Article Sidebar
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright in all material published in PER/PELJ vests in the author, provided that authors grant, by submission of their contributions, permission that their contributions may be shared and adapted without restriction. An author furthermore agrees that the same contribution may not be published elsewhere without the written permission of the editor.
Anyone gaining access, electronically or otherwise, to a contribution to PER, may quote from such contribution, use the intellectual content thereof, share and adapt it, but subject to the following conditions:
you must give appropriate credit, provide a link and indicate if changes were made; and
the copyright of the author(s) may not be infringed in any way.
Main Article Content
Claiming damages where dividends remain unpaid: A contribution towards a more balanced approach in South Africa
Abstract
In the matter between Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd 2013 NSWSC 235 (25 Mar 2013) the Supreme Court of New South Wales had to decide on the legal difficulty arising from unpaid dividends. The Court was required to decide whether a shareholder has a right to a predetermined annual dividend. The principles applied by the Supreme Court entailed estoppel (common law), minority oppression (company law) and contractual law principles. Although the principles of estoppel were relevant, these fall outside the ambit of this article concerning unpaid dividends. The Supreme Court cited approximately 40 cases and considered 5000 pages of documentary evidence pertaining to the contractual right to a predetermined dividend. Although the latter seems applicable and relevant to the South African corporate law environment, South African case law does not support it. Besides a contractual right, this article also investigates the Oxford Legal Group case in establishing at least an implied right (based on the doctrine of proper purpose) to claim an undeclared dividend or unauthorised dividend that is contrary to the board of directors discretion not to authorise any dividends. Both these cases argue when and why a court should interfere in company resolutions in striking a better balance between a right to a dividend and a company's discretionary power not to recommend or declare a dividend.
Keywords:Dividend, distribution, damages, proper purpose, implied right, declare a dividend, shares, profits for dividends.
