Sithole v Naude and Others; Ntiwane v Naude and Others (714/2021; 715/2021) [2021] ZAMPMBHC 58 (29 November 2021)

Sithole v Naude and Others; Ntiwane v Naude and Others (714/2021; 715/2021) [2021] ZAMPMBHC 58 (29 November 2021)

The court found that the removal of the applicants as directors was effected by the shareholder, Mawewe Communal Property Association, but the procedure prescribed by section 71(2) of the Companies Act was not followed. Specifically, the applicants were not given proper notice of the meeting and resolution, nor were they afforded a reasonable opportunity to make representations before the resolution was put to a vote. Section 71(1) and (2) of the Companies Act override any contrary provisions in the Memorandum of Incorporation or Shareholders' Agreement. As a result, the removal was unlawful and constitutes a nullity. Consequently, the board was improperly constituted during the...

Citation
[2021] ZAMPMBHC 58
Parties
Applicant: Jabulani Lighter Sithole; Applicant: Issac Myomo Ntiwane; Respondent: Etienne Jacques Naude; Respondent: Johannes Petrus KoekerMoer; Respondent: Johannes Lowedwyk Bouwer; Respondent: Mawewe Communal Property Association; Respondent: Mawecro (Pty) Ltd
Court
Mbombela High Court, Mpumalanga
Jurisdiction
South Africa
Judgment Date
29 November 2021
Case Number
714/2021; 715/2021
Procedural Posture
Review Application / Judgment
Outcome
Application granted. The removal of the applicants as directors is set aside; consequential relief including payment of directors' fees and invalidation of board meetings is ordered.
Judges
Roelofse
Legal Topics
Removal of Directors, Shareholders Rights, Companies Act Compliance, Board Composition, Unlawful Suspension
Commercial and Corporate Civil Procedure Removal of Directors Shareholders Rights Companies Act Compliance Board Composition Unlawful Suspension

Case Brief

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Parties

Jabulani Lighter Sithole

Applicant

Issac Myomo Ntiwane

Applicant

Etienne Jacques Naude

Respondent

Johannes Petrus KoekerMoer

Respondent

Johannes Lowedwyk Bouwer

Respondent

Mawewe Communal Property Association

Respondent

Mawecro (Pty) Ltd

Respondent

Procedural Posture

Review Application / Judgment

Legal Issues

  1. 1 Whether the removal and suspension of the applicants as directors of Mawecro (Pty) Ltd was lawful.
  2. 2 Whether the company and its shareholders complied with section 71 of the Companies Act in removing the applicants.
  3. 3 Whether the board of Mawecro (Pty) Ltd was properly constituted after the applicants' removal.

Ratio Decidendi

The court found that the removal of the applicants as directors was effected by the shareholder, Mawewe Communal Property Association, but the procedure prescribed by section 71(2) of the Companies Act was not followed. Specifically, the applicants were not given proper notice of the meeting and resolution, nor were they afforded a reasonable opportunity to make representations before the resolution was put to a vote. Section 71(1) and (2) of the Companies Act override any contrary provisions in the Memorandum of Incorporation or Shareholders' Agreement. As a result, the removal was unlawful and constitutes a nullity. Consequently, the board was improperly constituted during the...

Court Disposition

Application granted. The removal of the applicants as directors is set aside; consequential relief including payment of directors' fees and invalidation of board meetings is ordered.

Orders

  • The removal of Mr. Jabulani Lighter Sithole as Director and Chairperson of Mawecro (Pty) Ltd is set aside.
  • The removal of Mr. Isaac Myomo Ntiwane as Director of Mawecro (Pty) Ltd is set aside.