COMPANIES

The management of a Company vests in the appointed directors of that company.  In order to effect transfer of any property acquired or alienated by a Company, a company resolution authorising a company representative to act on behalf of the Company in the transaction will be required.  A companies office search should always be done to determine the identity of directors of the company.

In terms of section 112 of the Companies Act 71 of 2008 (section 228 of the previous Act), the directors of a Company may not dispose of the whole or substantially the whole of the undertaking or the greater part of the Company’s assets, without a special resolution authorised by the shareholders of the Company and thus under these circumstances a Section 112 Resolution may be required.   (refer to notes on Section 112).

If the intention is to register the property into the name of a Company which is still to be formed, this is acceptable.  One possible description of such an entity in an agreement is as follows: 

Joe Black for and on behalf of a Company to be formed

CLOSE CORPORATIONS

The business of a Close Corporation is generally attended to and authorised by the members of the Close Corporation.  A close corporation search should be conducted to determine who the members of the close corporation are.

Unless the Association Agreement of a Close Corporation stipulates otherwise, a Close Corporation will require the consent in writing of members holding 75% of the members’ interest before the Close Corporation can dispose of the whole or substantially the whole of the undertaking, or the greater part of the Close Corporation’s assets.

It is therefore important to obtain a copy of the Association Agreement, as well as a resolution authorising the nominated person to enter into the transaction.

If the intention is to register the property into the name of a Close Corporation which is still to be formed this is acceptable.  One possible description of such an entity in an agreement is as follows: 

Joe Black for and on behalf of a Close Corporation to be formed

TRUSTS

The business of a Trust is controlled by the Trustees appointed in terms of the Trust’s Letter of Authority.  Trustees are only authorised to act on behalf of a Trust once they have been issued with Letters of Authority by the Master of the High Court and not before. 

A contract entered into by the Trust before the Trustees are issued with a Letter of Authority is null and void.  The Trustee must further be authorised to enter into the contract (in this case the sale or purchase of immovable property) by the Trust Deed.  The trustees must be authorised to sign the sale agreement by way of a resolution prior to the agreement being entered into failing which the agreement is not a valid agreement. The trust deed may specify who is authorised to sign various agreements.

It is thus important to have sight of the Letters of Authority and Trust Deed before contracting.

See the article on the case of Thorpe and Others vs Trittenwein and Another 2007(2) SA 172 SCA

The Trustees may depending on the terms of the trust deed authorise one of their number by way of a resolution to sign the various documents on behalf of the Trust.   It is not possible to contract “for and on behalf of a trust to be formed”.  The Trust must be in existence when contracting.

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