Hattingh v Furman and Others NNO

Milton Lawrence Weinbren and Carl Frank Hattingh concluded several agreements in 2008 relating to a close corporation, Air and Allied Technologies CC. Hattingh acquired a 25% members’ interest under a memorandum of agreement (MOA), accompanied by a members’ association agreement (MAA) and a buy and sell agreement (BSA). The BSA required each party to insure the other’s life so that, on death, the surviving member would purchase the deceased’s members’ interest using the policy proceeds. In 2013, following concerns arising from Hattingh’s matrimonial property consequences after his wife’s death, the parties signed an addendum (AMA) cancelling the MOA, and Hattingh’s members’ interest was re‑transferred to Weinbren and deregistered at the CIPC. Hattingh thereafter remained only an employee. After Weinbren’s death in 2016, Hattingh received the proceeds of a life policy he had taken out on Weinbren’s life. Weinbren’s executors sued Hattingh, claiming that under the BSA he was obliged to pay the insurance proceeds to the estate as consideration for Weinbren’s members’ interest.

The application for leave to appeal was dismissed with costs, confirming the judgment of the Gauteng Division of the High Court in favour of Hattingh.

The case clarifies the centrality of statutory registration for membership in a close corporation and rejects the notion of undisclosed or beneficial membership interests. It affirms that deregistration of a member constitutes withdrawal from the business for purposes of contractual termination clauses and underscores the strict interpretation of buy and sell agreements in conjunction with company law formalities.