Analyses: An Alternative View of the Appraisal Remedy

• Jurisdiction: South Africa
• Pages: 678-687
• Author: Adam Pike
• Published date: 16 August 2019
• Date: 16 August 2019

AN ALTERNATIVE VIEW OF THE APPRAISAL

REMEDY

ADAM PIKE*

Attorney, Pike Law

An article appearing in this journal raised questions and stated proposi-

tions in relation to the appraisal remedy provisions found in section 164

of the Companies Act 71 of 2008 (‘the Act’).

1

It was suggested that these

questions required clarif‌ication through either legislative intervention

or judicial determination.

The article in question was published prior to the commencement of

the Act and thus subsequent amendments may not have been consid-

ered. This could perhaps explain all or part of the uncertainty regarding

some of the issues covered. Whether this may be the case, and the extent

to which it may be the case, will not be considered here. This note instead

focuses on seven questions or concerns identif‌ied in the article and

presents an alternative view to each of them.

First, the article raises a concern in relation to the exercise of the

appraisal remedy by holders of benef‌icial interests in shares and by

shareholders that acquire shares subsequent to the giving of a meeting

notice. Secondly, the article implies that section 164 is def‌icient in as

much as it does not require a company to give notice of a meeting at

which a special resolution pursuant to a fundamental transaction shall

be considered. Thirdly, the article asserts that a dissident is required to

give three notices of opposition before the dissident may exercise the

appraisal remedy. Fourthly, the article states that it is unclear whether a

dissident may be represented and vote in opposition to such a resolution

by proxy. Fifthly, the article states that a dissident may accept an offer by

a company to acquire the dissident’s shares by merely tendering the

share certif‌icates. Sixthly, the article suggests that the court has the

power to vary the amount payable to the dissident, whether agreed upon

by the relevant parties or determined by a court. Finally, and following

upon the preceding suggestion, the article suggests that a court may

reinstate the rights of the dissident in relation to the tendered shares.

A careful and detailed consideration of the article and section 164

reveals that the Act addresses these questions and propositions in clear

* BA LLB LLM (UCT). This note derives from the author’s unpublished LLM dissertation,

University of Cape Town, 2013, supervised by Ms Jacqueline Yeats.

1

See HGI Beukes ‘An introduction to the appraisal remedy in the Companies Act: Standing

and the appraisal procedure’ (2010) 22 SAMLJ 176.

678

(2014) 26 SA Merc LJ 678

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