Islandsite Investments 180 (Pty) Ltd v National Director of Public Prosecutions and Others

Islandsite Investments 180 (Pty) Ltd was under business rescue in terms of Chapter 6 of the Companies Act 71 of 2008, with duly appointed business rescue practitioners (BRPs). The National Director of Public Prosecutions (NDPP) obtained an ex parte provisional restraint order under s 26(3) of the Prevention of Organised Crime Act 121 of 1998 (POCA) against property of the company and other respondents. Following the order, the company’s directors, without the approval of the BRPs, appointed attorneys to oppose confirmation of the restraint order on behalf of the company. The BRPs disputed the directors’ authority to do so. The NDPP then brought a Uniform Rule 7(1) application challenging the authority of the attorneys appointed by the directors. The High Court held that the directors lacked authority to represent the company during business rescue and that such authority vested in the BRPs. The directors, purportedly on behalf of the company, appealed to the Supreme Court of Appeal.

The appeal was dismissed. The directors, Ms Ragavan and Mr Chawla, were ordered to pay the costs of the appeal jointly and severally in their personal capacities.

The judgment clarifies that during business rescue, authority to represent a company in litigation—particularly litigation affecting the company’s property—vests in the business rescue practitioners and not the directors. It reinforces a broad interpretation of BRPs’ ‘full management control’ under s 140 of the Companies Act and provides important guidance on representation, litigation control, and the limits of directors’ powers during business rescue.