Q&A: Lease Agreements and Close Corporation Resolutions

Posted on: November 1st, 2018 by Jacques Blignaut

Question: You are a landlord and you entered into a commercial lease with a Close Corporation (CC) as the tenant. Despite all three members of the CC signing the lease, one of the members is now trying to say he never signed the resolution. Is it a legal requirement that all three members of the CC had to sign the resolution for the lease to be valid?

Answer: As a general principle, for a round robin resolution to be valid, it has to be signed by all members. Section 48(3)(b) of the Close Corporation Act 69 of 1984 provides that a resolution signed by all the members will be valid as though it had been passed at a meeting, duly convened and held. This section has not been repealed by the Companies Act 71 of 2008 and, accordingly, unanimity is still a requirement for written resolutions of Close Corporations. If a meeting had been held, and the written document is merely a recording of the meeting’s decision, then it is not necessary for all the members to sign it as it only constitutes an extract from the minutes. In this case, however, the member cannot rely on his not signing the resolution as section 54 of the Close Corporations Act provides that any act of a member shall bind the corporation and, since all the members acted in executing the lease, that act will bind the corporation.

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