Masibuyisane Services (Pty) Ltd v Eqstra Corporation (Pty) Ltd

Masibuyisane Services was incorporated as a close corporation (CC) in 1998 and converted into a company in January 2006. In October 2007, after the conversion, a suretyship was signed in favour of Eqstra Corporation for the obligations of a third party, Maze Products (Pty) Ltd. The suretyship and accompanying resolution described the surety as “Masibuyisane Services CC”, despite the entity then existing in the form of a company. The suretyship was signed by an authorised individual who had been a member of the CC and was a director of the company. Eqstra later obtained default judgment against “Masibuyisane CC”. After execution steps were taken, Masibuyisane Services (Pty) Ltd applied for rescission of the judgment, arguing that the suretyship was invalid because it was concluded in the name of a non‑existent CC. The High Court refused rescission, and Masibuyisane Services (Pty) Ltd appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, and the refusal to rescind the default judgment was upheld.

The case authoritatively clarifies South African law on the legal consequences of conversion between close corporations and companies, confirming the continuity of juristic personality despite changes in corporate form. It resolves uncertainty created by earlier decisions and establishes that contractual obligations are not invalidated merely by misdescription of the entity’s corporate form after conversion.