Communicare and Others v Khan and Another (12/2012) [2012] ZASCA 180; 2013 (4) SA 482 (SCA) (29 November 2012)

Communicare and Others v Khan and Another (12/2012) [2012] ZASCA 180; 2013 (4) SA 482 (SCA) (29 November 2012)

The Supreme Court of Appeal held that the right of members to vote at annual general meetings for the election of directors is a personal right, not a corporate right. The exclusion of retiring directors from voting was contrary to article 15 of the articles of association, which envisaged a seamless transition of directorships and did not require directors to vacate their membership status before the election. The court found that the respondents had locus standi to challenge the validity of the resolutions, as their voting rights were adversely affected by the exclusion of eligible voters. The resolutions appointing replacement directors were therefore invalid and correctly set aside by...

Citation
[2012] ZASCA 180
Parties
Appellant: Communicare; Appellant: Communicare Construction; Appellant: Hermanus Johannes Fourie; Respondent: Blumerus Lodewyk Ezra Khan; Respondent: Barry Deane Tilney
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
29 November 2012
Case Number
12/2012
Procedural Posture
Civil Appeal / Appeal From the Western Cape High Court, Cape Town
Outcome
Appeal dismissed with costs, including costs of two counsel and costs in the application for leave to appeal.
Judges
Cloete, Cachalia, Malan, Shongwe, Swain
Legal Topics
Company Articles of Association, Members Rights, Locus Standi, Election of Directors
Commercial and Corporate Company Articles of Association Members Rights Locus Standi Election of Directors

Case Brief

Summary, issues, holding and outcome

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Parties

Communicare

Appellant

Communicare Construction

Appellant

Hermanus Johannes Fourie

Appellant

Blumerus Lodewyk Ezra Khan

Respondent

Barry Deane Tilney

Respondent

Procedural Posture

Civil Appeal / Appeal From the Western Cape High Court, Cape Town

Legal Issues

  1. 1 Whether the right to vote at annual general meetings for the election of directors is a personal or corporate right.
  2. 2 Whether the exclusion of retiring directors from voting at the annual general meeting was justified under the articles of association.
  3. 3 Whether the respondents had locus standi to challenge the validity of the resolutions appointing directors.

Ratio Decidendi

The Supreme Court of Appeal held that the right of members to vote at annual general meetings for the election of directors is a personal right, not a corporate right. The exclusion of retiring directors from voting was contrary to article 15 of the articles of association, which envisaged a seamless transition of directorships and did not require directors to vacate their membership status before the election. The court found that the respondents had locus standi to challenge the validity of the resolutions, as their voting rights were adversely affected by the exclusion of eligible voters. The resolutions appointing replacement directors were therefore invalid and correctly set aside by...

Court Disposition

Appeal dismissed with costs, including costs of two counsel and costs in the application for leave to appeal.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel where employed and the costs in the application for leave to appeal, on the same basis.