Strategic Partners Group (Pty) Ltd and Others v The Liquidators of Ilima Group (Pty) Ltd (in liquidation) and Others

Ilima Group (Pty) Ltd was placed in final liquidation in April 2010. Ilima held 16 million shares (11.784%) in Strategic Partners Group (Pty) Ltd, which constituted a material asset in the insolvent estate. The liquidators had a statutory duty to realise this shareholding for the benefit of creditors and therefore sought information from Strategic to value the shares. Strategic repeatedly resisted providing information, relying on valuations based on an invalid shareholders’ agreement and limiting disclosure to ordinary shareholder rights. After prolonged disputes, subpoenas were issued in insolvency enquiries under ss 414 and 415 of the Companies Act 61 of 1973 to compel production of documents. Strategic launched a main application seeking to limit the liquidators’ access to documents to those available to shareholders under the Companies Acts. The liquidators opposed this and brought a counter-application, including relief under s 163 of the Companies Act 71 of 2008, challenging an amendment to Strategic’s Memorandum of Incorporation (MOI) which introduced a forced-sale mechanism triggered by a shareholder’s liquidation. The High Court dismissed Strategic’s application, upheld the counter-application, enforced the subpoenas, and granted punitive costs. Strategic appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The High Court’s dismissal of the main application, the granting of the counter-application, the enforcement of subpoenas, the declaration that clause 27 of the MOI did not apply to Ilima’s shareholding, and the attorney-and-client costs order were all upheld.

The judgment affirms the broad investigatory powers of liquidators under ss 414 and 415 of the Companies Act 61 of 1973 and clarifies that liquidators are not restricted to ordinary shareholder information rights. It also reinforces the expansive and protective scope of the oppression remedy under s 163 of the Companies Act 71 of 2008, particularly where corporate governance mechanisms are manipulated to prejudice an insolvent shareholder and its creditors.