Differences between Members and Shareholders of a Friendly Society and the Payment of Dividends: A South African–Australian Perspective





shareholder, friendly society, friendly society benefits, friendly society loss ratio, committee of officers, shares, dividends, member


This article focusses on a very specific problem statement, namely how shareholder society relationships are viewed in Australia and South Africa. Friendly societies are special "legal creatures" enjoying legal personality from the date and time of their registration (not as companies). In South Africa friendly societies have been in existence for more than 160 years, with the latest legislation being promulgated in 1956. As an unregistered company, the friendly society forms part of the South African business enterprise landscape and has both members and shareholders. The legal relationships between members and shareholders and the payment of a dividend are unclear in the Friendly Society Act, 1956, and are generally regulated by the constitution or memorandum of incorporation of the friendly society. In Australia friendly societies developed approximately 200 years ago. In 1999 friendly society legislation was repealed by the Financial Sector Reform Act, 1999, in terms of which friendly societies had to convert to companies either as companies limited by guarantee or public companies as regulated by the Corporations Act, 2001. Prior to 1999, friendly societies were largely regulated by the Queensland Friendly Society Act, 1997 as unregistered companies. The Code regulated the relationships between members and shareholders and the payment of dividends. In this article we also focus on Australian friendly societies after 1999 and how they compare with South African friendly societies with regard to the member/shareholder relationships and the payment of dividends.


Download data is not yet available.


Metrics Loading ...




Ansell C A Treatise on Friendly Societies (Baldwin and Cradock London 1835)

Boros E and Duns J Corporate Law (Oxford University Press Melbourne 2007)

Cook J, Deakin S and Hughes A Mutuality and Corporate Governance: The Evolution of UK Building Societies Following Deregulation (Working Paper No 205) (ESCR Centre for Business Research, University of Cambridge Cambridge 2001)

Delport P The New Companies Act Manual: Including Close Corporations and Partnerships (LexisNexis Durban 2011)

Dugard J et al Dugard's International Law: A South African Perspective 5th ed (Juta Cape Town 2018)

Du Plessis JJ and Alveras S "The Payment of Dividends: Legal Confusion, Complexities and the Need for Comprehensive Reform" 2014 C&SLJ 312-332

Du Plessis JJ and Alveras A "A Shareholder's Contractual Right to a Dividend and a Company's Oppressive Conduct in Withholding Dividend Payments: Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd" 2014 C&SLJ 552-559

Green DG "The 1918 Strike of the Medical Profession against the Friendly Societies of Victoria" 1984 Labour History 72-87

Hardy GF "Friendly Societies" 1888 Journal of the Institute of Actuaries 245-348

Nelson FGP "Some Statistics of the Affiliated Order of Friendly Societies (Odd Fellows and Foresters)" 1877 Journal of Statistical Society of London 42-89

Pretorius JT et al Hahlo's South African Company Law through the Cases: A Source Book 5th ed (Juta Cape Town 1997)

Roth J Informal Micro-Finance Schemes: The Case of Funeral Insurance in South Africa (Working Paper No 22) (International Labour Office Geneva 2000)

Van der Merwe DHC Die Stokvel: 'n Ondernemingsregtelike Studie (University of the Free State Bloemfontein 1996)

Weinbren D "The World in 1913: Friendly Societies in History" 2013-2014 Magazine of the Historical Association 12-16

Weinbren D and James B "Getting a Grip: The Roles of Friendly Societies in Australia and Britain Reappraised" 2005 Labour History 87-103

Wettenhall RS The Influence of the Friendly Society Movement in Victoria 1835-1920 (PhD-thesis University of Melbourne 2019)

Wilkinson J "Friendly Societies FUM Grows to $7Billion" 2006 Money Management 5

Case law


Abrook v Paterson (No 2) 59 FCR 364 (1995)

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018] HCA 43

Carroll v Shillinglaw [1906] 3 CLR 1099

Lifeplan Australia Friendly Society Ltd v Wolf [2016] FCA 248

Mount Isa City Council v The Mount Isa Irish Association Friendly Society Ltd [2018] QCA 222

Re Grand United Order of Free Gardeners Friendly Society Ltd [2008] FCA 1537

R v Holmes, Ex Parte Manchester Unity Independent Order of Oddfellows in Victoria 147 CLR 65 (1980)

Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd [2014] NSWCA 326

The Friendly Societies Medical Association Inc v Commissioner of Taxation 4 SASR 96 (1972)

South Africa

Apollo Tobacco CC v Commissioner for South African Revenue 74 SATC 204

Chambers v Fedsure Group Staff Income Security Scheme 1999 11 BPLR 254 (PFA)

Family Benefit Friendly Society v Commissioner for Inland Revenue 58 SATC 243

G Lamparelli and S Hefele v Eskom Pension Fund (unreported) case numbers PFA/GA/2881/01/NJ and PFA/3000/01/NJ of 27 September 2001

Lasker v Cape Municipal Pension Fund Disability Income Benefit Scheme 2004 7 BPLR 5866 (PFA)

Mavundla v Flex-o-Thene Provident Fund 2004 5 BPLR 5739 (PFA)

Moonsamy v Uniserv Income Security Scheme 2004 7 BPLR 5907 (PFA)

Oliver v Packard Group Pension Fund 2004 8 BPLR 5945 (PFA)

Oosthuyzen v Road Accident Fund 2019 JOL 40807 (FB)

Reddy v Massmart Group Retirement Fund 2004 8 BPLR 5963 (PFA)

Rube v KPMG South Africa 2004 8 BPLR 5966 (PFA)

SACTWU v Feltex Sick Benefit Fund 2003 9 BPLR 5141 (PFA)

Tek Corporation Provident Fund v Lorentz 1999 4 SA 884 (SCA)

Thorne v Meihuizen Provident Fund 2000 11 BPLR 1288 (PFA)

Volkskas Beleggingskorporasie Bpk v Oranje Benefit Society 1978 1 SA 45 (A)

Williams v Mustek Group Income Plan 2004 8 BPLR 6000 (PFA)



Corporations Act, 2001

Financial Sector Reform (Queensland) Act 27 of 1999

Financial Sector (South Australia) Act, 1999

Friendly Societies (South Australia) Act, 1919

Friendly Societies (South Australia) Act, 1997

Friendly Societies (Tasmania) Act, 1888

Friendly Societies (Tasmania) Act, 1997

Friendly Societies (Queensland) Act, 1913

Friendly Societies (Queensland) Act (and Code), 1997

Friendly Societies (Victoria) Act (and Code), 1996

Life Insurance Act, 1995

Private Health Insurance Act, 2007

South Africa

Cape Colony Friendly Society Act 5 of 1892

Close Corporations Act 69 of 1984

Companies Act 61 of 1973

Companies Act 71 of 2008

Friendly Societies Act 25 of 1956

Medical Schemes Act 131 of 1998

Mutual Banks Act 124 of 1993

Natal Friendly Society Act 20 of 1862

Pension Funds Act 24 of 1956

Pension Funds Amendment Act 11 of 2007

Short-Term Insurance Act 53 of 1998

Transvaal Companies Act 31 of 1909

Transvaal Societies and Associations Incorporation Ordinance, 1903

Government publications

Gen N 457 in GG 30987 of 25 April 2008 (Determination of an Increased Maximum Amount of Benefit to be Provided by a "Friendly Society", as Envisaged in Section 7(2)(B) of the Long-Term Insurance Act, 1998)

Internet sources

Australian Securities and Investments Commission 2020 ASIC Company and Director Search https://www.equifax.com.au/businesscreditexpress/

resource/asic-company-and-director-search accessed 26 January 2020

Chen J 2020 Income Statement https://www.investopedia.com/terms/i/

incomestatement.asp accessed 9 September 2020

Companies and Intellectual Property Commission 2020 Companies and Intellectual Property Commission eServices https://eservices.cipc.co.za/

Search.aspx accessed 25 January 2020

Lifeplan 2020 Lifeplan: An Australian Public Company https://www.aubiz.net/company/lifeplan-australia-friendly-society-limited-087649492 accessed 1 September 2020

Manchester Unity Friendly Society 2017 https://www.manchesterunity.org


Manchester Unity Friendly Society 2017 Annual Financial Report of Manchester Unity Friendly Society for the Year Ended 31 May 2017 https://www.manchesterunity.org.nz/wp-content/uploads/2015/02/Manchester-Unity-Annual-Report-31-May-2017.pdf accessed 15 January 2020

Professional Provident Society 2009 Surplus Rebate Account 2009 http://www.powerbrokers.co.za/uploads/File/pdf/product_suppliers/pps/PPS_SURPLUS_REBATE_ACCOUNT.pdf accessed 10 July 2020

Rex S 2016 What is the Difference between a Building Society Shareholder and a Depositor? https://www.bsa.org.uk/information/consumer-factsheets/savings/what-is-the-difference-between-a-shareholder-and-a accessed 12 September 2020

Sampford K 1997 National Uniform Regulation of Friendly Societies and the Friendly Societies (Queensland) Bill 1997 (Legislation Bulletin No 8/97) https://www.parliament.qld.gov.au/documents/explore/ResearchPublications/LegislationBulletins/lb0897ks.pdf accessed 13 June 2020

Walsh M 2017 A Letter from the President of the Friendly Societies of Australia to the Australian Treasury on 23 May 2017 https://treasury.gov.au/sites/default/files/2019-03/Friendly-Societies-of-Australia.pdf accessed 4 August 2020



How to Cite

Kilian, N. (2021). Differences between Members and Shareholders of a Friendly Society and the Payment of Dividends: A South African–Australian Perspective. Potchefstroom Electronic Law Journal, 24, 1–32. https://doi.org/10.17159/1727-3781/2021/v24i0a10733



Special Edition: Corporate and Financial Markets 2021