Smuts v Booyens; Markplaas (Edms) Bpk v Booyens

Markplaas (Edms) Bpk was a private company with two equal shareholders and directors, Smuts and Roux. Its articles of association (incorporating Table B of Schedule 1 to the Companies Act 61 of 1973) contained pre-emptive rights restricting the transfer of shares. In 1993 Roux, without Smuts’s knowledge and contrary to these articles, concluded an agreement to sell his shares to Booyens. Roux was later sequestrated. The curator sought to set aside the sale, while Booyens sought rectification of the share register to reflect him as shareholder. The court a quo granted absolution from the instance in the action to set aside the sale and later ordered registration of the shares in Booyens’s name.

Both appeals were upheld. The order granting absolution from the instance was set aside and replaced with an order declaring the sale invalid and that Roux’s 50% shareholding vested in the curator of his insolvent estate. The order directing registration of the shares in Booyens’s name was also set aside and his application dismissed with costs.

The case authoritatively establishes that share transfer restrictions in a private company’s articles are substantive limitations on transferability, not merely procedural rights enforceable by interdict. It clarifies that a purchaser cannot acquire shares contrary to the articles, even if innocent, and affirms the statutory nature of shareholding under South African company law.