Co-authored by Brigitte Eloff, a candidate attorney.
In June 2025, the Pretoria high court dismissed an application to introduce new evidence relating to a claim for alleged non-compliance with section 45 of the Companies Act, 2008.
The judgment underscores the importance of raising all relevant defences and evidence at first instance, clarifies the limited circumstances in which new legal points and evidence may be introduced on appeal, in this case in the context of a section 45 of the Companies Act challenge and the importance placed on companies to ensure section 4 of the Companies Act will be met and that section 45 of the Companies Act is adequately complied with.
The parties entered into two agreements in 2019, namely a loan agreement whereby the first applicant borrowed R410 000 000 from the Unemployment Insurance Fund (UIF), through the Public Investment Corporation (PIC) (the respondents), and a cession and pledge agreement wherein the second applicant, being the first applicant’s holding company, provided security by ceding and pledging its shares in the first applicant.
The first applicant defaulted on its obligations, which prompted the UIF to perfect the cession and seek to exercise shareholder rights, including the right to appoint new directors. The applicants resisted, following which the UIF and PIC obtained a High Court order enforcing these rights.
On appeal, the first applicant and the second applicant sought to introduce a new defence, namely, that the respondents failed to plead compliance with section 45 of the Companies Act, which requires board and special shareholder approval, as well as a solvency and liquidity test authorising financial assistance by a company to related or inter-related companies, and that the agreements were void due to non-compliance with section 45. The applicants argued that they would suffer irreparable harm in being held to void agreements.
Based on previous activity, the applicants’ conceded that evidence not previously cited may be introduced, if precluding them from doing so would create an intolerable position by preventing the court from making the right decision on accepted facts. The court rejected this argument, finding instead that the introduction of the new evidence was unfair to the respondents and not in the interest of justice.
The basis for the court’s finding was based on the fact that section 45 defence was not “clearly right” as the evidence sought to be introduced was not self-evidently true.
In respect of the loan agreement, for instance, the respondents persuasively argued that compliance with section 45 did not apply to the original loan agreement, because the applicants were not related or inter-related companies at the time.
In terms of the cession and pledge agreement, the respondents argued that even if section 45 was applicable, the resolutions provided were compliant, because the resolutions were signed by the second applicant’s sole director who confirmed that the company would satisfy the solvency and liquidity test immediately after the provision of the financial assistance as required by section 4 of the Companies Act. The applicants raised further arguments, including the existence of an auditors’ report demonstrating that the second applicant did in fact not meet the solvency and liquidity test.
Despite these arguments, the court emphasised that its role in this appeal was not to determine the validity of the resolutions authorising financial assistance, but to determine whetherthere was a clear dispute which would render the rejection of the new evidence ‘intolerable’.
The court dismissed the application to rely on section 45 of the Companies Act and to introduce new evidence, as well as the appeal itself.