Sekepe Investments (Pty) Ltd and Others v Government Employees Pension Fund and Another

The appellants and the Government Employees Pension Fund (GEPF) were shareholders in Magae Makhaya Housing (RF) (Pty) Ltd (MMH), a company formed to develop low-cost housing. A shareholders’ agreement regulated MMH’s funding, including shareholder loans in proportion to shareholding. The GEPF also concluded separate loan agreements with the appellants, undertaking to lend them funds so that they could meet MMH’s shareholder funding calls. In September 2017 MMH resolved to require shareholder funding and issued utilisation notices. The GEPF failed to advance the loans, contending that conditions in the loan agreements were unmet and that the appellants lacked standing to enforce claims which, it argued, belonged to MMH. The appellants sought specific performance compelling the GEPF to advance the loans and to meet its shareholder funding obligations. The High Court dismissed the application, and the appellants appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The High Court order was set aside and replaced with an order granting the application and prayers 1–17 of the notice of motion, compelling the GEPF to perform its funding obligations.

The judgment clarifies shareholder standing to enforce contractual rights arising from shareholders’ agreements and related funding arrangements, confirming that not all claims benefiting a company require a derivative action. It provides guidance on the interpretation of conditions precedent in loan agreements and reinforces that a party cannot rely on its own non-performance to avoid contractual obligations. The case is significant in South African company and commercial law concerning shareholder funding and enforcement of specific performance.