SHAREHOLDERS and investors of Status Capital Building Society (SCBS) have opposed an application for liquidation, arguing that they have the necessary legal standing and that judicial management is a more appropriate remedy.
This is contained in a replying affidavit and counter-application deposed to by Sabelo Nkambule, who stated that he is a shareholder of SCBS and is acting on legal advice from the shareholders’ and investors’ counsel. Nkambule said the affidavit was filed in response to a replying affidavit and answer to the counter-application deposed to by Financial Services Regulatory Authority (FSRA) Chief Executive Officer Ncamiso Ntshalintshali.
He outlined that his response would focus on three issues; namely the question of legal standing, an application to strike out certain portions of the replying affidavit and a response to the counter-application.
On the issue of legal standing, Nkambule rejected FSRA’s assertion that shareholders and investors lacked the necessary standing to oppose the liquidation application. FSRA had argued that the matter was brought against SCBS and that the investors’ interest was merely commercial and therefore insufficient.
Quoting the applicant’s position, Nkambule said, “This application is brought against SCBS. Therefore, the investors and the shareholders, as third parties must demonstrate that they have standing and a direct and substantial interest in the matter and their interest is commercial in nature and is therefore insufficient,” he said.
However, Nkambule maintained that this assertion was incorrect. He argued that the law expressly empowers shareholders to act in such matters. Referring to the Companies Act of 2009, he stated that a shareholder may bring an application to wind up a company and therefore, logically, has the right to oppose such an application.
“I state therefore that if a shareholder is empowered to make an application to liquidate a company to which he is a member, he is entitled to oppose an application for its liquidation,” he said.
He further relied on Section 71(2) of the Building Societies Act, 1962, which allows members or creditors to apply for judicial management where there is mismanagement or other causes.
Nkambule submitted that this provision equally gives shareholders the right to oppose liquidation and propose judicial management as an alternative.
“I therefore state that the Building Societies Act gives the shareholders the standing in law to oppose an application for liquidation,” he added. Nkambule told the court that shareholders had demonstrated a direct and substantial interest in the matter.
He emphasised that judicial management was a reasonable alternative under the circumstances. The shareholders also applied for certain parts of the applicant’s replying affidavit to be struck out.
He argued that the applicant had introduced new evidence in its replying affidavit dated March 26, which should have been included in the founding papers.
According to Nkambule, the inclusion of this material amounted to an abuse of court process as it deprived the shareholders of an opportunity to respond.
“The material constitutes new and consequently irrelevant evidence and as such amounts to an abuse of the court process to the prejudice of the administration of justice and the shareholders and investors,” he said.
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He further pointed out that the applicant failed to state why the documents were not included in the founding affidavit despite being in its possession at the time.
He also criticised the reliance on proceedings from the High Court of South Africa, stating that their relevance had not been established.
Nkambule argued that the late filing of the replying affidavit had compounded the prejudice.
“There is no reasonable opportunity for the shareholders and investors to respond to the new material adduced for the first time in reply,” he said.
He argued that the approach taken by the applicant effectively denied the shareholders an opportunity to respond meaningfully, as they could not file further affidavits to address the new issues raised.
Nkambule submitted that judicial management was the most appropriate liquidation.
He stated that the objectives of the relevant legislation include ensuring the stability of the financial system and protecting shareholders.
He further stated that the applicant had failed to demonstrate that liquidation would achieve these objectives.
Nkambule noted that the majority of shareholders were opposed to liquidation and supported judicial management as an alternative.
He also addressed the issue of the respondent’s licence, stating that liquidation is only justified where a licence has been revoked, not where it has merely expired.
“The expiration of a licence is not a sufficient ground for liquidation because it can be renewed,” he said.
Nkambule explained that the failure to renew the licence was due to circumstances beyond the control of the respondent, including the role of curators.
He expressed confidence that the licence could be renewed if the respondent was given an opportunity to rectify the situation.
He further distinguished between curatorship and judicial management, stating that the two processes serve different purposes and should not be conflated.
“Judicial management will afford SCBS an opportunity to conduct its business accordingly,” he said as he argued that FSRA had failed to prove that the respondent was insolvent as at December 15, 2025, or that it could not meet its obligations.
He pointed out that even the curator had not recommended liquidation.
“The curator stated succinctly that the applicant should not pursue liquidation option since the entity can be revived,” he said.
