The impact of s23 (3) of the Companies Act 71 of 2008 (Companies Act) on the meaning of ‘residence’ in the context of s19 (1)(a) of the Supreme Court Act, No 59 of 1959 (Supreme Court Act)
A company must now register as its principal office its statutory residence where it must be ready to perform its corporate functions and where it is regarded as present at all times ready to conduct and control its administrative functions. In other words, the registered address must also be the company’s business address.
Section 19(1)(a) of the Supreme Court Act provides that the High Court has jurisdiction “over all persons residing or being in and in relation to all causes arising and offences triable within its area of jurisdiction…”.
Under the old Companies Act, No 61 of 1973 this provision was accepted to allow for a company to reside at more than one place, and litigants could rely on either the principal place of business or registered address of a company to determine which court would have jurisdiction over a matter involving that company.
The new Companies Act, and specifically the case of Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Country Estate (Pty) Ltd (Nedbank Ltd Intervening) 2013 (1) SA 191 (WCC), has altered this position and litigants can no longer rely on a company’s principal place of business to determine which court has jurisdiction to hear a matter if that address is not also the registered address of the company.
Section 23 (3) of the Companies Act requires companies to register the address of their office with the Companies and Intellectual Property Commission initially on their notice of incorporation and subsequently, if changed, by filing a notice of change of registered office.
In Sibakhulu, Binns-Ward J held that that a company resides for purposes of jurisdiction, as contemplated in s19 (1)(a) of the Supreme Court Act, only at its registered office which for jurisdictional purposes under the Companies Act is required to be the same place as its principal place of business.
Binns-Ward J held that the requirement that a company register its principal office is clearly intended for the benefit of third parties who may wish to obtain information about the company, communicate with it, or in any manner formally transact with or in connection with it and that the registered address of the company is the address at which this can effectively be done.
The ‘principal office’ of a company as contemplated in s23 (3) of the Companies Act constitutes for jurisdictional purposes a company’s statutory residence where it must be ready to perform its corporate functions and where it is regarded as present at all times ready to conduct and control its administrative functions.
While the decision in Sibakhulu may be seen as potentially narrowing or restricting the choice of litigants to initiate action in a particular jurisdiction, where it may previously have had the choice of two courts it now has only one (unless of course it founds jurisdiction on the basis of the place where the cause of action arose), the upside of this decision is that companies can no longer rely on registering addresses which they have little or no connection to in an attempt to avoid and frustrate potential litigants.