Khawa v Littlefish App (Pty) Ltd and Others (2024/069982) [2025] ZAGPJHC 418 (25 April 2025)

Key Facts

Issues

• The second issue concerns whether the applicant's claims of oppressive and unfairly prejudicial conduct meet the legal requirements under section 163. The court found the applicant's reduced role in the company was agreed to via contracts, rendering his claims invalid.
• The primary issue is whether section 163 of the Companies Act 71 of 2008 applies to a foreign company (the second respondent incorporated in the US). The court analyzed the Act's definition of 'company' and determined that section 163 does not extend to foreign entities.

Holdings

• The applicant failed to establish that the respondents engaged in oppressive or unfairly prejudicial conduct under section 163. The court found that the applicant's reduced role in the company was agreed upon in prior contracts, and his claims of a broken shareholder relationship were not legally sufficient to warrant relief under the Act. The applicant's acquiescence to the terms of the agreements further undermined his case.
• The application is dismissed because section 163 of the Companies Act does not apply to foreign companies like the second respondent. The court determined that the second respondent, incorporated in Delaware, is not a 'company' under the Act's definition, which limits its scope to South African-incorporated entities. The applicant's claim for a compulsory purchase of shares in the second respondent was thus invalid.

Remedies

• The applicant is required to pay the respondents' costs on scale C, as per the court's order.
• The court dismissed the applicant's application under section 163 of the Companies Act, as it determined that the application did not meet the required legal criteria.

Legal Principles

• The applicant failed to meet the burden of proof by not establishing the value of his shares in the first respondent after the transfer of intellectual property to the second respondent, rendering the compulsory purchase order infeasible.
• The court applied the literal definition of 'company' under section 1 of the Companies Act 71 of 2008, which excludes foreign companies, to determine that section 163 does not apply to the second respondent incorporated in Delaware, USA.

Precedent Name

• Cooperativa Muratori & Cementisti and Others v Companies and Intellectual Property Commission and others
• Gcaba v Minister for Safety and Security
• University of Johannesburg v Auckland Park Theological Seminary and Another
• Natal Joint Municipal Pension Fund v Endumeni Municipality
• Fischer and Another v Ramahlele and Others

Cited Statute

Judge Name

Passage Text

• [41] There is nothing in section 163 to indicate that for purposes of that section, "company" should have a meaning different to its defined meaning in section 1. To the contrary, it is hard to see how a South African court could order a foreign company to, for instance, amend its memorandum of incorporation or to rectify its registers (sections 163(2)(d) and (k)).
• [55] The applicant's reduced role in the conduct of the business of the first respondent and the second respondent was with his acquiescence, in that he was party to the agreements referred to above that left the determination of his role in the hands of the first respondent.
• [56] I do not understand the applicant's case to be that he is unfairly prejudiced by the mere fact of the dilution of his shareholding in the first and second respondents. Even if it was his case, that was also clearly with his acquiescence.