Luis Vaz De Sousa (“Luis”) and Sharon Vaz De Sousa (“Sharon”) were married in community of property. Luis was the registered shareholder of 30% of the shares in Technology Corporate Management (Pty) Ltd (“TCM”).
In 2015, Luis and Sharon divorced and an order of divorce was granted but the court had not divided the joint estate and no agreement had been reached between the parties as to how it was to be divided.
The court had to determine whether Sharon, as she claimed, was entitled to ownership of 15% of the shares in TCM and thus, entitled to a share of the payment of dividends by TCM.
Luis argued that it is a general principle of company law that a company shall concern itself only with the registered holder and not the owner or beneficial owner of the shares’. Further, unless a company’s articles provide otherwise, dividends are payable to persons who are registered in its register of members.
Sharon contended that when the community of property between her and Luis was dissolved, as a consequence of the divorce order, their ‘tied’ ownership over their joint estate became ‘free’ co-ownership, and their respective shares divisible. She argued that ownership of 15% of Luis’s shares in TCM then became vested in her and she became entitled to be registered as a shareholder in TCM and to the benefit of the payment of dividends attaching to the shares.
The court stated that a company only recognises those registered shareholders whose names are entered in its register of members. A company is not concerned with the principal whose name does not appear on the register, usually known as a ‘beneficial owner’.
Absent an agreement to the contrary, Sharon did not acquire any right to the shares themselves or any portion thereof. She couldn’t claim any specific asset in the joint estate in specie or in undivided form. Her entitlement was to a share of the net proceeds of the joint estate after the realisation of liabilities.
Shareholders must ensure that their names are registered in the company’s securities register in order to receive dividends, exercise voting rights, transfer shares and to be treated as shareholders.
Written by Jordan Dias and supervised by Pierre van der Merwe, 26 November 2018