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Nominee Shareholder Rights in Focus

SCA

Supreme Court of Appeal

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On 26 October 2017 the Supreme Court of Appeal handed down an important judgment, relating to Nominee Shareholder Rights

The case is part of the longstanding JCI litigation. The Court addressed the question of whether a shareholder that elected to hold shares through a nominee was entitled to approach the Court in relation to alleged Oppressive or Unfairly Prejudicial Conduct in terms of section 252 of the Companies Act 61 of 1973. Although the Companies Act 61 of 1973 has – for the most part – been overtaken by the 2008 Companies Act, the principle remains an important one.

The Court held that a party that is not listed in the share register does not have the right to approach the Court under section 252 of the Companies Act 1973. In the end the nominee arrangement served to preclude the beneficial shareholder from exercising rights that were reserved for a “member” of the company.

Smyth v Investec Bank Ltd (674/2016) [2017] ZASCA 147 (26 October 2017)

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