Mashiloane v Lopez and Others (25790/2014) [2016] ZAGPPHC 66 (26 January 2016)

Mashiloane v Lopez and Others (25790/2014) [2016] ZAGPPHC 66 (26 January 2016)

The court found that the sale and transfer of membership interest to the fourth respondent, held on behalf of the seventh respondent, was in direct contravention of section 29(1) of the Close Corporations Act, which prohibits juristic persons from holding membership interests in a close corporation. The purported ratification of the transaction by the members could not cure the statutory invalidity. The membership interest held by the fourth respondent was declared null and void and ordered to be restored to the corporation. The court further held that, in terms of section 63(d), the fourth and seventh respondents are jointly and severally liable for all debts incurred by the corporation...

Citation
[2016] ZAGPPHC 66
Parties
Applicant: Sitsoti Enock Mashiloane; Respondent: Antonio Augusto Silva Lopez; Respondent: Luke Gabriel Swarts; Respondent: Mahlangu Makiziwe Xoliswa; Respondent: Ngcebetsha Xoliswa; Respondent: S E Mashiloane Transport CC; Respondent: Golden Ribbon Trading 297 (Pty) Ltd; Respondent: John Sindiso Ngcebetsha; Respondent: The Companies and Intellectual Property Commission (The Registrar of Companies)
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
26 January 2016
Case Number
25790/2014
Procedural Posture
Review Application / Judgment
Outcome
Application granted. The membership interest held by the fourth respondent on behalf of the seventh respondent is declared null and void and must be restored to the fifth respondent. Costs awarded against specified respondents.
Judges
S. A. M. Baqwa
Legal Topics
Close Corporations Act, Invalid Membership Interest, Statutory Compliance, Unfairly Prejudicial Conduct, Joint Liability for Debt
Commercial and Corporate Civil Procedure Close Corporations Act Invalid Membership Interest Statutory Compliance Unfairly Prejudicial Conduct Joint Liability for Debt

Case Brief

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Parties

Sitsoti Enock Mashiloane

Applicant

Antonio Augusto Silva Lopez

Respondent

Luke Gabriel Swarts

Respondent

Mahlangu Makiziwe Xoliswa

Respondent

Ngcebetsha Xoliswa

Respondent

S E Mashiloane Transport CC

Respondent

Golden Ribbon Trading 297 (Pty) Ltd

Respondent

John Sindiso Ngcebetsha

Respondent

The Companies and Intellectual Property Commission (The Registrar of Companies)

Respondent

Procedural Posture

Review Application / Judgment

Legal Issues

  1. 1 Whether the membership interest of the fourth respondent is null and void under the Close Corporations Act.
  2. 2 Whether the membership interest should be restored to the fifth respondent and on what terms.
  3. 3 Whether the applicant is entitled to costs and if the conduct of the eighth respondent warrants censure.

Ratio Decidendi

The court found that the sale and transfer of membership interest to the fourth respondent, held on behalf of the seventh respondent, was in direct contravention of section 29(1) of the Close Corporations Act, which prohibits juristic persons from holding membership interests in a close corporation. The purported ratification of the transaction by the members could not cure the statutory invalidity. The membership interest held by the fourth respondent was declared null and void and ordered to be restored to the corporation. The court further held that, in terms of section 63(d), the fourth and seventh respondents are jointly and severally liable for all debts incurred by the corporation...

Court Disposition

Application granted. The membership interest held by the fourth respondent on behalf of the seventh respondent is declared null and void and must be restored to the fifth respondent. Costs awarded against specified respondents.

Orders

  • A declaratory order that the membership interest of the fourth respondent, held on behalf of the seventh respondent, is null and void.
  • The sixth respondent is ordered and authorised to transfer the membership interest of the fourth respondent back into the name of the fifth respondent.