South Africa Case Law

Constantia Insurance Company Limited v The Master of the High Court, Johannesburg and Others (512/2021)

Constantia Insurance Company Limited v The Master of the High Court, Johannesburg and Others (512/2021) [2022] ZASCA 179; 2023 (5) SA 88 (SCA) (13 December 2022)

Court

Supreme Court of Appeal

Case number

512/2021

Judges

Van der Merwe, Plasket, Basson

The Supreme Court of Appeal held that the indemnity provided by Protech Investments to Constantia constituted indirect financial assistance to a related company, Protech Khuthele, within the meaning of section 45(1)(a) of the Companies Act. The board of Protech Investments did not adopt a resolution authorising the indemnity nor did it satisfy itself of the solvency, liquidity, and fairness requirements as required by section 45(3)(b). The only resolution produced was by Protech Holdings, which did not suffice. The requirements not met were substantive, not merely formal or procedural, so sec…

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• Expungement Of Claims
• Financial Assistance
• Board Resolutions
• Solvency And Liquidity Test
• Arbitrary Deprivation Of Property
• Indemnity Agreements

Naidoo v Michau N.O and Others (269/2021P;3519/2019P)

Naidoo v Michau N.O and Others (269/2021P;3519/2019P) [2020] ZAKZPHC 1 (8 January 2020)

Court

Kwazulu-Natal High Court, Pietermaritzburg

Case number

269/2019P;3519/2019P

Judge

Madondo DJP

The court refused to set aside creditors’ rejection of a business rescue plan and upheld an application to terminate business rescue and liquidate SKN Group.

• Business Rescue
• Creditors Voting
• Liquidation
• Companies Act
• Solvency And Liquidity Test
• Business-rescue

Booysen and Others v Kohrs and Others (59732/2016)

Booysen and Others v Kohrs and Others (59732/2016) [2016] ZAGPPHC 871 (22 September 2016)

Court

North Gauteng High Court, Pretoria

Case number

59732/2016

Judge

Pretorius

The court found that the delegation agreement constituted financial assistance for the purchase of shares, falling squarely within the ambit of section 44 of the Companies Act 71 of 2008. The company failed to comply with statutory requirements, including the absence of a special resolution and failure to satisfy the solvency and liquidity test. As a result, the shareholders agreement, sale of shares agreement, and delegation agreement were declared void. Consequently, the restraint of trade clause, being part of the void shareholders agreement, was unenforceable. The applicants' locus standi…

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• Restraint Of Trade
• Shareholders Agreement
• Financial Assistance
• Solvency And Liquidity Test
• Companies Act Compliance

Air Tratment Engineering And Maintanance CC v Pac-Con Pharmaceuticals (3394/2014)

Air Tratment Engineering And Maintanance CC v Pac-Con Pharmaceuticals (3394/2014) [2016] ZAKZDHC 34 (25 July 2016)

Court

Kwazulu-Natal High Court, Durban

Case number

3394/2014

Judge

Masipa

The court held that the applicant failed to establish that the respondent was commercially insolvent as required under section 344(f) of the Companies Act 61 of 1973. The application was based on the old Act, which only applies to insolvent companies, while the respondent demonstrated solvency under the new Companies Act 71 of 2008. The applicant did not allege or prove commercial insolvency, and the respondent bona fide disputed the amount claimed and the basis for payment. The court found that liquidation proceedings are not appropriate for enforcing a disputed debt and that the application…

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• Winding Up Of Company
• Commercial Insolvency
• Solvency And Liquidity Test
• Prescription
• Disputed Debt
• Procedural Formalities

Firstrand Bank Ltd v Wayrail Investments (Pty) Ltd (684/2012)

Firstrand Bank Ltd v Wayrail Investments (Pty) Ltd (684/2012) [2012] ZAKZDHC 91; [2013] 2 All SA 295 (KZD) (20 December 2012)

Court

Kwazulu-Natal High Court, Durban

Case number

684/2012

Judge

Vahed

The court held that for the purposes of winding-up under Part G and Item 9 of Schedule 5 of the Companies Act, 2008, a company must be solvent in both the factual and commercial sense. The respondent, while its assets exceeded its liabilities, was unable to pay its debts as they fell due and was thus commercially insolvent. The court found the reasoning in Standard Bank of SA Ltd v R-Bay Logistics CC persuasive and adopted it, rejecting the contrary approach in Business Partners and HBT Construction. The court further held that the solvency and liquidity test under section 4 of the 2008 Act d…

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• Winding Up Of Companies
• Commercial Insolvency
• Solvency And Liquidity Test
• Business Rescue
• Creditor Standing

Platt v Umgamanzi Fishing (Pty) Ltd (3936/2011)

Platt v Umgamanzi Fishing (Pty) Ltd (3936/2011) [2012] ZAECPEHC 81 (16 November 2012)

Court

Eastern Cape High Court, Port Elizabeth

Case number

3936/2011

Judge

GG Goosen

The court dismissed an application to wind up a company, finding the claimed debts were bona fide disputed and insolvency was not proved.

• Winding Up Of Company
• Solvency And Liquidity Test
• Just And Equitable Ground
• Bona Fide Dispute Of Debt
• Company-winding-up
• Bona-fide-dispute-of-debt