Modise and Another v Tladi Holdings (Pty) Ltd

Tladi Holdings (Pty) Ltd was formed as a Broad-Based Black Economic Empowerment (BEE) holding company to pursue identified electrical-sector opportunities, including a potential share acquisition in ARB Electrical Wholesalers (Pty) Ltd (ARB). Jonathan Sandler conceptualised the venture and presented it to Jacob Modise, who became chairman and director of Tladi while also controlling Batsomi Power (Pty) Ltd. Sandler had consistently identified the ARB opportunity as one to be pursued through Tladi. When ARB’s existing BEE transaction with another partner (Umbani) unravelled in 2005, Modise—without disclosing this to Tladi—engaged directly with ARB and caused Batsomi Power to acquire a 26% shareholding in ARB. Tladi only became aware of this after media reports in December 2005 and alleged that Modise had misappropriated a corporate opportunity in breach of his fiduciary duties. Tladi sued Modise and Batsomi Power. The High Court found in Tladi’s favour against both defendants. Modise and Batsomi Power appealed to the Supreme Court of Appeal.

The appeal by Jacob Modise was dismissed with costs. The appeal by Batsomi Power (Pty) Ltd was upheld with costs. The High Court order was amended to delete references to Batsomi Power, and the claim against Batsomi Power was dismissed with costs.

The case is a leading South African authority on the misappropriation of corporate opportunities and the content of directors’ fiduciary duties, particularly in the context of BEE ventures. It confirms the strict, prophylactic nature of the duty of loyalty and clarifies that disclosure and consent are required even where the company may not ultimately have secured the opportunity. The judgment also provides important guidance on prescription in relation to amended claims for disgorgement of profits.