Butler v Van Zyl

The majority shareholders of Nuco Chrome Bophuthatswana (Pty) Ltd, acting through the executors of a deceased estate holding 78% of the shares, sought to remove the managing director, Gerrit Marthinus Van Zyl, in terms of s 71 of the Companies Act 71 of 2008. To do so, they requisitioned a shareholders’ meeting under s 61(3) of the Act. Van Zyl opposed this and launched urgent proceedings in the South Gauteng High Court to set aside the requisition and subsequent notices, relying primarily on an interdict granted by the North West High Court in unrelated proceedings, which restrained shareholders from voting on their shares pending determination of a dispute concerning beneficial ownership of shares. The High Court upheld Van Zyl’s application, declared the notices invalid, interdicted the holding of the meeting, and declared that Mkhwanazi was not a director. Butler and the executors appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The order of the High Court was set aside and substituted with an order dismissing Van Zyl’s application with costs.

The case clarifies the scope of shareholders’ rights under ss 61 and 71 of the Companies Act 71 of 2008, particularly that the right to requisition a shareholders’ meeting is not lightly curtailed. It affirms a contextual approach to interpreting court orders and interdicts, warning against literal interpretations that would paralyse corporate governance. The judgment also reinforces the application of the Plascon-Evans rule in company law disputes brought on motion.