What is my rights if I own shares?

2016-05-18 06:00


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I BOUGHT shares in a company a few years ago and was provided with a share certificate.

I recently attended a shareholders’ annual meeting and was told that I am not allowed to vote because I was not listed in the company’s share register.

Does that mean that I do not legally own the shares and that I have no rights as a shareholder?


A share certificate is not a share itself, but is merely evidence of a share.

A share is intangible property and has been described by our courts as being a bundle of rights which you own as shareholder.

The nature and scope of these rights are usually set out in the company’s memorandum of incorporation, read together with the rights afforded to shareholders in terms of the Companies Act 71 of 2008 (“the Act”).

These rights normally include, amongst others, the right to vote and the right to receive dividends.

The Act defines a shareholder as a person who is the holder of a share issued by the company and whose name is entered as such in the share register.

Based solely on the above definition, you then would not be regarded as a shareholder.

However, in the recent case of Du Plooy NO and others vs De Hollandsche Molen Share Block Ltd and Another, the judge was of a different opinion.

The judge found that a nominee is often an agent which holds shares in name on behalf of the shareholder – the principal from whom he takes instructions.

The principal, whose name does not appear on the share register, is actually the beneficial owner.

Ownership, therefore, does not depend on registration, however, only the registered shareholders are recognised by the company.

From the above it is clear that you are the valid owner of the shares, but that you will only be recognised by the company as a shareholder, and be able to exercise the accompanying rights, once you are reflected as such in the share register.

Section 161 of the Act provides that a shareholder may apply to a court for an order determining any right of such shareholder and any appropriate order necessary to protect such right, or to rectify any harm done to the shareholder by the company as a result of an act or omission that contravenes the Act.

This section has previously been applied by the courts to provide relief for an owner of shares who had not obtained registration of his shareholding in the company because of opposition or lack of cooperation by the company.

I would thus recommend with regard to your particular situation that you contact the company secretary to try and correct the share register.

Should the company refuse to do so, consider contacting an attorney to assist you in bringing an application for an order directing the company to enrol you on the share register.
Nanette Janse van Rensburg, Associate, Phatshoane Henney Attorneys


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