Tayob and Another v Shiva Uranium (Pty) Ltd and Others

Shiva Uranium (Pty) Ltd was placed under business rescue supervision on 20 February 2018 by board resolution under section 129(1) of the Companies Act 71 of 2008. The board appointed two senior practitioners, Mr Klopper and Mr Knoop. On 31 May 2018, the practitioners resigned and the court appointed Mr Murray as substitute senior practitioner. The Commission subsequently appointed Mr Monyela, a junior practitioner, as an additional practitioner. On 19 September 2018, Mr Murray resigned. In anticipation of this, on 18 September 2018, Messrs Murray and Monyela purported to appoint Mr Damons as substitute. However, on 22 September 2018, the board appointed the applicants (Messrs Tayob and Januarie) as practitioners together with Mr Monyela. Both parties filed notification forms with the Commission, which accepted the applicants' appointment and rejected Mr Damons' appointment. Mr Monyela and Mr Damons challenged this before the Companies Tribunal, which directed the Commission to accept Mr Damons' appointment. The applicants then approached the High Court for declaratory relief that they were validly appointed.

• Whether the board of directors of a company in business rescue has the power to appoint a substitute business rescue practitioner when the original practitioner dies, resigns or is removed from office under section 139(3) of the Companies Act 71 of 2008
• Whether a business rescue practitioner has the power to appoint another practitioner
• Whether the board's power to appoint a substitute practitioner under section 139(3) is subject to the authority or approval of the existing practitioner in terms of section 137(2)(a) of the Act
• Whether section 139(3) or section 130(6)(a) applies when a practitioner resigns
• Whether an affected person who nominated a practitioner under section 131(5) has the power to appoint a substitute practitioner

1. The applications for condonation were granted with costs on an unopposed basis payable by the applicants. 2. Leave to appeal was granted with costs to be costs in the appeal. 3. The appeal was upheld. 4. The order of the High Court was set aside and replaced with: (a) a declaration that the applicants were validly appointed as business rescue practitioners of the first respondent; and (b) an order that the second and third respondents pay the costs of the application jointly and severally. 5. The second and third respondents were ordered to pay the costs of the appeal jointly and severally.

1. Business rescue practitioners have no power under the Companies Act 71 of 2008 to appoint another business rescue practitioner. 2. Section 139(3) of the Act requires the company (through its board) or the creditor who nominated the practitioner (in cases under section 131(5)), as the case may be, to appoint a new practitioner when a practitioner dies, resigns or is removed from office under section 139(2). 3. The board's power to appoint a substitute practitioner under section 139(3) is not subject to the authority or approval of the existing practitioner. 4. Section 137(2)(a), which subjects directors' functions to the practitioner's authority, only applies to matters falling within the practitioner's ambit of authority as defined in Chapter 6 of the Act, particularly section 140. 5. The appointment of a business rescue practitioner is a governance function, not a management function, and therefore falls outside the scope of the practitioner's 'full management control' under section 140(1)(a). 6. Section 66(1) vests broad powers in the board which are retained during business rescue except to the extent that the Act expressly or by necessary implication provides otherwise. The power to appoint a substitute practitioner is not expressly or impliedly limited.

The court noted that the word 'creditor' in section 139(3) should be read as 'affected person', adopting the view of Professors Delport and Vorster in Henochsberg on the Companies Act. The court also observed that the dictum in Van Jaarsveld NO v Q-Civils (Pty) Ltd [2017] ZAFSHC 53 para 20 went too far (without specifying the precise nature of the error). The court distinguished the position of directors during business rescue from their position during voluntary and involuntary winding-up of an insolvent company, noting that in the latter case directors' powers and duties are terminated, whereas in business rescue the main object is to render the company successful under the management or direction of its board. The court also made observations about the practical unworkability of requiring practitioner approval for board appointments, particularly where only one practitioner exists or where the remaining practitioner is a junior practitioner in respect of a large company.

This case clarifies the allocation of powers between a company's board of directors and business rescue practitioners under the Companies Act 71 of 2008. It establishes that boards retain significant governance powers during business rescue proceedings, including the critical power to appoint substitute practitioners. The judgment provides important guidance on the interpretation of sections 137, 139 and 140 of the Act, particularly regarding the scope of a practitioner's authority and the meaning of 'subject to the authority of the practitioner' in section 137(2)(a). It confirms that practitioners do not have unfettered control over all company decisions during business rescue, and that governance functions remain with the board. The decision promotes the business rescue objective of restoring companies to successful concerns under board management and direction, rather than completely displacing board authority. It also clarifies the procedures for appointing substitute practitioners under different pathways to business rescue (voluntary under section 129 versus court-ordered under section 131).