Blue Square Advisory Services (Pty) Ltd v Mandingoane and Another

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Page 18 Ltd and Another v Ocean Commodities Inc and Others 1983 (1) SA 276 (A) at 289A-B. This policy is embodied in the provisions of section 104 of the 1973 Act. In Pender v Lushington (1877) 6 Ch 70, the articles of association of the company provided that every member was to have one vote for every complete number of ten shares held with a voting limit that no shareholder shall be entitled to more than 100 votes. A beneficial shareholder interested in more than 1000 shares, with the object of increasing its voting powers, arranged for its shares to be held through nominees so as to be able to cast 649 votes. The company rejected the votes and in proceedings by a member to restrain the rejection of votes, Jessel MR held the following at 77-78: “It appears to me that it is plain from the reading of these articles alone that the articles meant to refer to a registered member, but I think it is made, if possible, plainer – though I doubt whether it could be made plainer when you come to consider that it would not be possible to work the company in any other way, for how else could the company hold meetings or demand a poll, or have the votes taken by scrutineers? – but if possible it is made plainer by the 19th article, which says: “The executors and administrators of a deceased member shall be the only persons recognised by the company as having any title to his share,” and also provides that “the company shall not be affected by notice of any trust.” And the 30th section of the Companies Act, 1862 says: “No notice of any trust express, implied, or constructive, shall be entered on the register, or be receivable by the Registrar in the case of companies registered under this Act and registered in England or Ireland.” It comes, therefore to this, that the register of shareholders, on which there can be no notice of trust, furnishing the only means of ascertaining whether you have a lawful meeting or a lawful demand for a poll, or of enabling the scrutiny as to strike out votes. The result appears to be manifest, that the company has no right whatever to enter into the question of the beneficial ownership of the shares. Any such suggestion is quite inadmissible, and therefore it is clear that the chairman had no right to enquire who was the beneficial owner of the shares, and the votes in question ought to have been admitted as good votes independent of any enquiry as to whether the parties tendering them were or were not, and to what extent, trustees for other persons beneficially entitles to the shares.” [38] In Société Générale de Paris and Another v The Tramways Union Company, Ltd, and Others (1884-1885) 14 QB 424 (CA) Lindley, LJ said the following at pages 451-452:
Page 19 “But if shares in companies registered under the Companies Act, 1862, are spoken of as choses in action, care must be taken not to overlook the fact that their transferee has a legal, and not merely an equitable, right to become a shareholder. If a shareholder in a company governed by the Companies Act, 1862, does not transfer his shares, but agrees to transfer them or to hold them upon trust for another, either absolutely or by way of security, there can be no doubt as to the validity of the agreement, nor as to the effect of it as between the parties to it. As between them the agreement or trust can be enforced; but as regards the company the shareholder on the register remains the shareholder still. He is the person entitled to exercise the rights of a shareholder, - for example to vote as such, to receive dividends as such and to transfer the shares.” [39] In Inland Revenue Commissioners v J. Bibby & Sons, Ltd 1945 1 All ER 667 (HL), Lord Macmillan held the following at 671: “As was said by Jessel, M.R., in Pulbrook v, Richmond Consolidated Mining Company (2), [(1878), 9 Ch D 610] at p. 615: 'The company cannot look behind the register as to the beneficial interest but must take the register as conclusive and cannot enquire . . . into the trusts affecting the shares.' So far as the company is concerned the relation between such of its shareholders as happen to be trustees and their beneficiaries is res inter alios. It may be that a trustee shareholder may, as between himself and his cestuis que trust, be under a duty to exercise his vote in a particular manner, or a shareholder may be bound under contract to vote in a particular way (cf. Puddephatt v Leith (3) [[1916] 1CH 200]). But with such restrictions the company has nothing to do. It must accept and act upon the shareholder’s vote notwithstanding that it may be given contrary to some duty which he owes to outsiders. The remedy for such breach lies elsewhere.” [40] The February 2006 agreement alleges in effect that the first respondent was the beneficial holder of 50,1% of the registered shares of the applicant company. As such, the votes cast in respect of such shareholding were required to be in accordance with the first respondent’s instructions. Even if that were so, agreements between a registered shareholder and a beneficial shareholder in respect of the voting rights of the company are res inter alios acta. The first respondent cannot, vis a vis the applicant company, aver that a resolution was improperly passed on account of the fact that behind
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Blue Square Advisory Services (Pty) Ltd v Mandingoane and Another

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