Mosalakae and Others v Matlala and Others

The dispute concerned the shareholding of Gundo Investments (Pty) Ltd, a Black Economic Empowerment company formed in 1997 by various women’s groups, each of which paid an initial contribution of R2 000 with the intention that all participating entities would hold equal shares. Seven entities ultimately remained involved. In 2002, Gundo participated indirectly in an investment opportunity in Phumelela Gaming and Leisure Ltd through another company, Dihla Investments (Pty) Ltd, which required a substantial deposit. Two entities associated with the appellants, Sedimoza (Pty) Ltd and Ntombisi CC, purported to raise funds and claimed that, as a result, their shareholding in Gundo increased to the exclusion or dilution of the other entities. The appellants relied on alleged resolutions and a ‘rights offer’ said to have been adopted in October 2002. The respondents denied that any valid agreement or resolution existed to alter the equal shareholding and applied in terms of s 115 of the Companies Act 61 of 1973 for rectification of the share register to reflect all seven entities as equal shareholders. The High Court granted the relief sought, and the appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The order of the Gauteng Division of the High Court directing rectification of the share register to reflect all seven entities as equal shareholders was confirmed.

The case reaffirms the wide and equitable powers of courts under section 115 of the Companies Act 61 of 1973 to rectify company share registers so that they reflect the true and just position. It underscores that parties claiming an alteration of shareholding bear the onus of proving a valid agreement and compliance with statutory and corporate governance requirements. The judgment also highlights the court’s intolerance of unilateral, dishonest, or inequitable manipulation of corporate records.