Niemcor Africa (Pty) Limited v Bushveld Chrome Resources (Pty) Limited (73169/2013) [2014] ZAGPPHC 468 (20 June 2014)

Niemcor Africa (Pty) Limited v Bushveld Chrome Resources (Pty) Limited (73169/2013) [2014] ZAGPPHC 468 (20 June 2014)

The court held that the disposition of shares in a company is a process involving a series of steps, culminating in the registration of the transfer. In this case, although the agreement to sell the shares was concluded before the commencement of winding-up, the registration of the transfer occurred after the commencement date. Therefore, the disposition was completed after the winding-up commenced and falls within the ambit of section 341(2) of the Companies Act. The court further found that the transaction was not bona fide, as the shares were sold for a nominal amount to directors who owed a fiduciary duty to the applicant, and were subsequently offered for sale at a vastly higher...

Citation
[2014] ZAGPPHC 468
Parties
Applicant: Niemcor Africa (Pty) Limited (in liquidation); Respondent: Bushveld Chrome Resources (Pty) Limited; Respondent: Niemcor Brace (Pty) Limited (now Acacia Resources (Pty) Ltd); Respondent: Venter & Co
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
20 June 2014
Case Number
73169/2013
Procedural Posture
Civil Application / Final Judgment on Application Under Section 341(2) of the Companies Act
Outcome
Application granted. The sale and transfer of shares by the applicant to Bushveld Chrome Resources (Pty) Ltd are declared void. Rectification of the share register is ordered. Costs awarded against the first respondent.
Judges
Basson
Legal Topics
Company Liquidation, Disposition of Shares, Fiduciary Duty, Rectification of Share Register, Section 341 Companies Act
Commercial and Corporate Civil Procedure Company Liquidation Disposition of Shares Fiduciary Duty Rectification of Share Register Section 341 Companies Act

Case Brief

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Parties

Niemcor Africa (Pty) Limited (in liquidation)

Applicant

Bushveld Chrome Resources (Pty) Limited

Respondent

Niemcor Brace (Pty) Limited (now Acacia Resources (Pty) Ltd)

Respondent

Venter & Co

Respondent

Procedural Posture

Civil Application / Final Judgment on Application Under Section 341(2) of the Companies Act

Legal Issues

  1. 1 Whether the disposition of shares by the applicant to the first respondent occurred before or after the commencement of winding-up.
  2. 2 Whether the disposition is void under section 341(2) of the Companies Act.
  3. 3 Whether the court should exercise its discretion to validate the disposition under section 341(2).

Ratio Decidendi

The court held that the disposition of shares in a company is a process involving a series of steps, culminating in the registration of the transfer. In this case, although the agreement to sell the shares was concluded before the commencement of winding-up, the registration of the transfer occurred after the commencement date. Therefore, the disposition was completed after the winding-up commenced and falls within the ambit of section 341(2) of the Companies Act. The court further found that the transaction was not bona fide, as the shares were sold for a nominal amount to directors who owed a fiduciary duty to the applicant, and were subsequently offered for sale at a vastly higher...

Court Disposition

Application granted. The sale and transfer of shares by the applicant to Bushveld Chrome Resources (Pty) Ltd are declared void. Rectification of the share register is ordered. Costs awarded against the first respondent.

Orders

  • The sale by the applicant of its shareholding in Niemcor Brace to Bushveld Chrome is declared void.
  • The transfer by the applicant of its shareholding in Niemcor Brace to Bushveld Chrome is declared void.