Fleki Proprietary Limited v FNB Securities Proprietary Limited (29662/2018) [2019] ZAGPJHC 537; [2020] 2 All SA 452 (GJ) (12 December 2019)

Fleki Proprietary Limited v FNB Securities Proprietary Limited (29662/2018) [2019] ZAGPJHC 537; [2020] 2 All SA 452 (GJ) (12 December 2019)

The court held that section 54 of the Companies Act is clear and unambiguous: a shareholder may require materialisation of uncertificated shares, and the broker is obliged to comply without discretion or conditions. Section 49(4)(b) ensures that this statutory right prevails over any conflicting mandate or regulatory provision, unless there is a direct conflict with FICA. The respondent failed to demonstrate any actual conflict between section 54 and FICA, as the act of materialising shares is not a 'transaction' within the meaning of FICA requiring due diligence or reporting. The respondent's reliance on its mandate and regulatory obligations was misplaced. The applicant was entitled to...

Citation
[2019] ZAGPJHC 537
Parties
Applicant: Fleki Proprietary Limited; Respondent: FNB Securities Proprietary Limited
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
12 December 2019
Case Number
29662/2018
Procedural Posture
Civil Application / Opposed Motion; Final Judgment
Outcome
Application granted in part; order for materialisation of shares and costs in favour of applicant; declaratory relief refused.
Judges
P Coppin
Legal Topics
Companies Act Section 54, Dematerialisation of Shares, Broker Mandate, Fina Regulatory Compliance, Declaratory Relief, Costs Award
Commercial and Corporate Civil Procedure Companies Act Section 54 Dematerialisation of Shares Broker Mandate Fina Regulatory Compliance Declaratory Relief Costs Award

Case Brief

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Parties

Fleki Proprietary Limited

Applicant

FNB Securities Proprietary Limited

Respondent

Procedural Posture

Civil Application / Opposed Motion; Final Judgment

Legal Issues

  1. 1 Whether the respondent was obliged to comply with the applicant's request to materialise its dematerialised shares under section 54 of the Companies Act.
  2. 2 Whether the respondent could lawfully impose conditions or refuse compliance based on regulatory obligations or its mandate.
  3. 3 Whether the applicant was entitled to declaratory relief regarding the absence of suspicious or irregular conduct.

Ratio Decidendi

The court held that section 54 of the Companies Act is clear and unambiguous: a shareholder may require materialisation of uncertificated shares, and the broker is obliged to comply without discretion or conditions. Section 49(4)(b) ensures that this statutory right prevails over any conflicting mandate or regulatory provision, unless there is a direct conflict with FICA. The respondent failed to demonstrate any actual conflict between section 54 and FICA, as the act of materialising shares is not a 'transaction' within the meaning of FICA requiring due diligence or reporting. The respondent's reliance on its mandate and regulatory obligations was misplaced. The applicant was entitled to...

Court Disposition

Application granted in part; order for materialisation of shares and costs in favour of applicant; declaratory relief refused.

Orders

  • The respondent is to take all steps necessary, as envisaged in section 54 of the Companies Act 71 of 2008, to materialise the applicant's holding of 3000 shares in British American Tobacco Company (JSE code BTI) within five business days of this order.
  • The respondent is to pay the costs of the application, including the costs of senior counsel.