Peters and Others NNO v Schoeman and Others (288/98) [2000] ZASCA 63; 2001 (1) SA 872 (SCA) ; [2001] 1 All SA 155 (A) (10 November 2000)

Peters and Others NNO v Schoeman and Others (288/98) [2000] ZASCA 63; 2001 (1) SA 872 (SCA) ; [2001] 1 All SA 155 (A) (10 November 2000)

The Supreme Court of Appeal held that the transaction, when properly construed, involved the sale of shares in the company and the sellers' claims, but the financial assistance to enable payment of the balance of the purchase price was only to be provided after the company had been converted into a close corporation. At that stage, the company would have ceased to exist and its assets would have become those of the close corporation, which is permitted under the Close Corporations Act. The arrangement did not prejudice the creditors of the company nor did it contravene section 38(1) of the Companies Act. The court further found that none of the communications from the appellants...

Citation
[2000] ZASCA 63
Parties
Appellant: Jonathan David Peters NO; Appellant: Edwin Marcus Letty NO; Appellant: Leonard Carel van Vught NO; Appellant: Derrick Stuart Planting NO; Appellant: Michael Stephen Edy; Respondent: Theresa Schoeman; Respondent: Catherina Susara Abraham; Respondent: Müller Louw; Respondent: Marietha Magda Luttig
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
10 November 2000
Case Number
288/98
Procedural Posture
Civil Appeal / Appeal From the Transvaal Provincial Division
Outcome
Appeal upheld; order of the trial court set aside and substituted with orders compelling respondents to pay and comply with the sale agreement.
Judges
MPATI, HEFER, GROSSKOPF, MARAIS, SCHUTZ
Legal Topics
Financial Assistance for Share Acquisition, Companies Act Section 38, Simulated Transactions, Close Corporations Conversion
Commercial and Corporate Financial Assistance for Share Acquisition Companies Act Section 38 Simulated Transactions Close Corporations Conversion

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 7 Party arguments 2 Amounts and remedies 4
Sign in to unlock

Parties

Jonathan David Peters NO

Appellant

Edwin Marcus Letty NO

Appellant

Leonard Carel van Vught NO

Appellant

Derrick Stuart Planting NO

Appellant

Michael Stephen Edy

Appellant

Theresa Schoeman

Respondent

Catherina Susara Abraham

Respondent

Müller Louw

Respondent

Marietha Magda Luttig

Respondent

Procedural Posture

Civil Appeal / Appeal From the Transvaal Provincial Division

Legal Issues

  1. 1 Whether the deed of sale contravened section 38 of the Companies Act 61 of 1973 by rendering prohibited financial assistance for the purchase of shares.
  2. 2 Whether the transaction was a simulated agreement intended to circumvent the prohibition in section 38.
  3. 3 Whether the appellants had validly cancelled the agreement.

Ratio Decidendi

The Supreme Court of Appeal held that the transaction, when properly construed, involved the sale of shares in the company and the sellers' claims, but the financial assistance to enable payment of the balance of the purchase price was only to be provided after the company had been converted into a close corporation. At that stage, the company would have ceased to exist and its assets would have become those of the close corporation, which is permitted under the Close Corporations Act. The arrangement did not prejudice the creditors of the company nor did it contravene section 38(1) of the Companies Act. The court further found that none of the communications from the appellants...

Court Disposition

Appeal upheld; order of the trial court set aside and substituted with orders compelling respondents to pay and comply with the sale agreement.

Orders

  • The appeal is upheld with costs.
  • The order of the trial court is set aside and substituted as follows: (a) The respondents are ordered to pay to the applicants, within 20 days of date of this order, the sum of R450,000 pursuant to clause 6.2 of the Memorandum of Sale dated 9 May 1997.