High Court makes ruling on notices ito Companies Act
8/12/2008

The Transvaal Provincial Division has given judgment in African Sun Hotels (Pty) Ltd v The Registrar of Companies & another, Case No. 58013/2007, a case which has implications about formal notices sent to a company at its registered address.

The Second Respondent had formally objected to the Applicant’s name before the Registrar of Companies in terms of Section 45(2) of the Companies Act. The Registrar sent a copy of the objection by registered post to the Applicant’s registered address inviting the Applicant to make representations as to why its name should not be changed. The letter was returned undelivered.

The Registrar of Companies proceeded to consider the objection on the merits, deciding in favour of the Second Respondent. The Registrar then followed the procedure in terms of Section 46(2) of the Companies Act which requires an order for a company to change its name to be in writing and sent by registered post to the company at its registered office or postal address.

Only much later, the Applicant became aware of the order after the Registrar of Companies had received a request from the Second Respondent to place the Applicant in the process of deregistration because of its non-compliance with his order. At that point, the Applicant still had the opportunity to approach the High Court for relief in terms of Section 48 of the Companies Act. The High Court has the power to consider the merits of an objection afresh, including receiving further evidence and to make any order it deems fit. A company that misses a deadline under the Section may still, on good cause shown, apply for condonation for the late filing of such an application to the High Court.

Despite the procedures available to it in term of Section 48, the Applicant, instead, launched an application for a common law review of the Registrar’s decision to set it aside and refer the objection back to the Registrar to reconsider. The Applicant argued that it had not received the Registrar’s notices and that it had not been given an opportunity to be heard. The procedure before the Registrar of Companies was, accordingly, unsound. The Applicant also argued that its right to a fair hearing in terms of Sections 33(1) and (2) of the Constitution had not been observed.

In answering papers, the Second Respondent’s submissions were that application should have been made by the Applicant in terms of Section 48 of the Companies Act or alternatively, if the objection was reviewable, that there had been no procedural irregularities because the Registrar had properly sent his notices to the Applicant’s registered address.

The Court held that:

• Section 48 of the Companies Act does not prevent an aggrieved person from taking a decision of the Register relating to company names on review;

• although the Applicant did not rely on the Promotion of Access to Justice Act 3 of 2000 [PAJA], Sections 3(1) and (2) of PAJA incorporate a statutory form of the common law right to a fair hearing and it is incorrect to apply for a common law review when there is legislation that has codified the common law;

• the Registrar was obliged to do “something more” than merely follow the procedures in terms of the Companies Act and the notice to the registered address was held to be insufficient, especially considering that the Registrar had delivery receipts on record indicating that his notices to the Applicant had not been received; and

• the fact remained that, despite approaching the Court under the common law and not PAJA, the Applicant had not been given an opportunity to be heard. The matter was therefore referred back to the Registrar of Companies to reconsider the merits.

The effect of this judgment is that a company that does not receive notice of an objection to its name, even if properly sent to its registered address, has the right to seek a review of any adverse decision affecting it, regardless of whether or not the company was negligent in failing to update the official records to reflect its actual address or failed to take steps in terms of Section 48. There may be similar implications for other notices sent to a company’s registered address under the Companies Act.


Chris Job
Partner
chris@adamsadams.co.za

Christophe van Zyl
Professional Assistant
Christophe-v@adamsadams.co.za

8 December 2008