Philison qnd Others v Skhosana and Others (76686/16) [2017] ZAGPPHC 1150 (6 October 2017)

Philison qnd Others v Skhosana and Others (76686/16) [2017] ZAGPPHC 1150 (6 October 2017)

The court found that the removal of the first to fourth applicants as directors and the fifth to eighth applicants as shareholders of the sixth respondent was unlawful. The meetings at which the resolutions were passed were not properly constituted as meetings of shareholders, and the procedural requirements of section 71(1) and (2) of the Companies Act and the MOI were not followed. The applicants were not given notice or an opportunity to make representations prior to their removal. The court held that only shareholders may vote to remove directors, and beneficiaries do not have such authority. The respondents' concession regarding the unlawful removal of shareholders was accepted. The...

Citation
[2017] ZAGPPHC 1150
Parties
Applicant: Mandla George Philison; Applicant: Sibusiso Agreement Mavuso; Applicant: Nkhwanazi Bhekizizwe Jimi-Hendrix; Applicant: Masinga Mbalenhle Pertunia; Applicant: Emalahleni Youth Farmers Co-operative; Applicant: Sabelizipho Trading (Pty) Ltd; Applicant: Amabutho Investments (Pty) Ltd; Applicant: Vandyk Spruit Farmers (Pty) Ltd; Respondent: Besaphi Hendrick Skhosana; Respondent: Vusi Reginald Skhosana; Respondent: Thubana Dumisani Stephen; Respondent: Sipho Mahlangu; Respondent: Nandipha Mgijima; Respondent: Kwamhlanga Poultry Projects (Pty) Ltd; Respondent: The Companies Intellectual Property Commission; Respondent: First National Bank Limited
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
6 October 2017
Case Number
76686/16
Procedural Posture
Review Application / Judgment
Outcome
Application granted; resolutions removing applicants as directors and shareholders set aside; applicants reinstated; costs awarded against first to fifth respondents.
Judges
M J Teffo
Legal Topics
Removal of Directors, Shareholder Rights, Memorandum of Incorporation, Companies Act Section 71, Unlawful Expulsion, Procedural Fairness
Commercial and Corporate Civil Procedure Removal of Directors Shareholder Rights Memorandum of Incorporation Companies Act Section 71 Unlawful Expulsion Procedural Fairness

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Parties

Mandla George Philison

Applicant

Sibusiso Agreement Mavuso

Applicant

Nkhwanazi Bhekizizwe Jimi-Hendrix

Applicant

Masinga Mbalenhle Pertunia

Applicant

Emalahleni Youth Farmers Co-operative

Applicant

Sabelizipho Trading (Pty) Ltd

Applicant

Amabutho Investments (Pty) Ltd

Applicant

Vandyk Spruit Farmers (Pty) Ltd

Applicant

Besaphi Hendrick Skhosana

Respondent

Vusi Reginald Skhosana

Respondent

Thubana Dumisani Stephen

Respondent

Sipho Mahlangu

Respondent

Nandipha Mgijima

Respondent

Kwamhlanga Poultry Projects (Pty) Ltd

Respondent

The Companies Intellectual Property Commission

Respondent

First National Bank Limited

Respondent

Procedural Posture

Review Application / Judgment

Legal Issues

  1. 1 Whether the removal of the first to fourth applicants as directors of the sixth respondent was lawful.
  2. 2 Whether the removal of the fifth to eighth applicants as shareholders of the sixth respondent was lawful.
  3. 3 Whether the procedures set out in section 71(1) and (2) of the Companies Act and the MOI were followed.

Ratio Decidendi

The court found that the removal of the first to fourth applicants as directors and the fifth to eighth applicants as shareholders of the sixth respondent was unlawful. The meetings at which the resolutions were passed were not properly constituted as meetings of shareholders, and the procedural requirements of section 71(1) and (2) of the Companies Act and the MOI were not followed. The applicants were not given notice or an opportunity to make representations prior to their removal. The court held that only shareholders may vote to remove directors, and beneficiaries do not have such authority. The respondents' concession regarding the unlawful removal of shareholders was accepted. The...

Court Disposition

Application granted; resolutions removing applicants as directors and shareholders set aside; applicants reinstated; costs awarded against first to fifth respondents.

Orders

  • The resolution passed on 21 April 2016 at the Special Annual General Meeting of the Project Management Committee of the sixth respondent removing the first, second, third and fourth applicants as directors from the board of directors of the sixth respondent is set aside.
  • The resolution passed on 5 May 2016 by the board of directors of the sixth respondent removing the first, second, third and fourth applicants as directors from the board of directors of the sixth respondent is set aside.