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NORTH GAUTENG HIGH COURT, PRETORIA
AFRICAN BANKING CORPORATION OF BOTSWANA LTD v KARIBA FURNITURE MANUFACTURERS AND OTHERS, CASE NO. 20947/2012
Summary
The judgment deals with business rescue proceedings, and abusiness rescue plan which was adopted in terms of the provisions of chapter 6 of the Companies Act, 71 of 2008, subsequent to a binding offer to purchase the voting interest of the Applicant in terms of s 153(1)(b)(ii) of the Act. The primary issue before the Court was the interpretation of the term ‘binding offer’ as contemplated in s 153(1)(b)(ii) of the Act.
The Court held that: the concept of a ‘binding offer’ is novel to South African company law as it provides, amongst others, shareholders, creditors and holders of the company’s securities with the opportunity to purchase the voting interests of affected persons who oppose the adoption of a business rescue plan. The statutory context of s 153(1)(b)(ii) of the Act is important in construing the meaning of the term ‘binding offer’ and in doing so, the Act and its purpose must be construed in its entirety.
The Court held that: The concept of a ‘binding offer amounts to a ‘last-gasp’ attempt to have a business rescue plan approved. Whilst ordinarily an offer is made freely and voluntarily and may be withdrawn at any time before acceptance, s 153(1)(b)(ii) of the Act, describes the offer contemplated in the section as ‘binding’ because once it is made, it creates a vinculum juris or legal obligation on the part of the offeror, and may not be withdrawn. The ‘binding offer’ as envisaged by s 153(1)(b)(ii) is therefore, not an ‘option’ or ‘agreement’ in the contractual sense of the term, but is rather a set of statutory rights and obligations, from which neither party may resile. Thus, the binding offer, envisaged in s 153(1)(b)(ii) of the Act, will be binding on both the offeror and offeree once made, predominantly to ensure compliance with the procedure to revive a business rescue, and ensure a revised business rescue plan within the framework of s 153(4) of the Act. The position is such in order to ensure a swift procedure and that the business rescue proceedings are not stifled by recalcitrant creditors who wish to resist the business rescue process or hold out for better treatment. The binding offer, as contemplated by the s 153(1)(b)(ii) of the Act, places a creditor who votes against the adoption of the business rescue plan, in the same or similar position that the creditor would be if the company were liquidated, and accordingly does not violate the Applicant’s right to property in s 25 of the Constitution. Accordingly, the Court found that the binding offer was binding on the Applicant.