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[2021] ZASCA 148
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JP Markets v Financial Sector Conduct Authority (FSCA) (460/2021) [2021] ZASCA 148; 2022 (4) SA 94 (SCA) (20 October 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 460/2021
In
the matter between:
JP
MARKETS SA (PTY) LIMITED
APPELLANT
and
THE
FINANCIAL SECTOR CONDUCT AUTHORITY
(FSCA)
RESPONDENT
Neutral
citation:
JP Markets v
FSCA
(Case no 460/2021)
[2021] ZASCA
148
(20 October 2021)
Coram:
PETSE AP and VAN DER MERWE, MBATHA and HUGHES JJA
and MOLEFE AJA
Heard:
21 September 2021
Delivered:
This judgment was handed down electronically by
circulation to the parties’ legal representatives by email. It
has been published
on the Supreme Court of Appeal website and
released to SAFLII. The date and time for hand-down is deemed to be
09h45 on 20 October
2021.
Summary:
Financial markets – application
for winding-up by Financial Sector Conduct Authority under s 96 of
Financial Markets Act 19
of 2012 (FMA) – not requirement that
preceding investigation had to be concluded – whether
winding-up just and equitable
– requires consideration of
whether objects of FMA would be achieved and of availability of
alternative remedies.
ORDER
On
appeal from:
Gauteng Division of the
High Court, Johannesburg (Gilbert AJ, sitting as court of first
instance): judgment reported
sub nom
Financial Sector Conduct Authority v JP Markets SA (Proprietary)
Limited
[2020] 4 All SA 457
(GJ)
1
The appeal is upheld with costs, including the costs of two counsel.
2
The order of the court a quo is set aside and replaced with the
following:
‘
The application is
dismissed with costs, including the costs of two counsel.’
JUDGMENT
Van
der Merwe JA (Petse AP and Mbatha and Hughes JJA and Molefe AJA
concurring)
[1]
The respondent
in this appeal, the Financial Sector Conduct Authority
(the
Authority), is a juristic person established in terms of s 56(1) of
the Financial Sector Regulation Act 9 of 2017 (the FSRA).
At the
instance of the Authority, the Gauteng Division of the High Court,
Johannesburg (Gilbert AJ) ordered the final liquidation
of the
appellant, JP Markets SA (Pty) Ltd (JP Markets). The appeal is with
the leave of the court a quo. The principal issues in
the appeal are
whether the Authority met the statutory jurisdictional requirements
for the exercise of the power to institute an
application for
liquidation and, if so, whether it made out a proper case for the
winding-up of JP Markets.
Background
[2]
It is necessary to state at the outset what the matter is not about.
The Financial
Advisory and Intermediary Services Act 37 of 2002 (the
FAIS Act) regulates the rendering of financial advisory and
intermediary
services to clients by financial services providers
(FSPs). It provides that no person may act (or offer to act) as an
FSP without
a licence issued by the Authority under s 8 thereof. A
Category 1 FSP licence authorises an FSP to provide advisory and
intermediary
services in respect of derivative instruments, as well
as deposits as defined in the Banks Act 94 of 1990. In general terms
a derivative
instrument is a financial product that has a value based
on the value of another product, such as indices, currencies or
commodities.
The Authority issued a Category 1 FSP licence to JP
Markets. The evidence did not, however, provide any indication that
JP Markets
conducted business as an FSP by rendering financial
advisory and intermediary services.
[3]
Rather, the matter concerns transacting in over-the-counter (OTC)
derivatives. In
terms of the Financial Markets Act 19 of 2012 (the
FMA), the Minister of Finance made the Financial Markets Act
Regulations (the
regulations).
[1]
The regulations define an OTC derivative as ‘an unlisted
derivative instrument that is executed, whether confirmed or not
confirmed’,
[2]
but excluding foreign exchange spot contracts and physically-settled
commodity derivatives. OTC derivatives are unlisted because
they are
not kept by an exchange in terms of s 11 of the FMA. They are
high-risk financial products in respect of which only skilled
traders
could hope to profit over time.
[4]
In terms of the regulations an OTC derivative provider (ODP) means ‘a
person
who as a regular feature of its business and transacting as
principal: (a) originates, issues or sells OTC derivatives; or (b)
makes a market in OTC derivatives’.
[3]
An ODP is colloquially referred to as a broker and its clients are
referred to as traders. In terms of reg 2, a person may not
act,
advertise or hold itself out as an ODP unless authorised by the
Authority in terms of s 6(8) of the FMA. For convenience,
I refer to
this as an ODP licence.
[5]
In offering OTC derivative
instruments to clients an ODP generally quotes an ‘ask’
price, at which the instrument may be bought, and a ‘bid’
price, at which it may be sold. Accordingly, a client may
buy the
instrument at the ask price and sell it at the bid price. The
difference between the two prices is known as the ‘spread’.
The effect of such a contract between the ODP and the client is that
should the underlying asset price or index increase, the client
will
make a profit and the ODP will make a corresponding loss, and vice
versa.
[6]
JP Markets stated that it had approximately 300 000 client
accounts, of which
approximately 20 000 would be active on any
given day. These numbers apparently include so-called A-Book and
B-Book clients.
The A-Book clients trade directly with an entity
referred to as a liquidity provider. The B-Book clients trade
directly with JP
Markets. It did not say that it had any other type
of client, nor what the percentage of its B-Book clients were. It is
safe to
say, however, that they constituted the bulk of its clients.
This judgment deals
with the business of JP Markets that consisted of transactions
between it and its B-Book clients. The evidence revealed how this
business was operated. Much of the following exposition was derived
directly from the evidence of Mr Justin
Paulsen, the sole shareholder and directing mind of JP Markets.
[7]
It is the licensee in respect of computer software that constitutes a
trading platform.
The trading platform is ‘populated’ by
pricing data. JP Markets purchases the pricing data from a liquidity
provider.
The trading platform is not a market in the ordinary
meaning thereof. JP Markets utilises it to offer
contracts-for-difference
(CFDs) to clients. CFDs are a popular form
of OTC derivatives. They are instruments that enable clients to
speculate on the increase
or decrease of indices or in the prices of,
inter alia, currencies and commodities. A CFD mirrors the movements
of the index or
in the price of the underlying assets and profits are
gained or losses suffered relative to the position that the client
has taken.
The effect of the contract between JP Markets and the
client in respect of a CFD is that, depending on the relevant
increase or
decrease, the one profits and the other suffers a
corresponding loss and vice versa.
[8]
JP Markets is not able to change the pricing data on the trading
platform. It can
and does, however, alter the spreads offered to
particular clients or groups of clients. The spreads are offered on
the platform
and the clients are free to accept them or to shop
around for better trades. The adjustment of spreads particularly
takes place
in respect of what is referred to in the industry as
‘toxic’ clients. These are clients suspected of engaging
in questionable
trading practices. This is often indicated by
high-volume and/or high-value trades that pose a particular risk of
loss to JP Markets.
[9]
Although there may previously
have been some uncertainty in this regard, the evidence established
with clarity that the business of JP Markets fell squarely within the
definition of an ODP. As a regular feature of its business
it at the
very least issued and/or sold OTC derivatives whilst acting as a
principal. It follows that JP Markets required an ODP
licence to
lawfully continue with its business. It submitted a formal
application for an ODP licence to the Authority on 21 August
2020.
That was after the application for its liquidation had been launched
on an urgent basis on 7 July 2020. However, this must
be seen in the
following context.
[10]
The regulations introduced the requirement of an ODP licence during
February 2018. The Authority
nevertheless granted a period of grace
for the submission of ODP licence applications until 14 June 2019.
During July 2019, the
internal compliance officer of JP Markets
consulted with the Authority regarding the purport of the
regulations. The
Authority indicated
that the application process was still in its infancy. In the result,
the compliance officer advised JP Markets
that she was awaiting
clarity from the Authority regarding several elements of the
regulatory licencing process.
[11]
On 14 October 2019, representatives of the Authority interviewed Mr
Paulsen. During the interview
he made it clear that JP Markets was
the party (‘counter party’) that contracted with the
clients in respect of CFDs.
After the interview one of the
interviewers enquired from Mr Paulsen whether JP Markets would be
applying for an ODP licence. He
responded that JP Markets was seeking
advice in this regard. The internal compliance officer contacted the
Authority on the same
day. It responded the following day, 15 October
2019, and stated that the regulations, the Authority’s Conduct
Standard 1
of 2018 (criteria for authorisation of OTC derivative
providers) and other documentation on its website should guide JP
Markets
in respect of the licencing process. In an interview with a
manager of the South African Reserve Bank during November 2019,
Mr Paulsen also admitted that JP Markets was the other party to the
transactions with its clients.
[12]
In the meantime, however, the internal and external compliance
officers of JP Markets were researching
whether JP Markets in fact
required an ODP licence. On
10 December 2019, the Authority issued a notice to JP Markets in
terms of s 136 of the FSRA. The notice required it to furnish
the
Authority with a variety of particulars relating to, inter alia, its
business, trading platform and financial products. The
notice stated
that it was understood that JP Markets was the counter party in
respect of or the issuer of CFDs, and required it
to state whether it
had applied for an ODP licence and, if not, the reasons for not
having done so. JP Markets provided a comprehensive
response to the
Authority on 6 January 2020. It reiterated that it was the counter
party to CFD transactions, but put forward an
argument that its
business nevertheless did not fall within the definition of an ODP.
The argument was, inter alia, based on the
fact that the pricing on
its trading platform emanated from the liquidity provider. JP Markets
stated that it would appreciate
the guidance of the Authority on the
points that the former had raised. The Authority did not respond
thereto.
[13]
On 20 January 2020, however, JP Markets’ external compliance
officer advised it that the
Authority had indicated that it had to
‘register as an ODP’. On 30 January 2020, Mr Paulsen
instructed staff members
of JP Markets to commence the process of
preparing its ODP licence application. During February 2020, the
internal compliance officer
raised various difficulties in this
regard with the Authority. In response, the Authority offered to
assist JP Markets with the
application process.
[14]
JP Markets thus commenced the process of preparing its ODP licence
application. It was advised
by the Authority, however, that it had to
pay the licencing fee prior to the submission of the application.
After several written
enquiries in this regard on behalf of JP
Markets, the Authority, on 18 June 2020, provided it with an invoice
in respect of the
licencing fee in the amount of R50 000. JP
Markets paid the fee immediately.
[15]
The following day, 19 June 2020, the Authority provisionally
suspended JP Markets’ FSP
licence until 30 September 2020. The
notification that conveyed this decision set out the reasons
therefor. For present purposes
it suffices to say that, in the main,
they were related to OTC derivative transactions. In terms of the
notice JP Markets was prohibited
from conducting new business as
envisaged in the FAIS Act. During a teleconference on 23 June 2020,
Mr Paulsen informed the Authority
that it would comply with the terms
of the notice of provisional suspension. However, it enquired whether
‘new business’
included existing clients with open
positions, who could be severely prejudiced if they were not allowed
to make deposits in respect
of those positions. There was an
understanding that this matter would be given further attention.
[16]
On 24 June 2020, JP Markets responded to the notice of provisional
suspension in writing and
on 25 June 2020 the Authority’s
investigators conducted a further interview with Mr Paulsen, which
could not be finalised.
Neither in this response nor in the interview
did JP Markets deny that it was a party to CFD transactions with its
clients, but
argued that it was not the originator of the
instruments. At this interview the Authority also clarified (and JP
Markets accepted)
that it could do no new business in respect of new
or existing clients. As I have said, the Authority launched the
liquidation
application on 7 July 2020 and JP Markets submitted its
ODP licence application on 20 August 2020. In the result, JP Markets’
ODP licence application was pending on the date of the hearing of the
winding-up application in the court a quo.
[17]
For its legal standing to launch the liquidation application, the
Authority relied upon the provisions
of both s 38B of the FAIS Act
and s 96 of the FMA. Its founding affidavit proceeded to relate that
the Authority had received more
than a hundred complaints from
clients of JP Markets. The complaints had two main themes. The first
was that JP Markets had failed
to make payments that were due to its
clients.
The second was that due to interrupted access to its online trading
platform, its clients had been unable to close their positions,
with
resultant losses.
[18]
The Authority instructed investigators to conduct an investigation
into the complaints. The Authority
said that the investigation was
ongoing but reached a stage where the information that had been
gathered ‘informed’
the winding-up application. The
founding affidavit demonstrated that JP Markets operated as an ODP
without a licence. The Authority
also alleged that there was a
conflict between the interests of JP Markets and those of its
clients. These matters, as well as
the treatment of ‘toxic’
clients by
JP Markets, formed
the mainstay of the application.
[19]
The court a quo held that the Authority’s application was
empowered by both
s 38B of the
FAIS Act and s 96 of the FMA. It had regard to the alleged grounds
for the liquidation of JP Markets. The heart of
its reasoning
appeared from the following:
‘
148.
It is the failure of the respondent to have timeously applied for an
ODP licence when it was conducting the business
of an OTC derivative
provider and its persistence in conducting that business without
applying for a licence when it was required
to do so, coupled with
its obfuscation in its dealings with the applicant as the relevant
financial sector regulator, that most
strongly militates in favour of
the granting of a liquidation order, whether in terms of section 96
of the FMA or section 38B of
FAIS.
149.
The other grounds for winding-up therefore need not be considered in
any detail save to state that such grounds
demonstrate the necessity
for the respondent to have been licenced as an ODP.’
The
court accordingly concluded that it was just and equitable to order
the winding-up of JP Markets.
Authority’s
power to apply for winding-up
[20]
Section 1A of the FAIS Act deals with the relationship between it and
the FSRA. It provides that
certain references in the FAIS Act should
be read as references to provisions of the FSRA. Read with s 1A and
insofar as it is
relevant to this case, s 38B(1) provides as follows.
If, after a supervisory on-site inspection or an investigation in
terms of
the FSRA, the Authority considers that the interests of the
clients of an FSP or of members of the public so require, it may
apply
to the court for the liquidation of that FSP, whether or not it
is solvent, in accordance with the Companies Act 71 of 2008 (the
Companies Act).
[4
]
[21]
I very much doubt whether
s 38B(1)
could find application in this
case. As I have demonstrated, the winding-up application was not
about the conduct of JP Markets
as an FSP or about the protection of
the interests of clients or the public in respect of financial
advisory or intermediary services.
There is much to be said for the
view that the section envisages the winding-up of an FSP
qua
FSP. In addition, the phrase ‘in accordance with the
Companies
Act’ appears
problematic.
Section 81
of the
Companies Act
enumerates
the classes of persons that may apply for the winding-up
of a solvent company. They do not include the Authority. Thus, it may
be argued that the Authority could only apply for the winding-up ‘in
accordance with the
Companies Act’ under
s 157(1)
(d)
, that is, when acting in the public interest, with
leave of the court. However, in the light of the conclusion that I
have reached,
it is not necessary to determine these matters.
[22]
It is necessary to reproduce
s 96
of the FMA in full:
‘
Powers
of Authority after supervisory on-site inspection or investigation
After
a supervisory on-site inspection or an investigation has been
conducted, the Authority may, in order to achieve the objects
of this
Act referred to in section 2-
(a)
if the respondent is a company-
(i) apply
to the court under
section 81
of the
Companies Act for
the
winding-up of the respondent as if the Authority were a creditor of
the respondent;
(ii) apply
to the court under
section 131
of the
Companies Act to
begin business rescue proceedings in respect of the respondent as if
the Authority were a creditor of the respondent;
(b)
subject to section 5 of the
Financial Institutions (Protection of Funds) Act, apply to the court
for the appointment of a curator
for the business of the respondent;
(c)
direct the respondent to take
any steps, or to refrain from performing or continuing to perform any
act, in order to terminate or
remedy any irregularity or state of
affairs disclosed by the supervisory on-site inspection or
investigation;
(d)
direct the respondent to
prohibit or restrict specified activities, performed in terms of this
Act, of a director, managing executive,
officer or employee of the
respondent, if the Authority believes that the director, managing
executive, officer or employee is
not fit and proper to perform such
activities; or
(e)
hand the matter over to the
National Director of Public Prosecutions, provided that the
contravention or failure constitutes an
offence in terms of this
Act.’
[23]
Section 2 of the FMA sets out its objects, in these terms:
‘
Objects
of Act
This
Act aims to-
(a)
ensure that the South African
financial markets are fair, efficient and transparent;
(b)
increase confidence in the South
African financial markets by-
(i)
requiring that securities services be provided in a fair,
efficient and transparent manner; and
(ii)
contributing to the maintenance of a stable financial market
environment;
(c)
promote the protection of
regulated persons, clients and investors;
(d)
reduce systemic risk; and
(e)
promote the international and
domestic competitiveness of the South African financial markets and
of securities services in the
Republic.’
[24]
There was no suggestion that a supervisory on-site inspection had
taken place. Thus, the question
was whether the jurisdictional
requirement that ‘an investigation has been conducted’
had been met. With reference
to the evidence that the investigation
was ongoing, JP Markets argued that this phrase must be interpreted
to mean ‘after
. . . an investigation has been concluded’.
[25]
This contention faces difficulty at every level of interpretation.
First, the text simply does
not say that an investigation must have
been concluded. It does not introduce any element of finality. It
says that an investigation
must have been conducted. An ongoing
investigation has been conducted even though it may still be
continuing.
[26]
Secondly, the context points to the same conclusion. It is clear that
the remedies in subsections
(a)
to
(e)
of s 96 may be
invoked after a single supervisory on-site inspection. The section
does not require the inspection to have had a
formal or final result.
This provides a strong indication that a formal or final result in
respect of an investigation is similarly
not a requirement.
[27]
In the third place, the interpretation for which JP Markets contended
is unbusinesslike. It leads
to an insensible result. It makes little
or no sense to require that an investigation be concluded before the
taking of any steps
in terms of subsecs
(a)
to
(e)
would be permissible, even though an ongoing investigation revealed
evidence that would justify or require such action.
[28]
With reference to s 91 of the FSRA, JP Markets argued that a contrary
interpretation would deprive
it of the right to have a decision taken
under s 96 reviewed and set aside under the provisions of the
Promotion of Administrative
Justice Act 3 of 2000 (PAJA). It pointed
out that PAJA does not apply to incomplete investigative action. Read
with the definitions
in s 1 of the FSRA, s 91 provides that PAJA
applies to any administrative action (within the meaning of PAJA)
taken by, inter alia,
the Authority in terms of the FMA.
[29]
The short answer to this submission is that a decision to apply to a
court under subsec
(a)
or
(b)
is not administrative
action under PAJA. It could not by itself affect the rights of any
person nor have a direct, external legal
effect. The same applies to
proceeding under subsec
(e)
. This must be distinguished from a
direction under subsec
(c)
or
(d)
,
which could well be subject to review under PAJA. It follows that the
court a quo correctly held that the Authority was authorised
by s 96
of the FMA to apply for the liquidation of JP Markets.
Just
and equitable ground for winding-up
[30]
It will be recalled that in terms of subsec
(a)
(i)
of s 96, the Authority may, in order to achieve the objects of the
FMA, apply for the winding-up of a respondent under
s 81
of the
Companies Act, as
if it were a creditor of the respondent. In the
circumstances of this case
s 81(1)
(c)
(ii)
of the
Companies Act
[5
]
was applicable. Thus, the Authority had to show that it was just and
equitable for JP Markets to be wound up.
[31]
Although our courts have repeatedly stressed that this does not
constitute a complete or closed
list, they have over the years
developed five broad categories of cases that could constitute a
‘just and equitable’
ground. These are: (a) disappearance
of the company’s substratum; (b) illegality of the objects of
the company and fraud
in connection therewith; (c) a deadlock in the
management of the company’s affairs which can only be resolved
by winding
it up; (d) grounds analogous to those for the dissolution
of partnerships; and (e) oppression. These categories remain
applicable
under the
Companies Act and
may, of course, be
extended.
[6]
[32]
Most of these categories apply to cases where the applicant is a
shareholder of the company and
none of them apply to JP Markets.
Importantly, a winding-up under
s 96
must be aimed at achieving the objects of the FMA. The determination
of whether it would be just and equitable to order a winding-up
under
s 96
, is therefore inextricably linked to the achievement of the
objects of the FMA. As the manifest purpose of the FMA is to serve
public interest, the
dictum
of this Court in
Redhisa
[7]
para 116
[8]
is relevant to
s 96.
Consequently, a consideration of
alternative remedies must also take a central place in the enquiry.
[33]
The starting point must be that JP Markets is a solvent company and a
substantial concern. It
employs 70 permanent employees at a monthly
cost of more than R1 million. It paid in excess of R1 billion to
thousands of clients
during the period of three months preceding the
liquidation application. It was not disputed that its own cash equity
amounted
to approximately R220 million.
[34]
The Authority declined to make the complaints levelled against it
available to JP Markets. JP
Markets nevertheless pointed out that
around 100 dissatisfied clients did not represent a large percentage
of its approximately
300 000 clients. It said that it did its
utmost to retain clients in a very competitive environment. It would
be counterproductive
to arbitrarily deny withdrawal requests or to
cause unnecessary delays, and that it did not do so. It explained
that in limited
cases, where prohibited trading had been identified
(and after the trader was afforded an opportunity to make
representations),
profits were withheld, but the client’s
deposit was refunded.
[35]
It further explained that because trading takes place on an automated
trading platform, interruptions
in access thereto would be
detrimental to its business. It therefore employed all precautions at
its disposal to prevent such interruptions
or system failures. The
instances of interruption of access to the trading platform that
occurred had been caused by circumstances
beyond its control.
[36]
One such event, for example, was a ‘global market halt’
on 16 March 2020.
It was caused by the COVID-19 pandemic and affected many brokers
around the world. As a result, the pricing of instruments on JP
Markets’ trading platform were either absent or incorrect. In
affected clients were restored to the positions in which they
had
been before the market halt. Whilst clients who had lost money were
refunded, the profits of others were reversed, which understandably
might have caused dissatisfaction and complaints. It is clear from
the aforegoing that it could not be determined on the papers
whether
any of the complaints were valid.
[37]
There was no evidence that the clients of JP Markets had been unaware
that they transacted with
JP Markets itself. It follows that it could
not be said that there was any conflict of interest as alleged. And
because traders
were free to accept or decline the spreads offered to
them, it was not objectionable to quote differentiated spreads to
clients
that had been regarded as ‘toxic’. I have set out
the interactions between
JP Markets and the Authority in some detail to show that, contrary to
what the court a quo found, JP Markets had not been guilty
of
obfuscation.
[38]
The evidence therefore did not establish that the business of JP
Markets constituted a systemic
risk to its clients or to financial
markets generally. It follows that the only remaining relevant factor
was that JP Markets had
been doing business as an ODP without a
licence. In this regard it was in the first place not irrelevant that
it was not the only
one to do so.
[39]
Following the service of the liquidation application, JP Markets
caused a letter to be sent to
the Authority, seeking copies of the
ODP licences of all other OTC derivative brokers. The letter
contained a list of eight OTC
derivative providers who were known to
operate on the same business model as JP Markets. The Authority’s
response recorded
that only one of these entities had submitted an
application for an ODP licence. Notably, the Authority had not taken
steps against
any of these brokers.
[40]
In the circumstances the decisive consideration was that JP Markets
had applied for an ODP licence.
At the time of the hearing of the
appeal that application was still pending before the Authority. The
liquidation of JP Markets
prior to the determination of its ODP
licence application would not achieve the objects of the FMA. I
believe that the court a
quo had this in mind when it said the
following in respect of granting leave to appeal:
‘
What
has swayed me to find that there is some other compelling reason why
the appeal should be heard is that my judgment does operate
in a
regulatory environment and more particularly the regulation of the
unlicensed conducting of the business of an OTC derivative
provider,
and how that is advanced by granting a winding-up order.’
And
should an ODP licence ultimately be refused, the Authority would have
no difficulty to obtain an order prohibiting JP Markets
from
continuing to do business as an ODP. In
the result, the winding-up of JP Markets was neither
just nor
equitable.
[41]
For these reasons I conclude that the court a quo erred in finding
that it was just and equitable
to liquidate JP Markets and that the
appeal must succeed. Although
JP Markets
employed four counsel, it rightly asked to be awarded the
costs of only two counsel.
[42]
The following order is issued:
1
The appeal is upheld with costs, including the costs of two counsel.
2
The order of the court a quo is set aside and replaced with the
following:
‘
The application is
dismissed with costs, including the costs of two counsel.’
C
H G VAN DER MERWE
JUDGE
OF APPEAL
Appearances
For
appellant:
J
Muller SC (with him A Katz SC, P Long and
K Perumalsamy)
Instructed
by:
Hanekom Attorneys, Cape Town
Webbers
Attorneys, Bloemfontein
For
respondent:
E Theron
SC (with him L Mbatha)
Instructed
by:
Mamatela
Attorneys, Johannesburg
Lovius Block
Attorneys, Bloemfontein
[1]
‘
Financial
Markets Act Regulations
, GN R98
,
GG
41433, 9 February 2018.’
[2]
Financial
Markets Act Regulations
,
s 1.
[3]
Ibid.
[4]
Section
38B(2)
provides: ‘
In
deciding an application contemplated in subsection (1), the court—
(a)
may take into account whether sequestration or liquidation of the
financial services provider concerned is reasonably necessary—
(i) in order to protect the
interests of the clients of the provider; and
(ii) for the integrity and
stability of the financial sector;
(b)
may make an order concerning the manner in which claims may be
proved by clients of the financial services provider concerned;
and
(c)
shall appoint as trustee or liquidator a person nominated by the
registrar.’
[5]
Section
81(1)
provides that:
‘
A
court may order a solvent company to be wound up if—
(
a
)
. . .
(
b
)
. . .
(
c
)
one or more of the company’s creditors have applied to the
court for an order to wind up the company on the grounds that—
(i)
. . .
(ii)
it is otherwise just and equitable for the company to be wound up.’
[6]
See
Rand Air (Pty) Ltd
v Ray Bester Investments (Pty) Ltd
1985
(2) SA 345
(W);
Cuninghame
and Another v First Ready Development 249 (Association incorporated
under
s 21)
[2010] 1
All SA 473
;
2010 (5) SA 325
(SCA) para 6;
Thunder
Cats Investments 92 (Pty) Ltd and Another v Nkonjane Economic
Prospecting & Investment (Pty) Ltd and Others
[2013]
ZASCA 164
;
[2014] 1 All SA 474
;
2014 (5) SA 1
(SCA) paras 15 and 16.
[7]
Recycling and Economic
Development Initiative of South Africa NPC v Minister of
Environmental Affairs
[2019] ZASCA 1
;
[2019] 2 All SA 1
;
2019 (3) SA 251
(SCA)
(Redhisa)
.
[8]
Paragraph
116 states: ‘There is one more reason why it was not just and
equitable to wind up the appellants: the court had
to be satisfied
that the Minister had no alternative means to address complaints
before resorting to the drastic expedient of
winding up the
appellants. The court a quo did not address this requirement. It is
discussed further in the following section.’