Msibithi Investments (Pty) Ltd and Others v African Legend Investment (Pty) Ltd and Others

The case arose from a prolonged struggle for control of African Legend Investments (Pty) Ltd (ALI), a B‑BBEE investment holding company. Competing factions, referred to as the Ramano group and the Ahmed group, were involved. The main dispute concerned a board resolution of 25 February 2020 approving a subscription agreement whereby shares in ALI were issued to the Astron Energy Employee Participation Plan Trust in return for R24 million, much of which was advanced to a related company, Off the Shelf Investments 56 (RF) (Pty) Ltd (OTS56). The Ramano group, comprising certain shareholders and directors, sought to set aside the resolution on grounds of non‑compliance with s 74 of the Companies Act 71 of 2008, improper purpose, lack of rationality, and oppressive conduct under s 163. The Ahmed group opposed this and brought counter‑applications seeking to have Mr Mashudu Ramano declared a delinquent director under s 162 due to multiple alleged breaches of fiduciary duties, particularly in relation to the handling of major transactions with Glencore concerning Astron Energy. A further dispute concerned the validity of a historic share issue dating back to 1998–2000, which was found to be technically invalid but was validated by the High Court under s 97 of the Companies Act 61 of 1973.

The appeal against the dismissal of the main application was dismissed with costs. The first cross‑appeal succeeded: Mr Mashudu Ramano was declared a delinquent director for a period of seven years, and the High Court’s order was substituted accordingly. The second cross‑appeal against the validation of the historic share issue was largely dismissed, save for a correction to the costs order.

The judgment is significant for its detailed clarification of the standards applicable to challenges against directors’ resolutions, particularly regarding compliance with s 74, proper purpose, rationality, and oppression under the Companies Act 71 of 2008. It also provides an important and robust application of the delinquent director provisions in s 162, illustrating that serious and repeated breaches of fiduciary duty, even in complex commercial contexts, will justify delinquency orders. Additionally, it reaffirms the strict but discretionary power of courts to validate invalid share issues under the 1973 Companies Act.