Ungerer v Ferreira and Others

The applicant and first respondent were equal (50/50) shareholders in two private companies conducting a community scheme management business. Although no written shareholders’ agreement existed, the parties contributed equally to start-up capital, shared drawings and dividends equally, and both participated in the business. The first respondent was the sole director, while the applicant actively managed most of the operations and recruited the majority of clients. Their relationship deteriorated in 2024 after the first respondent diverted company business to a separate company solely owned by her, excluded the applicant from bank accounts, communications, and management, suspended her drawings, removed her details from company letterheads, and initiated disciplinary proceedings. Efforts to agree on an exit strategy failed. The applicant approached court under s 163 of the Companies Act 71 of 2008, alleging oppressive and unfairly prejudicial conduct, and sought access to records, reversal of diverted funds, and termination of the parties’ relationship through a structured exit.

The applicant was granted full access to the financial and administrative records of the sixth, seventh, and eighth respondents; all monies diverted to the eighth respondent were ordered to be repaid or credited as loan accounts; and the relationship between the parties in the companies was ordered to cease through a binding sale mechanism (Texas auction–style arrangement) regulating which party would exit. Costs were awarded against the first to fifth respondents on Scale C. The alternative winding-up relief was not considered.

This judgment affirms the broad and flexible application of s 163 of the Companies Act and reinforces that courts will look beyond formal corporate structures to the substance of relationships. It confirms that quasi-partnership principles remain relevant in South African company law and that exclusion from management in such circumstances may constitute unfair prejudice, even where strict legal rights are not infringed.