A company registered three days before the Tender is not automatically a red flag
Katlego Sekhu
When news broke that Lighthouse Publishers had received the largest share of the Department of Basic Education’s textbook budget, one detail drew immediate scrutiny: the company had been registered shortly before the tender specifications were announced. For many, that timeline was reason enough to raise an eyebrow. For commercial lawyers, the picture is more complicated.
Siz The World with Sizwe Dhlomo spoke to Mpumelelo Zikalala, Founder of Zikalala Attorneys, to unpack the legal mechanics behind newly registered companies, special purpose vehicles, and what the law actually says about all of it.
Why a new registration number does not mean a company has no experience
A special purpose vehicle, or SPV, is a company created specifically for a single transaction or contract. It is a legitimate and widely used commercial structure, particularly in the tender space. Two businesses with complementary capabilities may each qualify for parts of a contract but not all of it. Rather than submitting as a joint venture, they form a new company to bid as a single entity.
“It doesn’t mean that if it’s registered two or three days before the tender closes, it’s something you have to frown upon,” Zikalala noted. The experience that matters, he explained, belongs to the individuals and entities behind the SPV, not the registration date of the vehicle itself. Reference letters, track records and credentials are submitted from the founding entities, not the newly formed company.
Why limited liability does not always protect the people behind an SPV
The benefit of an SPV is also its limitation. Because it is a separate juristic entity, its liability is generally contained within it. But that protection is not absolute. A procuring party can require the founders to stand as surety, making them personally liable if the SPV fails to deliver.
Courts also retain the power to pierce the corporate veil in cases of fraud, corruption or criminality, looking past the company structure to hold the individuals behind it accountable.
The registration date of a company, Zikalala concluded, is one data point among many. The adjudication process exists precisely to evaluate the full picture.
To hear the full discussion, listen to the podcast.
Read Next: ‘A passenger got injured in one of my taxis and I don’t have insurance’ – The Blind Spot
