Abstract

Since the Companies Act 2008 came into being, there has been no clear direction regarding the interpretation to be given to the provisions regulating buy-back transactions. Recently, the provisions finally received some concrete attention in the judgment of Windell J in First National Nominees (Pty) Limited v Capital Appreciation Limited (Capprec). The judgment is important because it has since provided a measure of clarity on the potent interdependence between sections 48 and 114 of the 2008 Act, and how these must be interpreted. What is of interest is how Windell J set out and interpreted the operation and interdependence between section 48(2)(a), section 48(8)(b) and section 114 of the 2008 Act. Overall, the arguments from both parties in Capprec presented Windell J with a solid foundation that enabled the court to proffer a succinct and illuminating direction on the interpretation and operation of the provisions. This article attempts to extricate whether the course Windell J adopted in her judgment is consistent with what the 2008 Act contemplates, and if not, what would have been the appropriate course to take. The article demonstrates that Windell J did not seize the opportunity to thoroughly engage with section 114(1)(e) regulating buy-back schemes of arrangement and to ascertain what a scheme entails. This is despite the fact that in Capprec both parties’ arguments were underpinned by whether or not the proposed arrangement was a scheme. In this regard, Windell J’s approach is disappointing and is criticised because her interpretation means that the provisions of the 2008 Act have still not been clarified, although we have been waiting for 13 years for clarification. This is an unnecessary oversight by the judge.