AA Mutual Insurance Asspciation Ltd. v Century Insurance Company (366/84) [1986] ZASCA 50 (16 May 1986)

AA Mutual Insurance Asspciation Ltd. v Century Insurance Company (366/84) [1986] ZASCA 50 (16 May 1986)

The court held that clause 17(a) of the agreement, which precluded AA Mutual from redeeming the preference shares while Century held them, was not incompatible with section 43 of the Companies Act, regulation 6(bis) of the Articles of Association, or the special resolution creating the shares. The right to redeem was solely for the benefit of the company and could be renounced, provided such renunciation was not contrary to law or public policy. The undertaking not to redeem operated only while Century or an approved transferee held the shares and did not affect their character as redeemable preference shares. No statutory or common law provision prohibited such an agreement. Accordingly,...

Citation
[1986] ZASCA 50
Parties
Appellant: A.A. Mutual Insurance Association Limited; Respondent: Century Insurance Company Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
16 May 1986
Case Number
366/84
Procedural Posture
Civil Appeal / Appeal From Motion Proceedings in the Witwatersrand Local Division
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Corbett, Joubert, Hoexter, Galgut, Nicholas
Legal Topics
Redeemable Preference Shares, Companies Act 1926, Articles of Association, Contractual Waiver, Shareholder Rights
Commercial and Corporate Redeemable Preference Shares Companies Act 1926 Articles of Association Contractual Waiver Shareholder Rights

Case Brief

Summary, issues, holding and outcome

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Parties

A.A. Mutual Insurance Association Limited

Appellant

Century Insurance Company Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Motion Proceedings in the Witwatersrand Local Division

Legal Issues

  1. 1 Whether AA Mutual was precluded by clause 17 of the 1969 agreement from redeeming the preference shares held by Century.
  2. 2 Whether clause 17(a) is unenforceable as contrary to the Companies Act or the Articles of Association.

Ratio Decidendi

The court held that clause 17(a) of the agreement, which precluded AA Mutual from redeeming the preference shares while Century held them, was not incompatible with section 43 of the Companies Act, regulation 6(bis) of the Articles of Association, or the special resolution creating the shares. The right to redeem was solely for the benefit of the company and could be renounced, provided such renunciation was not contrary to law or public policy. The undertaking not to redeem operated only while Century or an approved transferee held the shares and did not affect their character as redeemable preference shares. No statutory or common law provision prohibited such an agreement. Accordingly,...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.
  • The costs of the application for leave to appeal, including the costs of opposition, are to be costs in the appeal.