex parte Premier
Paper Limited
1981 (2) SA 612
(W) at
615C-H
24
See Wessels:
Contract
at para 1915;
The National Bank of S A
v Graaf
(1904) SC 457
;
Hayne
& Co v Kaffrarian Steam Mill Co Ltd
1914 AD 363
25
‘
43. Subject to any rights or restrictions of
the time being attached to any share or class or classes of shares –
43.1 every member, and if a member is a body
corporate, its representative, shall have one vote on a show of
hands, and on a
poll have one vote for each share held by such
member;
43.2 no owner of shares received contrary to the provisions of
Article 15, shall have a vote, unless authorized thereto by the
directors.’
26
In
Smuts v
Booysens: Markplaas (Edms) Bpk & Andere v Booysens
2001 (4) SA 15
(SCA) at para [10] the Court stated that, ‘In
regard to shares, the word “transfer”, in its full and
technical
sense, is not a single act but consists of a series of
steps, viz. an agreement to transfer, the execution of a deed of
transfer,
and finally the registration of transfer.’
27
15.3 A shareholder in whose name any share or shares
has been registered, contrary to the provisions of clause 15.2,
shall not
in respect of such shares –
15.3.1 be entitled to exercise any vote, provided that
any decision taken on the strength of such shares shall be deemed to
be
valid if a similar decision would have been taken by the required
majority of votes;
15.3.2 entitled to receive any divided or other advantage, which
divided or advantage shall revert to the company to be utilized
to
the advantage of the company as the directors may determine.
28
Compare,
Cash
Converters Southern Africa v Rosebud WP Franchise
2002 (5) SA 494
(SCA) at paras 23 and 24
29
Blackman
et al
:
Commentary on the Companies Act
,
Vol 1, pp 7-42 and the authorities cited there.
30
See
Sasfin (Pty) Ltd v Beukes
1989 (1) SA 1
(A) for a
discussion on severability of clauses from a contract potentially
void for being
contra bonos mores
.
31
See
Bader and Another v Weston and Another
1967 (1) SA 134
(C) at 147E-F;
De Franca v Exhaust Pro CC (De Franca Intervening)
1997 (3) SA 878
(SE);
Irvin and Johnson Ltd v Oelofse Fisheries
Ltd
1954 (1) SA (EC);
Donaldson Investments (Pty) Ltd v
Anglo Tvl Collieries Ltd
(
supra
) at 209D-F;
Livanos
v Swartzberg and Others
1962 (4) SA 395
(W) at 396;
Garden
Province Investment v Aleph (Pty) Ltd
1979 (2) SA 525
(D &
CLD)