Piercing the corporate veil in South Africa: The Constitutional Court defines the boundaries of judicial discretion under section 20(9) of the companies act

What happens when a court, armed with the power to pierce the corporate veil, goes further than the law permits? Can judicial discretion, however well-intentioned, liquidate a company without following the proper liquidation procedures? These questions lie at the heart of the Constitutional Court’s recent decision in Centaur Mining South Africa (Pty) Limited v Sivalutchmee Moodliar N.O. and Others [2026] ZACC 20, a case that has far-reaching implications for the doctrine of separate legal personality in South African corporate law.

The doctrine of separate legal personality stands as a foundational pillar of modern company law, first articulated in Salomon v A Salomon & Co Ltd.[1] This doctrine enables limited liability and facilitates capital formation. Yet it is susceptible to abuse. When corporate structures are manipulated to perpetrate fraud or shield wrongdoers from accountability, courts possess the power to “pierce” the corporate veil.

In South Africa, this power has been codified in section 20(9) of the Companies Act 71 of 2008, which empowers courts to declare that a company is deemed not to be a juristic person where there has been an unconscionable abuse of its separate legal personality. However, as the Constitutional Court has now made clear, this power is not without limits. This article analyses the Court’s judgment and its implications for judicial discretion under section 20(9).

The Statutory Framework

Section 20(9) of the Companies Act empowers a court, on application by an interested person or in any proceedings involving a company, to pierce the corporate veil if it finds that the incorporation, use, or any act by or on behalf of the company constitutes an unconscionable abuse of its juristic personality.[2] The provision operates in two parts: section 20(9)(a) authorises the court to declare that the company is deemed not to be a juristic person in respect of any right, obligation, or liability; section 20(9)(b) grants broader powers to make any further order the court considers appropriate. It is this second limb that formed the crux of the dispute in Centaur Mining.

The Facts

The facts emerge from one of South Africa’s most notorious corporate scandals. On 9 March 2020, Trillian Management Consulting Proprietary Limited (“TMC”) was placed into liquidation. Ten months later, the liquidators invoked section 20(9), seeking an order declaring that six TMC-related companies be deemed not to be separate juristic persons, effectively “collapsing” them into TMC for a consolidated liquidation. The High Court granted the order, critically setting the effective liquidation date as 9 March 2020.

Centaur Mining South Africa Proprietary Limited (“CMSA”) had advanced loans to, and received payments from, two of the subject companies during 2016 and 2017. CMSA was not a party to the High Court proceedings and only learned of the decision after the fact. The liquidators then sought to recover the payments CMSA had received as voidable preferences under the Insolvency Act[3], alleging the payments unduly preferred CMSA when the companies’ liabilities exceeded their assets. For CMSA, this was a fundamental injustice: claims arising from transactions that were lawful when concluded, only because the High Court had retrospectively deemed the companies to have been in liquidation.

The Litigation History

CMSA launched an application to rescind the High Court’s section 20(9) order, arguing that section 20(9) does not empower a court to liquidate a company. The High Court and Supreme Court of Appeal both dismissed CMSA’s challenges, holding that section 20(9) empowers courts to grant appropriate relief, including winding-up orders.

CMSA sought leave to appeal to the Constitutional Court, maintaining that section 20(9) is concerned with addressing unconscionable abuse of corporate personality—not liquidation, which is governed by a separate statutory regime with its own procedural safeguards.

The Court’s Decision

The Constitutional Court vindicated CMSA’s position. The Court held that there was no need to order the liquidation of the subject companies; the order made under section 20(9)(b), which sought to annihilate their corporate existence, went beyond what the provision permits.

The Court’s reasoning was elegant: the declaration under section 20(9)(a), that the subject companies were deemed not to be separate juristic persons, already sufficiently addressed their rights, obligations, and liabilities. Once pierced, these would flow to TMC, whose liquidation was already underway. There was no statutory basis for separately liquidating the subject companies. Accordingly, the Court ordered that any right, obligation, or liability of the subject companies be relocated to TMC, but the companies themselves were not liquidated.

The Limits of Judicial Discretion

The Court drew a crucial distinction between piercing the corporate veil and destroying the corporate entity. Piercing disregards separate personality for the specific purpose of imposing liability on those who abused the corporate form or to consolidate assets and liabilities. This is fundamentally different from liquidation, which is governed by its own statutory regime, with detailed procedural protections that cannot be circumvented through a veil-piercing order.

Section 20(9)(b) confers broad remedial powers to make “any further order the court considers appropriate.” However, “appropriate” cannot mean “unlimited.” The further orders must be directed at giving effect to the veil-piercing declaration; they cannot achieve objectives divorced from that purpose. Courts may fashion creative remedies in order to “unbundle” the abuse or misuse of the corporate form, but cannot order liquidation.

Most fundamentally, the judgment reaffirms the importance of separate legal personality. The doctrine facilitates investment, enables efficient organisation of business enterprises, and provides commercial certainty. While courts will intervene where there has been unconscionable abuse, veil-piercing remains the exception. The Court’s careful calibration of piercing the corporate veil for the purpose of consolidating rights and liabilities, while declining to order liquidation, demonstrates that remedies must be proportionate and targeted.

The Implications

For liquidators the judgment confirms that section 20(9) remains a powerful tool for consolidating rights, obligations, and liabilities across group companies where abuse is established. But actually winding up related companies requires following proper liquidation procedures. For third-party creditors the judgment provides protection. Parties who dealt in good faith with companies subsequently made subject to veil-piercing orders can take comfort that section 20(9) cannot be used for retrospective liquidation, and procedural safeguards cannot be circumvented. For corporate groups the judgment reminds directors to maintain proper corporate formalities, conduct intercompany transactions at arm’s length, and preserve each company’s separate identity.

Conclusion

The Constitutional Court’s judgment in Centaur Mining clarifies that section 20(9) does not empower courts to order the liquidation of a company, drawing an important boundary around judicial discretion in veil-piercing cases. The case reminds us that legal remedies must be appropriate to their purpose: section 20(9) addresses unconscionable abuse of corporate personality, but this remedial purpose does not extend to the wholesale destruction of corporate entities.

As South African courts continue to develop the jurisprudence around section 20(9), Centaur Mining will stand as an authoritative statement on the relationship between veil-piercing and liquidation. In the balance between effective remedies and fundamental corporate law principles, the Constitutional Court has marked out where the line must be drawn.