Abstract

Section 163 of the Companies Act 71 of 2008, and its predecessors, has been interpreted as a shield for minority shareholders against oppression by the majority. This article revisits the provision to address a less conventional but critical question: Can the minority oppress the majority? Drawing on Van der Watt v Schoeman, where relief was granted to a non-minority shareholder in a deadlocked company, it is argued that the court’s decision and its dictum that a majority shareholder will not ‘generally’ obtain relief must be read contextually. Properly understood, it does not exclude the majority but recognises that deciding whether conduct is oppressive is a factual inquiry based on the manner and effect of the impugned conduct, rather than on numerical voting power. The text of s 163, which refers broadly to a ‘shareholder’, supports this interpretation. Minority power may be exercised oppressively where veto rights entrenched in the memorandum of incorporation or shareholder agreements neutralise the majority voting power; where the minority secures de facto control of the board; where it dominates access to company resources; or where procedural barriers render the majority’s self-help remedies illusory. Jurisprudence from some common law jurisdictions confirms that majority shareholders may obtain relief where their voting power is insufficient, neutralised, circumvented, or irrelevant. The article argues that alternative remedies, though theoretically available, may often be practically inaccessible or unsuitable. The upshot of the argument is that where the locus of power and de facto control resides with the minority and its exercise is unfair, the majority should be entitled to relief under s 163. Ultimately, the animating purpose of the section is to promote commercial fairness for all, rather than naval gazing on the balance of voting power.