A new writ was issued in the name of the company, rather than the CC, and was twice served by the sheriff – in 2016 and 2018. Masibuyisane (Pty) Ltd attempted to have this writ rescinded in 2018 on the grounds that it had left the CC behind, but this attempt failed in the high court, and now again in the SCA.
The SCA pointed to the Close Corporations Act, which makes clear that a CC is a juristic person and continues to exist as such, even though the members may change and the entity converts to a company (in which case it falls under the Companies Act).
The Companies Act, anticipating a dispute such as this, says that when a CC converts to a company, “all the assets, liabilities, rights and obligations of the corporation shall vest in the company.”
The Companies Act also makes provision for legal proceedings launched against a CC to be continued against the business entity, even though it has converted to a company.
The counsel for Masibuyisane (Pty) Ltd argued that the conversion of a CC to a company extinguished the existence of the CC, and any legal contract made with the CC is invalid and unenforceable.
The high court had earlier ruled that “the obligations of the suretyship is not a different person, it is the same person but simply in a different corporate form.”
The SCA found a “singularity of identity” between the CC and company, despite their several incarnations, confirmed by the fact that they retained the same VAT and tax numbers.
The SCA rejected the appeal with costs and ruled that the suretyship is valid and enforceable.
