Smyth v Investec Bank Limited and Another

The appellants were beneficial owners of shares in Randgold & Exploration Company Ltd, held through nominees whose names appeared on the company’s register of members. Following the conclusion of two settlement agreements in January 2010 between Randgold, Investec Bank Ltd, and JCI Ltd, the appellants alleged that these agreements were unfairly prejudicial to them as shareholders. They sought relief under s 252 of the Companies Act 61 of 1973, including an order compelling Investec to purchase their shares. Investec raised a preliminary objection that the beneficial owners lacked locus standi because they were not registered members of Randgold. The High Court upheld the objection, non-suited the beneficial owners, and dismissed their applications to intervene. The matter came before the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel.

The case authoritatively clarifies that the statutory oppression remedy under s 252 of the Companies Act 61 of 1973 is confined to registered members and is not available to beneficial shareholders holding through nominees. It reinforces the primacy of the register of members in determining locus standi and affirms the policy that companies deal only with registered shareholders. The decision has significant implications for investors who structure shareholding through nominees in South African company law.