The recent judgment of BNS Nominees and Others v Arrowhead Properties and Others has laid down various important principles regarding the novel area of law regulating appraisal rights in terms of section 164 of the Companies Act 71 of 2008 .
In this matter, the first applicant, BNS Nominees Ltd , is the registered shareholder of the shares in the first respondent, Arrowhead Properties Ltd . The second applicant, Breede Coalitions Ltd, is the beneficial owner of the shares held by BNS . The applicants submitted an application requesting the court to determine the fair value of the shares held by the applicants in the respondent, or, alternatively, that an appraiser be appointed to determine the fair value of the shares.
After extensively considering both parties’ reasoning as well as several economists’ reports, the court found that there are various methods used to establish fair value, but none of them appear to rely on the NAV as the sole indicator of fair value. Rather, the fair value is to be assessed on the basis of a market price not subject to distortions.
In the present case, the court found that the respondent had put up evidence that relies on valuations of expert parties who have no interest in the matter , as well as reasoning from an expert as to why NAV is not an appropriate methodology to determine fair value.