Highlands Park is in the process of selling their Premier Soccer Leagues status to the Mpumalanga based TS Galaxy. For this transaction to proceed, it will require the approvals of the PSL board. PSL has rejected this transaction on Monday 14 September 2020, due to some legal entanglements that need to be resolved, it has been reported that the team failed to comply with Companies’ Act of 2008 section 112 requirements.
Diski101.com spoke to some legal expert and they broke down what these legal issues is that is preventing the sales of the team to run smoothly.
“Highlands Park would have been registered as a company, i.e. Pty (Ltd). This means it has to comply with the Companies’ Act of 2008, and it is a regulatory requirement for all companies registered in SA.” – Diski101.com legal consultant
Highlands Park is apparently owned by 3 major Shareholders, Brad Kaftel (Chairman), Larry Brookstone, and Sinky Mnisi. Sinky Mnisi is known to own 20% o of the team this means he is a minority shareholder.
Companies Act, Section 112 provides regulations with regards to proposals to dispose of all or the greater part of assets or undertaking. In this case, a proposal to sell Highlands Park. Section 112 (2) states that a company may not dispose of all or the greater part of its assets or undertaking unless:
(a) the disposal has been approved by a special resolution of the shareholders, in accordance with section 115; and
(b) the company has satisfied all other requirements set out in section 115, to the
extent those requirements are applicable to such disposal by that company.
(3) A notice of a shareholders meeting to consider a resolution to approve a disposal
contemplated in subsection (2)(a) must—
(a) be delivered within the prescribed time, and in the prescribed manner to each
shareholder of the company; and
(b) include or be accompanied by a written summary of—
(i) the precise terms of the transaction or series of transactions, to be considered at the meeting; and
(ii) the provisions of sections 115 and 164, in a manner that satisfies the prescribed standards.
According to the law noted above, Highlands Park majority shareholders cannot sell the team without it being approved in the special resolution of shareholders, in this case, it means Highlands Park need to prove that they held a meeting with all shareholders, including the minority shareholder Sinky Mnisi. However, this meeting is reported to have not taken place and only scheduled to take place on Thursday 17 September.
What would be the impact on the transaction in an event that Sinky vote against the sale of the club in the special resolution meeting? According to the legal guru that Diski101.com spoke, he stated that the law Section 115 (3) states that a company may not proceed to implement that resolution (selling of team) without the approval of a court if the resolution was opposed by at least 15% of the voting rights that were exercised on that resolution, and any person who voted against the resolution requires the company to seek court approval. If it is true that Sinky owns the 20% shares, this means he might be able to activate this clause and take this sale for court review.
PSL is expected to start their new season campaign in the next 4 weeks and going through the court might lead to this deal falling through.
It has been reported that Sinky does not want to halt the sale of the club, but he would have liked to be consulted about this transaction prior to the team engaging with TS Galaxy.