Smuts v Booyens, Markplaas (Edms) Bpk en 'n Ander v Booyens (222/99, 257/99) [2001] ZASCA 57; [2001] 3 All SA 536 (A); 2001 (4) SA 15 (SCA) (2 April 2001)

Smuts v Booyens, Markplaas (Edms) Bpk en 'n Ander v Booyens (222/99, 257/99) [2001] ZASCA 57; [2001] 3 All SA 536 (A); 2001 (4) SA 15 (SCA) (2 April 2001)

The Supreme Court of Appeal held that the restrictions on share transfer contained in the articles of Markplaas (Edms) Bpk, derived from Table B of Schedule 1 of the Companies Act, created an absolute bar to the transfer of shares to a third party unless the prescribed procedure was strictly followed. These restrictions were not merely personal rights but statutory and contractual limitations that formed an original incident of the shares themselves. The right to transfer shares was limited from inception, and absent compliance with the procedure, no rights could vest in the transferee, regardless of the transferee's knowledge of the restriction. The court rejected the argument that...

Citation
[2001] ZASCA 57
Parties
Appellant: Leon Ferdinand Smuts; Respondent: Wilfred Booyens; Appellant: Markplaas (Edms) Bpk
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
2 April 2001
Case Number
222/99, 257/99
Procedural Posture
Civil Appeal / Final Appellate Decision
Outcome
Appeal upheld; orders of the lower courts set aside.
Judges
Vivier, Nienaber, Olivier, Schutz, Cameron
Legal Topics
Transfer of Shares, Company Articles, Pactum De Non Cedendo, Statutory Interpretation, Rectification of Register
Commercial and Corporate Civil Procedure Transfer of Shares Company Articles Pactum De Non Cedendo Statutory Interpretation Rectification of Register

Case Brief

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Parties

Leon Ferdinand Smuts

Appellant

Wilfred Booyens

Respondent

Markplaas (Edms) Bpk

Appellant

Procedural Posture

Civil Appeal / Final Appellate Decision

Legal Issues

  1. 1 Whether shares in a private company can be transferred to a third party in contravention of restrictions in the company's articles.
  2. 2 Whether knowledge of such restrictions by the transferee is relevant to the validity of the transfer.
  3. 3 Whether the procedures in the articles must be strictly complied with before any transfer to an outsider is valid.

Ratio Decidendi

The Supreme Court of Appeal held that the restrictions on share transfer contained in the articles of Markplaas (Edms) Bpk, derived from Table B of Schedule 1 of the Companies Act, created an absolute bar to the transfer of shares to a third party unless the prescribed procedure was strictly followed. These restrictions were not merely personal rights but statutory and contractual limitations that formed an original incident of the shares themselves. The right to transfer shares was limited from inception, and absent compliance with the procedure, no rights could vest in the transferee, regardless of the transferee's knowledge of the restriction. The court rejected the argument that...

Court Disposition

Appeal upheld; orders of the lower courts set aside.

Orders

  • In case number 222/99: The appeal succeeds with costs, including the costs of two counsel, but excluding the costs of one-third of the record.
  • The order of the court a quo is set aside and replaced with: (i) The application referred for hearing succeeds with costs. (ii) It is declared that 50% of the shares in Markplaas (Edms) Bpk vest in the curator of the insolvent estate P S Roux, Estate Number T3163/94.