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SCA delivers clarity on locus standi for oppressive conduct

9 November 2017

South Africa

In the reportable case of Smyth v Investec Bank Ltd (674/2016) [2017] ZASCA 147, the Supreme Court of Appeal held that the beneficial owners of shares in a company are not eligible to join as co-applicants with the relevant nominees who hold the shares on their behalf. 
 

The application was brought in the Gauteng Division of the High Court, Pretoria. The appellants sought a declaration that, among other things, the conclusion of certain agreements by Randgold & Exploration Company Limited (the Company) was unfairly prejudicial, unjust or inequitable as contemplated in section 252(1) as read with section 252(3) of the Companies Act 61 of 1973 (the Act). The First Respondent contested the legal standing of some of the appellants on the basis that they were not members of the Company and therefore could not seek relief under section 252. 

The court reiterated the principle that it is the policy of the law that a company should concern itself only with the registered owners of its shares. When a nominee has been nominated, it is the nominee and not the beneficial owner who is eligible to have his/her name entered in the register of members. As the statutory remedy created by section 252 of the Act is available to members only, beneficial owners are not eligible to be joined in the proceedings.

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