Sefalana Employee Benefits Organisation v Haslam and Others

The appellant, Sefalana Employee Benefits Organisation (SEBO), agreed to purchase from Concor Holdings (Pty) Ltd a 66% controlling shareholding in Time Life Insurance Limited at R2.50 per share. The transaction was an 'affected transaction' under Chapter XVA of the Companies Act 61 of 1973 and the Securities Regulation Code on Takeovers and Mergers, which would have required SEBO to make a mandatory offer to minority shareholders, including the respondents, had the transaction been implemented. Before any such offer was made, SEBO repudiated the agreement. Concor accepted the repudiation and successfully claimed damages for breach of contract. SEBO never acquired control of Time Life and did not make an offer to the minority shareholders. The respondents sued, alleging that SEBO was nonetheless obliged to make a mandatory offer and was liable for damages for failing to do so.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order declaring that SEBO incurred no obligation to make a mandatory offer to the minority shareholders and that its failure to do so did not contravene the Companies Act or the Securities Regulation Code. The respondents were ordered to pay the costs, including the costs of two counsel.

The case clarifies that under South African takeover law, a mandatory offer obligation depends on an actual or continuing change of control, not merely on the conclusion of an agreement that is later aborted. It limits the scope of minority shareholder protection by confirming that the Code does not apply to failed or repudiated takeover transactions where control never passes, and emphasises a purposive interpretation tied to the mischief the legislation seeks to prevent.