IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Reportable
CASE NO: 2025-209746
In the matter between:
LIGHTMAP (PTY) LTD Applicant
and
CYBERSMART (PTY) LTD First Respondent
ANDREW FORSSMAN Second Respondent
INFRA IMPACT MID-MARKET Third Respondent
INFRASTRUCTURE FUND I
HEXION DATA STORAGE PROPRIETARY
LIMITED Fourth Respondent
Coram: HOLDERNESS J
Heard: 15 April 2026; 29 April 2026
Delivered: 14 May 2026
________________________________________________________________
JUDGMENT
________________________________________________________________
HOLDERNESS J
[1] The applicant, Lightmap (Pty) Ltd ( “Lightmap or the applicant ”), a
minority shareholder in the first respondent, Cybersmart (Pty) Ltd (“Cybersmart
or the Company ”), applies in terms of Part A for urgent interim interdictory
relief pending the determination of Part B.
[2] The applicant seeks to halt the implementation of two transactions, the
proposed disposal of the hosting division of Cybersmart to Host Africa (Pty) Ltd
(“Host Africa”) pursuant to a letter of intent dated 12 February 2026 (the LOI)
(the Hosting Disposal) and the Hexion JV unwinding (the transactions).
[3] The matter initially served before me in the fast lane of third division.
After hearing argument solely on the issue of urgency, I found that the relief
sought in Part A was urgent and that substantial redress would not be available
to Lightmap at a hearing in the ordinary course.
[4] I afforded the respondent an opportunity to file an answering affidavit in
respect of the Part A relief, and for this reason the matter was set for hearing on
29 April 2026.
[5] The application, which Lightmap initially launched as a rule nisi to
preserve the status quo pending the return date, is now sought in two parts, Part
A and Part B.
[6] The applicant seeks relief solely against the first and second respondents.
The third and fourth respondents are cited as interested parties only.
[7] I do not intend dealing at this stage with the Uniform rule 30 (“rule 30”)
proceedings launched by the applicant at the first hearing , relating to an
amendment to the notice of motion which was subsequently withdrawn by
Lightmap. I intend ordering that the costs of th e rule 30 application stand over
for determination at the hearing of Part B.
Factual background
[8] The facts and issues in this matter are complex and for the purposes of
this judgment, which is only in respect of Part A, I will endeavour to deal only
briefly with the factual matrix insofar as it is relevant to the urgent interim relief
sought.
[9] Cybersmart was incorporated in 1998 as an internet service provider
(ISP). According to Mr. Laurie Fialkov (Mr. Fialkov), a director of the applicant
and the founder of Cybersmart, the Hosting Division is its founding business
and its second largest revenue stream. On a gross profit margin basis , it is the
most profitable division of the company (40.3% as against 38.5% for fibre) and
contributes approximately 50% of the net profit of the company.
[10] According to the applicant, Cybersmart reported a net loss of R649,428
for the year to date to January 2026. Absent the gross profit contribution of the
Hosting Division of R4,030,651, the net loss would have increased sevenfold to
approximately R4.68 million.
Chronology of events leading up to the urgent application
[11] On 27 February 2026 the second respondent, Mr. Andrew Forsmann (Mr.
Forssman) sent an email to the Board present ing the unwinding of the
incorporated joint venture in Hexion Data Storage (Pty) Ltd (the Hexion JV
unwinding) as a fait accompli. Mr. Fialkov immediately noted his objection to
the Hexion JV unwinding to the Chairperson of the Board.
[12] On 2 March 2026 Mr. Zaid Bester (Mr. Bester) began reinstalling the
identical data storage software on the identical hardware used in the Hexion
Venture, under a different licence for Cybersmart’s own account.
[13] On 9 Marc h 2026 Lightmap delivered its objection letter expressly
placing on record that the transactions constitute reserved matters requiring a
special resolution and demanding inter alia that no further steps be taken (the
objection letter).
[14] On 13 March, Mr. PJ Veldhuizen of Gillan & Veldhuizen Attorneys (Mr.
Veldhuizen), the attorney acting on behalf of the first and second respondents,
responded stating that the R20 million SHA would not be crossed and that the
Hexion matter ‘is already underway, if not completed.’ The parties thereafter
agreed to a joint instruction to a senior advocate to resolve t he impasse by
providing a joint opinion.
[15] On 25 March 2026, a board resolution was sought to approve the Hosting
Disposal, recording that due diligence is underway and a revised LOI is being
executed. The meeting was cancelled in the wake of Mr. Fialkov’s objections .
Shortly thereafter, a dispute arose regarding the terms of reference of the senior
counsel’s brief and the first and second respondents withdrew from the process.
[16] On 27 March 2026 Ms Joon Chong of Webber Wentzel (Ms. Chong), the
attorney of record for Lightmap, sent a letter to the respondents demanding an
undertaking that no further steps would be taken to advance the transactions ,
alternatively requesting the implementation dates.
[17] Mr. Veldhuizen replied via email on 2 April 2026 stating that Cybersmart
would not provide any undertaking.
[18] The application was launched three court days later, on 8 April 2026.
[19] On 9 April 2026, Mr. Veldhuizen replied to Ms. Chong raising procedural
objections, demanding the withdrawal of the application, threatening punitive
costs, and that he intended reporting Ms. Chong to the Legal Practice Council.
[20] On 10 April 2026 , Ms. Chong proposed that the matter be postponed in
exchange for a status quo undertaking. Mr. Veldhuizen did not respond and filed
a Notice of Intention to oppose on behalf of the first and second respondents.
[21] On 11 April 2026, Mr. Forssman circulated a round robin board resolution
to oppose the application, for him to sign all necessary affidavits to give effect
to this resolution on behalf of service smart and for the board to ratify any steps,
actions or process which has already been undertaken.
[22] The applicant contends that the authori sation of the individual whose
conduct is impugned to control Cybersmart’s defence of proceedings
challenging that very conduct is itself prejudicial to Lightmap’s interests as a
minority shareholder.
[23] The Hosting Disposal is subject to a 90 -day exclusivity period expiring
on or about 13 May 2026.
[24] The applicant contends that if the Hosting Disposal proceeds before
judicial determination, its entrenched minority veto right would have been
rendered academic , Lightmap’s investment value will have been materially
diminished, and the practical efficacy of any subsequent order setting aside the
transaction will be compromised by the creation of third -party rights, the
migration of customers, the transfer of employees , and the restructuring of
operational systems.
[25] The applicant emphasised that the breach of clause 5.3.3.3 of the MOI
occurred at the point at which negotiations for the hosting disposal commenced
without a special resolution. That breach renders the negotiations and any
agreement concluded pursuant to them void ab initio by operation of section
15(7)1 of the Companies Act 71 of 2008 (the “Companies Act”), alternatively
section 20(9) of the Companies Act.2
[26] According to Lightmap the Hosting Disposal further creates material
operational risks to Cybersmart’s remaining business , specifically pertaining to
paid for capacity going unused post-disposal, customers losing single-point fault
1 Section 15 (7) provides that the shareholders of a company may enter into any agreement with one another
concerning any matter relating to the company, but any such agreement must be consistent with this Act and the
company's Memorandum of Incorporation, and any provision of such an agreement that is inconsistent with this
Act or the company's Memorandum of Incorporation is void to the extent of the inconsistency.
2 Section 20 (9) provides that if, on application by an interested person or in any proceedings in which a
company is involved, a court finds that the incorporation of the company, any use of the company, or any act by
or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a
separate entity, the court may-
(a) declare that the company is to be deemed not to be a juristic person in respect of any right, obligation or
liability of the company or of a shareholder of the company or, in the case of a non-profit company, a member of
the company, or of another person specified in the declaration; and
(b) make any further order the court considers appropriate to give effect to a declaration contemplated in
paragraph (a).
resolution, increas ing attrition risk and approximately 10,000
@cybersmart.co.za email addresses which are not addressed by the LOI.
[27] The applicant further highlighted that the FY2027 budget signed by all
board members on 26 and 27 March 2026 (save for Mr. Fialkov) does not
reflect the Hosting Disposal proceeds and continues to reflect Hosting Division
revenue. The transaction remains open and capable of being interdicted.
[28] Regarding the Hexion JV Unwinding , it appears that certain operational
steps have already been taken, including the cessation of the R66,000 monthly
payment to Hexion, the withdrawal of Mr. Bester from Hexion JV technical
duties, and the reinstallation by Mr. Bester on or about 2 March 2026 of the
identical software on the identical hardware under a different licence for
deployment by Cybersmart independently of Hexion.
[29] According to Lightmap , these operational steps were taken before any
formal unwinding agreement was signed, before the board had received the
Investment Committee (IC) recommendation, and without a 75% shareholder
resolution.
[30] To date , a written unwinding agreement has not been executed , and
Cybersmart’s 50% equity in Hexion has not been formally retransferred . The
Hexion JVA accordingly appears to remain operative as a matter of law.
[31] The urgency , according to the applicant, is that the formal legal
completion of the unwinding, the execution of a written agreement, the
retransfer of equity, the payment of the repurchase price, and the mutual release
of claims will convert what is presently a reversible operational situation into an
irreversible legal one . Cybersmart’s contractual rights under the Hexion JVA
will be extinguished, and the committed third -party revenue stream will be
permanently forfeited.
[32] In my view, the matter is clearly urgent. The first and second respondents
are intent on proceeding with the implementation of the transactions before Part
B is heard. If not, they would have provided the requested undertaking to
preserve the status quo pendente lite.
[33] I am not persuaded, in light of the timeline of events set out above , that
any urgency is self-created. The applicant acted with due haste after reasonable
attempts to resolve the matter failed.
[34] The first and second respondents refused three invitations to engage
meaningfully at shareholder level to resolve the dispute or to provide an
undertaking not to advance the transactions pending judicial determination. The
applicant launched proceedings within one court day of the second refusal.
[35] I agree with Mr. Irish SC, who appeared together with Mr. Choate for the
applicant,3 that t he respondents cannot credibly contend that the applicant’s
pursuit of a resolution mechanism before litigation constitutes self -created
delay, while simultaneously accusing the applicant of failing to pursue
alternative dispute resolution in a letter from their attorneys. These positions are
irreconcilable.
[36] It is for these reasons that I ruled that the matter was urgent and agreed to
hear Part A on an expedited basis.
The impugned transactions
3 At the second hearing only Mr. Choate appeared for the applicant.
[37] The applicant seeks interim relief on two independent bases. The first is
an interim order in terms of section 163(2) of the Companies Act . The second is
a common law interim interdict founded on the relevant clauses of the MOI and
SHA.
The hosting disposal
[38] On 12 February 2026, Host Africa (Pty) Ltd ( “Host Africa ”) sent Mr.
Forsmann the LOI for the Hosting Division , proposing a purchase price of
R13,825,000, which represents approximately 10% of Cybersmart’s enterprise
value based on the recent minority stake acquisition by the third respondent ,
Infra Impact Mid-Market Infrastructure Fund I (“Infra”).
[39] The applicant contends that the LOI offer price is significantly
undervalued and that, on any reasonable basis, a disposal of one -tenth of
Cybersmart’s total value constitutes a disposal of the Company ’s business
within the meaning of clause 5.3.3.3 of the MOI, requiring special resolution
approval with no threshold value.
[40] The LO I includes a 90 -day exclusivity period, a five -year restraint of
trade; deferred payment of the purchase price , and a 24 -month referral
obligation without compensation.
[41] The applicant alleges that Mr. Forssman has since received a draft
purchase agreement and an updated LOI, neither of which has been disclosed to
the applicant.4
[42] According to Cybersmart, the hosting disposal, which has not yet been
concluded, advanced the interests of Cy bersmart as hosting services are
4 Reference is made in the answering affidavit to an updated LOI however same was not attached thereto.
becoming more specialised and scale dependant, which is not its focus, but is
the core business of Host Africa.
[43] In reply, the applicant conceded that the sale agreement has not yet been
signed, but highlights that due diligence has materially advanced, there is an
updated LOI, and Mr. Forssman instructed Infra’s legal adviser to draft board
resolutions on 3 March 2026. Board approval was sought in the 25 March 2026
CEO report (which meeting was cancelled).
[44] The applicant’s stance is that Mr. Forsmann’s continued negotiations with
Host Africa in the face of Lightmap’s objection letter and urgent he aring for
interim relief, and the fact that he has been provided with a draft purchase
agreement which he has failed to share with Mr. Fialkov, is a clear indication of
his intention to block all communication from him, and amounts to a blatant
disregard for Lightmap’s interests.
[45] In early 2025, Cybersmart entered into an incorporated joint venture (JV)
and acquired 50% of the equity of the fourth respondent, Hexion Data Storage
(Pty) Ltd (Hexion), pursuant to a Subscription and Shareholders’ Agreement
dated 17 March 2025 (the Hexion JV A). The JV provided distributed data
storage across Cybersmart’s data centres and so eliminated a single catastrophic
point of failure.
Are the transactions, prima facie, reserved matters?
[46] According to the applicant, the transactions are ‘reserved matters ’ under
the MOI and SHA, requiring the prior written approval of shareholders holding
not less than 75% of the issued ordinary shares of Cybersmart. It does not
appear to be in dispute that no such approval has been obtained.
[47] Lightmap, a minority shareholder, holds 33.511% of the issued ordinary
shares of Cybersmart, which gives it a blocking vote on matters requiring a
special resolution 5 which includes matters defined as ‘reserved matters’ under
the Memorandum of Incorporation (MOI) and the Second Addendum to and
Restated Shareholders’ Agreement (SHA) of Cybersmart.
[48] In terms of the MOI, the board of Cybersmart shall not, without the
passing of a special resolution, inter alia , negotiate for and/or conclude any
agreement in respect of the sale of the Company’s business (clause 5.3.3.3) nor
conduct the business of the Company outside the normal and regular course of
its business (clause 5.3.3.4).
[49] Clause 5.3.3.3 does not contain any monetary threshold.
[50] Cybersmart, as a private company is governed by the Companies Act, its
MOI and then its SHA.6
[51] The applicant contends that the negotiations with Host Africa,
encapsulated in the LOI , fall within clause 5.3.3. 3 of the MOI , and that as no
prior special resolution was obtained, the negotiations and any agreement
concluded pursuant thereto, are void ab initio, by operation of section 15(7)
alternatively section 20(9) of the Companies Act.
[52] In my view , neither section 15(7) nor section 20(9) find application.
While section 15(7) establishes the binding nature of the MOI, it does not, on its
own, prescribe the consequence of voidness for a breach . Section 20(9) deals
with the piercing of the corporate veil, which does not apply in casu.
5 In terms of clause 4.7.2 of the MOI, for a special resolution to be adopted at a Shareholders’ Meeting, it must
be supported by the holders of at least 75% of the issued Ordinary Shares.
6 Section 15(7) of the Companies Act.
[53] Where the parties differ is whether clauses 5.3.3.3 properly interpreted
includes the sale of a division of the company’s business.
[54] The SHA has a corresponding clause, clause 3.2.3, which requires a
special resolution of the shareholders before the board can negotiate for and/or
conclude any agreement in respect of the sale of the Company’s business.
[55] In terms of clause 3.2.24 of the SHA , the ‘disposal of the business of the
Company or any aspect of portion of its Business with a value in excess of R20
million, and / or the merger or amalgamation of the Company with any other
entity’ also requires a special resolution.
[56] Unsurprisingly, the parties presented competing arguments regarding how
these clauses are to be interpreted and whether the sale of the hosting division,
which falls below the R20 million threshold, constitutes the sale of the business.
[57] The respondents contend that clause 3.2.24 militates against the argument
that clauses 5.3.3.3 of the MOI and 3.2.3 of the SHA relate to the sale of a
division of the company rather than the entire company. On their interpretation,
the relevant clauses of the MOI and the SHA make it clear that it envisages the
‘disposal of the business in its entirety’.
[58] It i s well established in our law that the interpretation of a constitutive
corporate instrument should be undertaken in accordance with the unitary
approach, which considers language, context and purpose as a n integrated
exercise.7
7 University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (6) SA 1 (CC) paras
[65]–[68].
[59] The applicant contended that, with regard to language, the operative
phrase is ‘any agreement in respect of the sale of the Company’s business.’ As
the word ‘any’ stands unqualified, to confine the clause to a sale of the entire
business would require the reading in of such a qualifier that does not appear in
the text.
[60] This becomes even more apparent when regard is had to the context, as
the separate provision in clause 3.2.24 expressly provides for the disposal of any
aspect or portion of the business exceeding R20 million. If clause 5.3.3.3 of the
MOI applied only to a disposal of the entirety of the business, the MOI would
provide no minority protection in respect of partial disposals, however large , so
the applicant’s argument went.
[61] Put differentl y, if clause 5.3.3.3 were construed as applying only to a
disposal of the entirety of the business, the MOI would not provide any minority
protection for partial disposal s, however large the transaction, which is the
antithesis of the protection that the clause was plainly designed to provide.
[62] In argument , Mr. Woodland SC, who appeared together with Ms .
McChesney on behalf of the first and second respondents, contended that the
MOI takes precedence over the SHA, but what the SHA provides at clause
3.2.24 is that the board cannot sell the substratum of the company, which
resonates with section 65 of the Companies Act.
[63] The respondents argued that the directors sought to frame SHA consistent
with the MOI by imposing a threshold of R20 million, and that this is the only
way to read the MOI with the Companies Act and SHA consistently.
[64] The applicable clauses were clearly incorporated for the purpose of
protecting minority shareholders, and similarly to section 163 of the Companies
Act, must be interpreted in a manner which advances that protection and the
remedies available to minority shareholders, rather than limit or undermine it.
[65] I find myself in agreement with the applicant that o n the respondents’
interpretation, the board could sell off the entirety of the business but for one
small division without ever engaging clause 5.3.3.3. This would produce an
absurd and unbusinesslike result.
[66] I say this mindful that it is not for the court at this stage, when only
urgent interim relief is being sought, to make any definitive findings in this
regard. I do not make any such findings and leave these complex matters, which
require a full ventilation of all the issues which are to be further traversed in a
supplementary answering affidavit and re plying affidavit in respect of the Part
B relief, to the court hearing the application in terms of Part B for final relief.
Has the applicant prima facie established that the transactions fall outside the
normal and regular course of business?
[67] The next issue which arises in considering whether, prima facie , the
transactions are reserved matter s is whether they fall ‘outside the no rmal and
regular course of business’ as contemplated in clause 3.2.4 of the MOI.
[68] The evidence of Mr. Fialkov is that the Hosting Division is a core
component of Cybersmart’s business and that the normal course of business is
the provision of these services, not the disposal of them.
[69] According to the applicant , without the Hosting Division, the Company
would have been loss making every month. 8 The disposal of a division of this
significance is, according to Lightmap, ‘extraordinary’.
8 From March 2025 to January 2026.
[70] The applicant emphasised that the Hosting Disposal would precipitate
five cascading consequences: (a) unused bandwidth capacity for which
Cybersmart would continue to pay; (b) loss of approximately 10,000
“@cybersmart.co.za” email addresses, which operate as an embedded fibre -
retention mechanism; (c) the elimination of staff cost recovery; (d) loss of brand
goodwill driven by the hosting services; and (e) destruction of the Hexion
synergy.
[71] It appears prima facie that a disposal of one tenth of the enterprise value,
which the Hosting Division represents, concentrated in the most profitable
division, is a step which may indeed require shareholder oversight.
[72] A further persuasive argument is if the Hosting Disposal was intended as
a transaction in the ordinary course of business, it would have been reflected in
the approved budget for FY 2027. The applicant contends that i ts exclusion
suggests that the transaction may well be not in normal and ordinary course of
business and may constitute a divergence from the approved budget.
[73] I turn now to consider whether the Hexion JV unwinding is taking place
in the normal and ordinary course of business.
[74] The Hexion JV was undertaken as a strategic initiative to provide
distributed data storage across various Cybersmart data cent res, a configuration
that successfully eliminated the single point of failure for the company.
[75] Cybersmart maintained a 50% equity stake in this venture, which had
received IC approval and was generating committed revenue from third -party
clients.
[76] The JV entailed Mr. Hardy and Mr . Steingo contribut ing R3 million in
capital and provided sales and marketing expertise without taking salaries,
while Cybersmart provided technical support through the deployment of Mr .
Bester. Cybersmart retained 50% of the equity, revenue and infrastructure assets
of the venture on what the applicant describes as ‘commercially favourable
terms’.
[77] Despite the commercial viability of the arrangement, the joint venture
was subsequently unwound. This dissolution occurred alongside the disposal of
Cybersmart’s most profitable division at a time when the internal technical team
was already under-resourced and struggling with performance.
[78] The applicant contends that this clearly not in the normal and ordinary
course of business.
[79] The financial implications of this unwinding are significant based on the
valuation established in the letter of intent. By applying a multiple of 1.75 times
the yearly recurring revenue, the Hexion venture reached an implied enterprise
value of approximately R5.8 million.
[80] Based on the foregoing, the retransfer of Cybersmart’s 50% equity stake
at nil consideration constitutes a disposal of approximately R2.9 million without
shareholder value, which the applicant contends can only be characterised as an
extraordinary transaction.
[81] The respondents , by their own admission, seek to sell of the profitable
divisions of the Company and then ultimately the Company itself. To do so
without the requisite shareholder oversight would prima facie constitute an
unfair trammelling of the applicant’s rights as a minority shareholder.
[82] It bears repeating that it is not for this court to determine whether the
transactions are reserved matters in terms of the MOI and the SHA. All that the
applicant need establish at this stage is that it has a prima facie right to the relief
which it seeks, though it may be open to some doubt
Interim interdictory relief – Applicable legal principles
[83] The question which this court need determine is whether the applicant has
met the lower threshold of a prima facie right and the further requirements for
an interim interdict, either in terms of section 163 of the Companies Act or in
terms of the common law.
Section 163(2) of the Companies Act
[84] As the holder of 33.511% of the issued ordinary shares of Cybersmart,
Lightmap holds a blocking vote on reserved matters under the MOI and the
SHA.
[85] In Grancy Property Ltd v Manala and Others 9 (Grancy), the Supreme
Court of Appeal (the “ SCA”) held that where a shareholder asserts that
corporate steps breach entrenched approval rights in a manner that is oppressive
or unfairly prejudicial to it, the shareholder has direct standing.10
[86] The court in Grancy emphasised that in determining whether the conduct
complained of is oppressive, unfairly prejudicial or unfairly disregards the
interests of the minority shareholder it is the conduct itself and the effect which
it has on other members of the company that the court must examine, and not
the motive behind the conduct complained of.11
9 Grancy Property Ltd v Manala and Others 2015 (3) SA 313 (SCA).
10 Ibid paras 21- 27.
11 Ibid para 27.
[87] Section 163(2) of the Companies Act, which is headed ‘ Relief from
oppressive or prejudicial conduct or from abuse of separate juristic personality
of company’, confers a broad power on this court to make ‘any interim of final
order it considers fit’.
[88] In terms of section 163, a shareholder or a director of a company may
apply to a court for relief if-
‘(1) (a) any act or omission of the company, or a related person, has had a result that
is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the
applicant.
(b) the business of the company, or a related person, is being or has been carried on
or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly
disregards the interests of, the applicant; or
(c) the powers of a director or prescribed officer of the company, or a person related
to the company, are being or have been exercised in a manner that is oppressive or
unfairly prejudicial to, or that unfairly disregards the interests of, the applicant.’
[89] The court considering such an application may, inter alia ‘make an order
restraining the conduct complained of.’ 12 The broad remedial nature of the
section, which is focused on unfairly prejudicial or oppressive conduct, permits
the court to grant any order it considers just and equitable to address the
mischief.13
[90] A conspectus of the evidence suggests that Cybersmart has been
systematically excluding the applicant from communications and decision
making.
12 In terms of section 163(2)(a).
13 Grancy at paras [27] to [32].
[91] Concerning incidents include significant unauthorised payment of R1.5
million to Mr. Forssman, unratified salary increases, and the withdrawal of over
R13 million from a reserve account without the requisite 75% resolution.
[92] The evidence adduced by the applicant suggests that t hese actions are
compounded by a lack of institutional oversight, evidenced by the failure to
form an Audit and Risk Committee for eighteen months and persistent delays in
key performance reporting.
[93] The applicant describes a pattern of deliberate marginali sation where Mr.
Fialkov (on behalf of the applicant) who appears to have been an integral part of
the Company for three decades, was removed from formal communication
channels and excluded from critical strategy meetings regarding the Hosting
Disposal.
[94] The second respondent’s refusal to share draft purchase agreements until
they are finalised is viewed by the applicant as a strategy to present transactions
as a fait accompli, similar to the previous unwinding of the Hexion JV.
[95] A further notable complaint is that the management’s current strategy
prioritises short term financial gains over sustainable shareholder value , by, for
example, disposing of profitable divisions while key leadership roles such as the
Chief Technical Officer and Head of Finance remain vacant. The applicant
describes this as a piecemeal liquidation of the Company rather than a sound
turnaround strategy.
[96] The financial impact of the Hexion venture dissolution alone exceeds the
contractual thresholds that trigger entrenched minority protection rights, yet
these protections were allegedly ignored.
[97] Section 163 is no longer limited to oppressive conduct or conduct which
is ‘unfairly prejudicial, unjust or inequitable’, but now includes conduct ‘that
unfairly disregards the interests of, the applicant ’ indicating a far wider basis
upon which relief may be sought.
[98] The introduction of a new ground in section 163 (as compared to the old
section 252, namely conduct ‘that unfairly disregards the interests of the
applicant’ indicating a far wider basis upon which relief may be sought – in
other words, the conduct now need not be limited to oppressive conduct or
conduct which is ‘unfairly prejudicial, unjust or inequitable’.
[99] By treating matters that require a seventy five percent majority as
ordinary resolutions, the respondents appear , at least prima facie , to be
attempting to circumvent the constitutional safeguards found in the
Shareholders’ Agreement and the Memorandum of Incorporation, which may
well constitute unfair prejudice under the Companies Act.
Interim interdictory relief in terms of the common law
[100] Turning now to the common law requirements for interim interdictory
relief. The requirements are well established and will be dealt with individually
below.
Prima facie right
[101] The first requirements are the establishment of a prima facie right, even if
thought to be open to some doubt.
[102] On these papers, which will be amplified before the hearing of Part B, it
is clear that there is a genuine dispute regarding whether the transactions
constitute reserved matters in terms of the MOI and SHA.
[103] Regarding the Hosting Disposal, the IC considered the matter sufficiently
material to impose multiple conditions and expressly noted that the issue of
whether the transactions are reserved matters required board level or legal
consideration.
[104] The CEO report recorded the applicant’s stance and recorded that
Cybersmart was ‘in the process of getting clarity’ on whether the sale of a
portion of the business required a special resolution.
[105] The respondents contend that any right which the applicant may have to
the ultimate relief sought can only arise when the applicant may exercise that
right.
[106] This contention cannot be sustained . The applicant as a minority
shareholder has a right to be protected as provided for the in the MOI, SHA, and
the Companies Act. The court hearing Part B will determine whether the
transactions are reserved matters, however, it is necessary for the status quo to
be preserved and for further implementation to be halted to give effect to such
rights.
[107] The interpretative exercise is best left to the court hearing Part B. I am
however persuaded , at least prima facie , that the Hosting Disposal and the
Hexion JV unwinding, based on all the reasons and upon a careful consideration
of the evidence referred to above, is not in the normal and ordinary course of
business, and that the applicant has accordingly established a prima face right to
the relief it seeks in Part B.
[108] Put differently, in my view the applicant had demonstrated a bona fide
and prima facie enforceable right not to have reserved matters implemented
without a special resolution.
Reasonable apprehension of irreparable harm
[109] The Constitutional Court in Eskom Holdings SOC Ltd v Vaal River
Development Association (Pty) Ltd and Others 14 confirmed the test for
threatened irreparable harm in the context of interim relief. An applicant need
only demonstrate a well-grounded apprehension of harm that cannot adequately
be compensated by damages or otherwise reversed by final relief.
[110] The relief is necessary to prevent the disputed transactions from being
implemented or further implemented and completed, which, if the Part B relief
is ultimately granted , would result in the infringement of the applicant’s
minority protection rights.
[111] As alluded to above, the respondents’ refusal to provide a status quo
undertaking served to reinforce the applicant’s well-grounded fear that they are
intent with proceeding with the transactions to its likely detriment.
[112] According to the applicant , the Hosting Disposal would increase
Cybersmart’s loss sevenfold, and the Hexion JV unwinding will result in the
‘surrender of an operationally integrated venture with committed revenue,
14 Eskom Holdings SOC Ltd v Vaal River Development Association (Pty) Ltd and Others 2023 (4) SA 325 (CC).
contributed expertise and significant capital value, in exchange for equipment at
depreciated cost.’
[113] The crystallisation of th ird-party rights once the transactions are
implemented, the migration of customer, transfer of employees and
restructuring of systems would render any subsequent relief hollow.
[114] The respondents deny that the applicant faces irreparable harm,
contending that it seeks to interdict a prop osed disposal where no such disposal
exists. I cannot agree. The LOI is the courting phase which by all accounts will
culminate in a final agreement to dispose of the Company’s hosting business. If
this were not so, the respondents would not hesitate to furnish the requested
undertaking.
[115] I am satisfied, on a careful consideration of the evidence and arguments
presented in this matter, that the applicant has established that it has a
reasonable apprehension that it may suffer irreparable harm if the relief sought
is not granted, as the implementation of the transaction without shareholder
approval will mean that its minority shareholder right to approval cannot be
restored, such as by a damages claim.
Balance of convenience
[116] The respondents in their Heads of Argument argued that the applicant
will not be prejudiced if Cybersmart is permitted to engage in non -binding
negotiations ‘and to formulate an agreement with Hexion and/or Host Africa
and then present same for the requisite voting approval, which Cybersmart
contends is an ordinary resolution’.
[117] It is clear from this contention that the respondents will proceed with the
proposed transactions and that they will present them for approval by ordinary,
and not special resolution. This is precisely the prejudice which the applicant
contends that it will suffer if interim relief is not granted.
[118] Having weighed the prejudice to the applicant if the interdict is refused
against the prejudice to the respondents if it is granted, I am persuaded that the
balance clearly favours the applicant. No cogent evidence of any prejudice to
the respondents has been placed before the court.
[119] There is no evidence to suggest that the interim relief will permanently
scupper or in any way imperil the potential sale to Host Africa. Host Africa
have approached Cybersmart on three occasions, each time with a higher offer,
and by all accounts they are committed to proceeding with transaction.
[120] On the respondents’ version , the unwinding has commenced and there is
no reason to believe it will not be completed.
[121] By contrast the refusal of relief in terms of Part A would allow the
implementation of transactions which are on the applicant’s version unlawful
and irreversible. The respondents have failed to ca st any serious doubt on the
applicant’s version that its right is secured and sought to be protected in the
MOI and SHA.
[122] The applicant sought to obtain an undertaking and to have matter s
resolved by the appointment of a joint decision -maker, to no avail. With a
shareholding of only 33.511%, the applicant cannot block ordinary resolutions
which the respondent has stated it will present to implement the transactions.
[123] A claim for damages is not an adequate alternative remedy as the
consequences of the transactions are irreversible, including a five -year trade
restraint and the migration of the applicant’s hosting customer base.
[124] As to the Hexion JV unwinding, as pointed out by the applicant an order
directed at Cybersmart cannot compel the other parties to the JV to re -enter the
JV. It appears at this interim stage that it is not in the ordinary course of business
if Cybersmart exits JV with a R3million loss.
[125] In Jackson v Louw,15 the court, in deciding whether a disposition was
made in the ordinary course of business, found that t he court must ask itself
whether the disposition was one which would normally be entered into between
solvent business persons, or put differently, whether the disposition conforms
with ordinary business methods adopted by solvent businessmen, or whether
it ‘would not to the ordinary man of business appear anomalous, un-businesslike
or surprising,’ and ‘[i]t means that the transaction must fall into place as part of
an undistinguished common flow of business done, so that it should form part of
the ordinary course of business as carried on, calling for no remark and arising
out of no special situation’.16
[126] If the Hosting Disposal proceeds, Cybersmart cannot re-open or return to
hosting operations for five years. This too may well constitute business not in
the ordinary course.
[127] The applicant’s case is that the catastrophic infrastructure failure risk
cannot be compensated in damages, and that any damages would ultimately be
awarded against Cybersmart which would diminish the value of the applicant’s
shareholding. Because these infrastructure risks are catastrophic, they fall
15 Jackson v Louw N.O and Another (CA&R 149/17) [2018] ZAECGHC 141; [2019] 2 All SA 145 (ECG) (13
December 2018).
16 Ibid at para 60.
outside the scope of simple monetary compensation , and contends, correctly in
my view, that the remedy for a void act is prevention, not compensation.
[128] The result of the transaction, permitted to proceed unhindered, will be
that the applicant is unfairly prejudiced by not being permitted to exercise its
blocking vote in terms of the SHA and MOI on transactions which at least
prima facie appear to be reserved matters in terms thereof.
Conclusion
[129] I am persuaded that the applicant has demonstrated, prima facie, that it is
entitled to relief in Part B, and that there is a reasonable risk that unfair
prejudice will ensue if the urgent relief in part A is refused. The applicant has
therefore established that these rights should be protected pending
determination of Part B
[130] In all the circumstances , I am s atisfied that the applicant has made out a
proper case for the relief sought in part A of the notice of motion.
Costs
[131] Turning now to costs. The respondents proposed that costs should be
costs in the cause. The applicant contended that costs should rather stand over
for later determination.
[132] The court hearing Part B will ultimately determine the merits of the
application, and as the issues in Part A are inextricably linked with those in Part
B, will have a fuller picture o f the evidence and competing arguments, once the
papers have been supplemented and the issues fully ventilated.
[133] In the circumstances I am of the view that the fairest order would be for
the costs of this application, including the costs of the rule 30 application which
did not proceed due to the applicant abandoning their proposed amendment on
the first day of the hearing, to stand over for later determination.
Order
[135] The following order shall issue:
(a) Pending the hearing of Part B of the application as set out in paragraph 4 of
the Notice of Motion, on a date to be determined by the Registrar , the first
and second respondents are interdicted and restrained from implementing,
giving effect to, concluding, performing or taking any further steps in
relation to:
i. The proposed disposal by the First Respondent of its Hosting Division to
Host Africa (Pty) Ltd pursuant to the letter of intent dated 12 February
2026 or any updated letter of intent, agreement or arrangement (“the
Hosting Disposal”).
ii. The unwinding or termination of the joint venture between the First
Respondent and Hexion Data Storage (Pty) Ltd, together with any
transfer, disposal, compromise, release, write -off, assumption of
liabilities, or restructuring pursuant thereto (“the Hexion JV
Unwinding”).
(b) All issues of costs, including the costs of the rule 30 application brought by
the first and second respondents, shall stand over determination by the
court hearing Part B of the application.
_____________________
M HOLDERNESS
JUDGE OF THE HIGH
COURT
Appearances
For Applicant: Adv Irish SC (Heads of argument and hearing on 15
April 2026) and Adv L Choate
Instructed by: Webber Wentzel (Per: Ms. J Chong)
For Respondents: Adv G Woodland SC (Heads of argument and hearing
on 29 April 2026) and Adv MA McChesney
Instructed by: Gillan & Veldhuizen Inc. (Per: Mr. PJ Veldhuizen)