Contesting the Removal of a Director by the Board of Directors under the Companies Act 71 of 2008 (original) (raw)
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REMOVAL OF DIRECTORS BY THE SHAREHOLDERS IN THE COMPANIES ACT 71 OF 2008
REMOVAL OF DIRECTORS BY THE SHAREHOLDERS IN THE COMPANIES ACT 71 OF 2008, 2023
A case review of Pretorius and Another v Timcke and Others (15479/14) [2015] ZAWCHC 215 and Miller v Natmed Defence (Pty) Limited and Others 2022 (2) SA 554 (GJ). The latter judgment held that section 71 (1) and (2) of the Companies Act 71 of 2008 required no reasons to be furnised to the director before his removal by the shareholders in the company, and differed from the former judgment which held that reasons are required for such removal. This paper argues that both these judgments fall short of the statutory and constitutional interpretation required by section 71 of the Companies Act 71 of 2008. An alternative interpretation of section 71 (1) and (2) of the Companies Act 71 of 2008 which is consistent with the 1996 Constitution of the Republic is therefore offered.
2020
Section 162 of the South African Companies Act 71 of 2008 empowers courts to declare directors delinquent and hence to disqualify them from office. This article compares the judicial disqualification of directors under this section with the equivalent provisions in the United Kingdom, Australia and the United States of America, which have all influenced the South African act. The article compares the classes of persons who have locus standi to apply to court to disqualify a director from holding office, as well as the grounds for the judicial disqualification of a director, the duration of the disqualification, the application of a prescription period and the discretion conferred on courts to disqualify directors from office. It contends that, in empowering courts to disqualify directors from holding office, section 162 of the South African Companies Act goes too far in certain respects.
Confusion in Removal of Directors by Shareholders
South African Law Journal, 2022
This note critically analyses the judgment in Miller v Natmed Defence (Pty) Ltd 2022 (2) SA 554 (GJ), in which the court ruled on the validity of the removal of a director by the company's sole shareholder. Three issues were in contention: whether a shareholder must furnish the director with reasons for the proposed resolution to remove a director from office under s 71 of the Companies Act 71 of 2008; whether a shorter notice period for the shareholders' meeting was legally acceptable; and whether the meeting that was held telephonically was valid. The court ruled that the director's removal from office was valid and dismissed his request to be reinstated as a director. This note critically analyses the judgment and argues that the court misinterpreted some aspects of s 71 of the Act.
2018
Section 66(1) of the Companies Act 71 of 2008 (the 2008 Act) empowers the board of directors of a company to manage the business and affairs of a company, save to the extent that the Companies Act or the company’s Memorandum of Incorporation (MoI) provides otherwise. While this provision may at first blush appear unexceptional, it is far from it! Section 66(1) of the 2008 Act is an innovative provision in the 2008 Act in that, for the first time in South Africa’s corporate law history, the Companies Act has conferred a statutory power and responsibility to manage the business and affairs of the company on the board of directors. In Kaimowitz v Delahunt 2017 (3) SA 201 (WCC) the Western Cape Division of the High Court in Cape Town (the court) was confronted with an important question regarding section 66(1) of the 2008 Act: to what extent do the powers of a company director include involvement in the day-to-day management of a company’s business? This note critically analyses the jud...
2018
Section 71(5) of the Companies Act 71 of 2008 provides that a director who has been removed from office by the board of directors may apply to court to review the board's decision. If the board of directors decides not to remove a director from office, any director who voted in favour of the removal, may, under section 71(6) of the Companies Act 71 of 2008, apply to court to review the board's decision. This article critically examines: the powers of a court under the judicial review processes; the permissible court orders which may be made; the locus standi to apply to court for a judicial review under section 71(5) and 71(6); the time period within which an application for judicial review must be instituted; the costs of the judicial review procedures; and the discretion of a court in granting or dismissing such applications. It is argued that the judicial review processes in section 71(5) and 71(6) are unclear and ambiguous in certain respects. Recommendations to amend and modify section 71(5) and 71(6) are made with a view to removing ambiguities in these provisions, and to improving and strengthening the judicial review processes under these provisions.
Edinburgh Law Review, 2012
House. 2 This analysis covers only instances where leave has been granted by a court but does, however, cover cases from Scotland, England and Wales and Northern Ireland. 3 The CDDA and its Northern Ireland equivalent contain a number of grounds for disqualification. A ground that is frequently used is provided in section 6 of the Act: 4 (1) The court shall make a disqualification order against a person in any case where, on application under this section, it is satisfied-(a) that he is or has been a director of a company which has at any time become insolvent (whether while he was a director or subsequently), and (b) that his conduct as a director of that company (either taken alone or taken together with his conduct as a director of any other company or companies) makes him unfit to be concerned in the management of a company.. .
Mediterranean Journal of Social Sciences, 2014
Directors have a duty to exercise care and skill in the performance of their activities. They must carry out the functions of their office and exercise the powers bona fide for the benefit of the company. Long ago, courts restrained themselves from assessing the performance of directors in running the company. However, directors are under constant scrutiny. They can be held delictually liable if they failed to properly exercise their duty of care and skill. Courts use the objective and subjective approaches to determine the liability of directors. The Companies Act 71 of 2008 has partially codified the common law directors' duty of care, skill and diligence. The directors have to display or demonstrate care and skill of the person holding the same position. However, the directors' knowledge and skill are also considered in determining what they can perform for the company. The Companies Act has introduced the business judgment rule as a defence for directors to avoid liability.