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REPUBLIC OFSOUTH AFRICA

COMPANIES TRIBUNAL

 

Case/File Number: CT013MAR2014

 

In the matter between:

 

JOBSEBATE PHETLHE	First Applicant
PETER SEEMELA	Second Applicant
CLEARENCENTSHANGASE	Third Applicant
and
SAMUEL MOGOHU PHASHA	First Respondent
MILLICENT MOTLALEKGOMO MOGWEBI	Second Respondent
MALISELA JOSEPH MOABELO	Third Respondent
JOB SEBATE PHETLHE	Fourth Respondent
PETER SEEMELA	Fifth Respondent
PHINEAS MOGALE	Sixth Respondent
CLEARENCE NTSHANGASE	Seventh Respondent
HIFRA THOLOLO KUPA	Eight Respondent
JOHANNES SHOLE	Ninth Respondent
THABO MOLOI	Tenth Respondent

 

 

Presiding Member of the Tribunal: Khashane Manamela

 

[1] The first two of the three applicants listed above are directors of a company known as Jozifusion (Pty) Ltd (Jozifusion or the company). All three applicants are said to be shareholders of Jozifusion. They require a shareholders meeting of the company to be convened and provide a list of issues that they would like to table at the meeting.[1]

 

[2] However, there appears to be confusion over who is bringing this application and against whom the application is brought. This is evident from the citation of parties above. It is also difficult to determine with utmost certainty who the shareholders are, on the one hand and who the directors are, on the other. From the documents filed, I was able to confirm only 8 of the 10 respondents as directors. The third and seventh respondents are not directors. As already indicated, the seventh respondent, who also appears as the third applicant, holds shares in the company. But the third respondent's role in the company is unclear. Al these do not really matter due to the nature of the order I will be making.

 

[3] It is submitted that, this Tribunal ought to issue an administrative order in terms of section 61(11)(b) of the Companies Act 71 of 2008 (the Act). The applicants also require that an impartial person be invited "to chair, observe, type or record the proceedings at this meeting"[2] This, in my opinion, alludes to possible difficulties in the relationship between the parties and it may also help to explain why this Tribunal has been approached for the relief sought. However, as ' some of the applicants are directors and shareholders, one can only wonder as to the real cause of the inability to convene a shareholders meeting.

 

[4] The application appears to have been served by registered post on about thirteen people listed on a document from the post office[3]. Evidently, this number does not accord with the cited number of parties or of the directors listed on a document that appears to be from the records of the Commissioner of Companies and Intellectual Property Commission filed as part of the papers for this matter[4]." As I already indicated above, this document has eight directors. Be that as it may, I will overlook this issue and proceed with the rest of the application.

 

[5] I have already indicated that, the application is based on section 61(11)(b) of the Act. Section 61 generally provides for matters relating to shareholders meetings and its relevant provisions [for current purposes] read as follows:

 

"61. Shareholders meetings

 

(1) The board of a company, or any other person specified in the company's Memorandum of Incorporation or rules, may call a shareholders meeting at any time.

(2) Subject to section 60, a company must hold a shareholders meeting- (a) at any time that the board is required by this Act or the Memorandum of Incorporation to refer a matter to shareholders for decision;

 

(b) whenever required in terms of section 70(3) to fill a vacancy on the board; and (c) when otherwise required-

(i) in terms of subsection (3) or (7); or

(ii) by the company's Memorandum of Incorporation.

 

(3) Subject to subsection (5) and (6), the board of a company, or any other person specified in the company's Memorandum of Incorporation or rules, must call a shareholders meeting if one or more written and signed demands for such a meeting are delivered to the company, and

 

(a) each such demand describes the specific purpose for which the meeting is

proposed; and

(b) in aggregate, demands for substantially the same purpose are made and signed by the holders, as of the earliest time specified in any of those demands, of at least 10% of the voting rights entitled to be exercised in relation to the matter proposed to be considered at the meeting.

 

(11) If a company is unable to convene a meeting as required in terms of this section because it has no directors, or because all of its directors are incapacitated- (a) any other person authorised by the company's Memorandum of Incorporation may convene the meeting; or

 

(b) if no person has been authorised as contemplated in paragraph (a), the Companies Tribunal, on a request by any shareholder, may issue an administrative order for a shareholders meeting to be convened on a date, and subject to any terms, that the Tribunal considers appropriate in the circumstances.

 

(12) If a company fails to convene a meeting for any reason other than as contemplated in subsection (11)-

 

(a) at a time required in accordance with its Memorandum of Incorporation; (b) when required by shareholders in terms of subsection (3); or

(c) within the time required by subsection (7),

a shareholder may apply to a court for an order requiring the company to convene

a meeting on a date, and subject to any terms, that the court considers appropriate in the circumstances.

 

(13) The company must compensate a shareholder who applies to the Companies Tribunal in terms of subsection (11), or to a court interms of subsection (12), respectively, for the costs of those proceedings.

[I added the underlining]

 

[6] Yes, from the above, it is so that this Tribunal may issue an administrative order for a shareholders meeting to be convened subject to the requirements set out in section 61(11)(a) and (b). I will revert to this in a moment.

 

[7] It is also clear that the prerogative [if for a moment I may give it that reference] to convene a shareholders meeting is with the board of directors or persons specified by the company's Memorandum of Incorporation (the MOl) or in its rules. In the absence of submissions regarding what is stated in the MOl and rules of Jozifusion in this regard, I have only the provisions of the Act to go by.

 

[8] The further provisions of section 61 allow for a meeting to be demanded by at least 10% of the holders of voting rights exercisable with regard to the matter proposed to be considered at the shareholders meeting [section 61(3)(b)]. When such demand is made, the board or the specified person, if any, must call a shareholders meeting. There are other requirements or further implications regarding a meeting convened this way.

 

[9] I understand what is stated in [8] above to be allowing qualifying interested parties like the current applicants, once they satisfy the equity requirements imposed by the Act or should it be so, the Company’s MOI or the rules, to demand that a shareholders meeting be held. The applicants did not elect this option and they did not furnish reasons for doing so.

 

[10] As I have indicated, the applicants elected to approach this Tribunal in terms of section 61(11)(b) of the Act. This provision [as pasted above] is applicable where the company is "unable to convene a meeting as required in terms of this section because it has no directors, or because all of its directors are incapacitated " The Act does not define what constitutes "incapacity" of a director. However the word "incapacity is used in sections 70, 71 and 139 of the Act albeit for different purposes. What comes close to incapacity of a director is in section 70(1)(b)(ii), which reads as follows:

 

"70. Vacancies on board

 

(1) Subject to subsection (2), a person ceases to be a director, and a vacancy arises on the board of a company-

(a).

(b) in any case, if the person-

(i) ...

(iii) becomes incapacitated to the extent that the person is unable to perform the functions of a director, and is unlikely to regain that capacity within a reasonable time, subject to section 71(3)."

[l added the underlining]

 

[11] Although section 70(1)(b)(iii) seems to be dealing with a degree of incapacity rather than defining what incapacity is in the first place, it is useful in the sense that it explains that this is about inability to perform the functions of a director. The Oxford Large Print Dictionary (New Edition) states that "incapacity noun inability, lack of sufficient strength or power." | therefore understand the word incapacity to be generic in the sense of its application to the position of a director. A person is incapacitated, if either due to a physical or mental ailment or condition is unable to perform her duties as a director. This could be for reasons other than physical or mental ailments. This will exclude instances where a person is prevented from being a director due to being ineligible or disqualified [section 69] or declared a delinquent [section 162]. In fact, this seems to be the theme flowing throughout the other provisions of the Act where the word "incapacitated' is used [5]

 

[12] There are no submissions regarding the directors' incapacity. Just bald statements made in the second affidavit attached to Form CTR 145 dated 03^rd June 2014 that, the directors of the company are incapacitated and that they "are currently not conducting company business matters"[6] Apart from being procedurally irregular [as they should have been made in the first or supporting affidavit attached to Form C T 142], these submissions are unhelpful. They are even misleading, as three of the four joint deponents are directors of the company. They do not explain what they did or attempted to do in order to convene a meeting of the shareholders. Whether their attempts in this regard have been blocked by the other directors? There is also no word regarding whether Jozifusion's MOl authorises anyone, besides the board of directors, to convene a shareholders meeting. This is in fact a requirement or a hurdle that has to be cleared first, before this Tribunal is requested to step in, so to speak. In other words, when the directors or a person or persons authorised as such, do not convene a shareholders meeting, such a meeting may be demanded by at least 10% of the holders of the applicable voting rights. And where the directors or designated person or persons are not there (i.e. not appointed or for some reason out of the office of director(s)) or incapacitated to convene a meeting, this Tribunal may on request issue an administrative order for a shareholders meeting to be convened where it is considered appropriate in the circumstances.

 

[13] In respect of Jozifusion, the directors appear to all still be in office although they are alleged to be incapacitated. I do not accept that they are incapacitated and therefore do not consider this application to be necessary. Besides, I have already found that, the submissions made do not sustain the application.

 

[14] On another note, I detect what appears to be some simmering tensions between some of the directors and shareholders. But as I stated above, there is relief in terms of section 61(3) of the Act upon satisfaction of its requirements. Failing or absent the aforesaid relief, section 61(12) of the Act provides for a shareholder to apply to court for an order requiring the company to convene a meeting, for any other situation not falling within what is provided for in the rest of section 61 of the Act.

 

[15] In the result:

 

a)    the application is dismissed.

 

 

Khashane Manamela

Member, Companies Tribunal

02^nd July 2014

 

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