THE COMPANIES ACT 71 OF 2008 DOES NOT OUST THE COMMON-LAW DERIVATIVE ACTION FOR CLOSE CORPORATIONS Naidoo v The Dube Tradeport Corporation [2022] ZASCA 14

Abstract

The Companies Act 71 of 2008 (2008 Act) abolished the common-law derivative action for companies; section 165 of the 2008 Act replaced it with the statutory derivative action (Griggs “The Statutory Derivative Action: Lessons That May Be Learnt From the Past!” 2002 University of Western Sydney Law Review par 1.2; Coetzee “A Comparative Analysis of the Derivative Litigation Proceedings Under the Companies Act 61 of 1973 and the Companies Act 71 of 2008” 2010 Acta Juridica 298). The question that remained was what impact this would have on common-law rights for close corporations that had been incorporated before the commencement of the 2008 Act but which have not converted to companies under that Act. The Supreme Court of Appeal (SCA) judgment in Naidoo v The Dube Tradeport Corporation ([2022] ZASCA 1) provides much-needed clarity on the status of the common-law derivative action for close corporations. The case also provides guidance on how a court will assess whether knowledge of information can be imputed to a third party in their dealings with a close corporation.