Neutral citation: Simcha Properties v San Marcus Properties (256/2009) [2010] ZASCA 54 (31 March 2010). Coram: Lewis and Mlambo JJA,and Hurt, Griesel and Seriti AJJA Heard: 4 March 2010 Delivered: 31 March 2010
Summary: Company Law - s 228 of the Companies Act - director's authorisation by sole shareholder to dispose of the company's sole asset.
A dismissal of an appeal by the Supreme Court of Appeal of an appeal by Simcha Properties 6 CC against the judgment of the South Gauteng High Court (Swart AJ) in which an order for specific performance of a contract of sale of land by San Marcus Properties (Pty) Ltd to Simcha Properties was granted.
Simcha Properties had contended that the representative of San Marcus Properties who had concluded the contract of sale had not been properly authorised to do so. The contract had been concluded on 11 September 2007 but was subject to a suspensive condition which had been fulfilled only on 15 December. In the interim, on 14 December, an amendment to s 228 of the Companies Act 61 of 1973 had taken effect. This amendment stipulated that a company could not dispose of its assets or the greater part of its assets without such disposal being approved or ratified by a special resolution of shareholders.
The land sold to Simcha Properties was the sole asset of San Marcus Properties, but no such special resolution had been passed approving or ratifying the sale. In the High Court, Swart AJ had held that the conclusion of the contract had, indeed been properly authorised by what was effectively a general resolution passed prior to 11 September 2007. He held, further, that the amendment to the Companies Act did not operate with retrospective effect and therefore that the new requirement of a special resolution did not affect the validity of the authorisation conferred on the representative of San Marcus Properties to conclude the contract of sale. The SCA upheld the decision and findings of Swart AJ.
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