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IN THE COMPANIES TRIBUNAL OF THE REPUBLIC OF SOUTH AFRICA

 

 

CASE NO: CT00999ADJ2022

 

In the matter between:

 

Lucky Solomzi Novukuza                                                           Applicant

 

and

 

Fanyana Gideon Thusi                                                                First Respondent

 

Presiding member: Lindelani Daniel Sikhitha Decision handed down on 27 July 2022

 

Summary: Directorship dispute –– application for removal of the respondent as director of Thee Truth Technology Training and Projects (Pty) Limited –– whether to grant application for removal of a director of a company will depend on the alleged misconduct –– the applicant is required to allege and prove the allegations of misconduct against the respondent –– the standard of proof required is on balance of probability –– in terms of this standard the Companies Tribunal must be satisfied that an event occurred based on available evidence –– held: the application for removal of the respondent as director of Thee Truth Technology Training and Projects (Pty) Limited is granted for reasons outlined below.

 

 

DECISION (Reasons and Order)

 

 

A.        INTRODUCTION

 

[1]       The Applicant in this matter is Lucky Solomzi Novukuza who is an adult male South Africa citizen and currently residing at [....] B[....], A[....], Richardsbay, KwaZulu Natal Province, Republic of South Africa (“South Africa”).

 

[2]       The Respondent in this matter is Fanyana Gideon Thusi who is an adult male South African citizen and currently residing at [....] M[....] Street, Birch Acres, Kempton Park, Gauteng Province, 1759, South Africa.

 

[3]       This is an application for the removal of the Respondent as a director of a company known as Thee Truth Technology Training and Projects (Pty) Limited with registration number: 2016 / 420619 / 07 (“Thee Truth Technology”). This application is brought in terms of section 71(8) of the Companies Act, 2008 (Act No. 71 of 2008) (“the Act”) read together with regulation 142 of the Companies Regulations, 2011 (“the Regulations”). In this application the Applicant is seeking an order to remove the Respondent as director from Thee Truth Technology as contemplated in section 71(8) of the Act.

 

[4]       The Applicant and the Respondent are the only two directors of Thee Truth Technology. This is supported by a copy of the Disclosure Certificate: Companies and Close Corporations issued by the Commissioner of the Companies & Intellectual Property Commission (“the CIPC”) on Friday, February 4, 2022 at 8:20. I am therefore accepting this document to be a valid document which serves as true and correct official record of the current directors of The Truth Technology as contained in the Register of Companies that is held by the CIPC.

 

B.        COMPLIANCE WITH PROCEDURAL MATTERS

 

[5]       In terms of Regulation 142(1) of the Regulations, a person may apply to the Companies Tribunal for an order in respect of any matter contemplated by the Act or the Regulations by completing and filing with the Companies Tribunal’s recording officer:

 

5.1         an Application in Form CTR 142; and

 

5.2         a supporting affidavit setting out the facts on which the application is based.

 

[6]       In terms of Regulation 142(2) of the Regulations, the Applicant is required to serve a copy of the application and supporting affidavit on each respondent cited in the application, within 5 business days after filing it with the Companies Tribunal. On the face of the papers placed before me, only one respondent is cited on this application.

 

[7]       It appears from the papers placed before me that that the application was served on the Respondent in the following two manners:

 

7.1        by means of electronic communication through email communication to the following email address:[....] and such

communication having been successfully transmitted on 07/04/2022 at 14:27;

 

7.2         by means of hand delivery through courier services to the Respondent personally at his place of work at Siyakhulisa Skills, [....] BL[....], A[....], Richards Bay and such delivery having been effected on 07 April 2022 at 14H02.

 

[8]       In terms of regulation 142(2) of the Regulations, the Applicant is required to serve a copy of the application and supporting affidavit on each respondent named in the application, within 5 (five) business days after filing it. According to the papers before me, the application in this matter was served on the next day that it was filed with the Companies Tribunal. I am therefore satisfied that the current application is in substantial compliance with Regulation 142 of the Regulations.

 

[9]       I am therefore satisfied that the application in this matter was properly served on the Respondent in the manners that had been fully outlined in the in paragraph 7 above. The manners used by the Applicant to effect service of the application on the Respondent are acceptable and sufficient for purposes of my determination.

 

[10]    In terms of regulation 143(1) of the Regulations, a respondent who wishes to oppose the complaint or application must serve a copy of answer on the initiating party and file the answer with proof of service thereof with the Companies Tribunal within twenty (20) business days after being served with an application, that has been filed with the Companies Tribunal.[1]

 

[11]    It follows therefore that the Respondent was required to serve a copy of his answer on the Applicant and file his answer with proof of service on the Applicant with the Companies Tribunal within twenty (20) business days in terms of regulation 143(1) of the Regulations. According to my calculations, the Respondent had until the 11th day of May 2022 to file his answer together with proof of service on the Applicant with the Companies Tribunal.

 

[12]    The Applicant alleges in his Affidavit filed in support of the Request for Default Order that the Respondent did send him a communication stating that the Applicant should communicate with his lawyers regarding this application for his removal as director of The Truth Technology. The Applicant further alleges that the Respondent’s attorneys did send him a letter indicating that they no longer represent the Respondent.

 

[13]    Despite being requested by the Registrar of the Companies Tribunal to provide copies of the communication and letter he referred to in his Affidavit filed in support of the Request for Default Order, the Applicant failed to do so.

 

 

C.        SUMMARY OF FACTS THAT ARE RELEVANT TO THE APPLICATION FOR REMOVAL OF THE RESPONDENT

 

[14]    The jurisdiction of the Companies Tribunal to deal with the current application is to be found through conducting a thorough examination of the papers placed before me in this matter. Such a process also requires me to examine the applicable provisions of the Act and to a certain extent to look at case law as well.

 

[15]    According to the papers placed before me, Thee Truth Technology was registered by the CIPC on the 28th day of September 2016 with the Applicant as its sole director. The Respondent joined Thee Truth Technology on or about the 21st day of June 2017 as a shareholder and a co-director. At the time that the Respondent joined Thee Truth Technology this company was not functioning since it was still at inception. Later in the year 2017, the company started operating.

 

[16]    The Respondent later on introduced a company that was wholly white owned called Siyakhulisa and he suggested that Thee Truth Technology should enter into a partnership with Siyakhulisa because it did not have the training accreditation that Thee Truth Technology had. On the other hand, Thee Truth Technology did not have the venue to conduct training from and Siyakhulisa had the venue. Thee Truth Technology and Siyakhulisa did indeed enter into some form of a partnership.

 

[17]    After two or three months after the conclusion of the partnership, Siyakhulisa started threatening Thee Truth Technology and demanded that Thee Truth Technology should hand over its intellectual property to Siyakhulisa. Thee Truth Technology refused to do so and the partnership between the two companies was terminated on or around the 08th day of August 2019.

 

[18]    Despite the partnership termination between Thee Truth Technology and Siyakhulisa, the Respondent continued working for Siyakhulisa behind the Applicant’s back. The Respondent continued to conduct training on behalf of Siyakhulisa and the Applicant only found out about the Respondent’s conduct when several clients told him that they had trained elsewhere with the Respondent. The Applicant further discovered that the books of Thee Truth Technology were used during the process.

 

[19]    Upon finding out about the dealings between the Respondent and Siyakhulisa, the Applicant did confront the Respondent about it. The Respondent denied that he had any dealings with Siyakhulisa. The Respondent started to be totally unavailable for the projects and meetings of Thee Truth Technology and he gave several excuses for his unavailability.

 

[20]    The Applicant later found out that the Respondent was dedicating all his time on the projects of Siyakhulisa while neglecting the projects and affairs of Thee Truth Technology. The Applicant found the conduct of the Respondent to be unacceptable.

 

[21]    Consequently, the Applicant did send the Respondent several messages asking him for a meeting in order to discuss the way forward with regard to operations and business affairs Thee Truth Technology. The Respondent later sent a message to the Applicant indicating that he wants to pull out of Thee Truth Technology and requested the Applicant to pay him for the work that he did for Thee Truth Technology.

 

[22]    The Applicant agreed to part ways with the Respondent because the Respondent was holding the business of Thee Truth Technology back. On or about the 03rd day of September 2019, the Applicant went to the Respondent’s house and asked him to sign a mandate to lodge the change of directorship with CIPC. On the same day, the Respondent asked to be removed from Thee Truth Technology and the Applicant went ahead to have the Respondent removed as a director of Thee Truth Technology by the CIPC.

 

[23]    On the 18th day of November 2021, the Applicant proceeded to pay the Respondent an amount of R19 666.00 for the work that Thee Truth Technology did for Siyakhulisa and the Respondent. The Respondent went quite after such payment and the Applicant assumed that the issue of Respondent’s directorship in Thee Truth Technology is resolved.

 

[24]    Be that as it may, on the 04th day of November 2019, the Applicant received a letter from the CIPC advising him that the CIPC received a complaint from the Respondent. The crux of the complaint that was filed against the Applicant related to the Respondent’s removal as director of Thee Truth Technology. The Respondent alleged that the Applicant submitted a fraudulent resignation letter to the CIPC which resulted in the Respondent being resigned as a director from Thee Truth Technology. The resignation of the Respondent effectively left the Applicant as the sole director of Thee Truth Technology.

 

[25]    The Applicant was surprised because he never submitted any resignation letter to the CIPC. The Applicant gave the CIPC his side of the story. A period of two years went by without hearing anything from the CIPC. On or about the 03rd day of February 2022, the Applicant received Investigation Report from the CIPC indicating that the removal of the Respondent as director of Thee Truth Technology should be nullified and further that the Respondent should be reinstated as director of Thee Truth Technology.

 

[26]    Based on the recommendation contained in the CIPC’s Investigation Report dated 03 February 2022, the Respondent was reinstated as a director of Thee Truth Technology. The reinstatement of the Respondent as a director of Thee Truth Technology was effected by the CIPC without the involvement of the Applicant.

 

[27]    The Applicant is aggrieved by the decision of the CIPC to reinstate the Respondent as director of Thee Truth Technology. The Applicant proceeded to lodge the current application for the removal of the Respondent based on the following grounds:

27.1        The Respondent requested the Applicant to remove him as director of Thee Truth Technology on the 03rd day of September 2019. The Applicant proceeded to remove the Respondent as director of Thee Truth Technology but using the wrong procedure.

 

27.2        The Respondent is a director in several companies that are competitors of Thee Truth Technology and he is fully employed by Siyakhulisa.

 

27.3        The Respondent is going around to the clients of Thee Truth Technology telling them that the Applicant is a fraudster. As a result of the aforementioned defamatory statements, the Applicant had to seek a protection order against the Respondent. A protection order was granted protection order against the Respondent on the 13th day of March 2020.

 

27.3  Through his conduct the Respondent has demonstrated that he does not have the best interest of Thee Truth Technology in his heart. The Respondent has also demonstrated that he will not act in good faith in as far as the business and affairs of Thee Truth Technology are concerned.

 

F.      APPLICABLE LAW

 

[28]    In terms of section 66(1) of the Act, the business and affairs of any company must be managed by or under the direction of the Board of Directors of such company. The board of directors of a company has the authority to exercise all the powers and perform any of the functions of the company, except to the extent that the Act or the company’s Memorandum of Incorporation provides otherwise.

 

[29]    As already pointed out above, a “director” is a member of the board of a company, as contemplated in section 66 of the Act, or an alternate director of a company and includes any person occupying the position of a director or alternate director, by whatever name designated. I have already found that the Applicant is a director of Thee Truth Technology as envisaged in section 1 read with section 66 of the Act.

 

[30]    My starting point will be to look at section 70(1) of the Act which makes provisions relating to vacancies on the board of a company. The relevant provisions of section 70(1) read as follows:

“(1)   Subject to subsection (2), a person ceases to be a director, and

a vacancy arises on the board of a company-

(a)     when the person’s term of office as director expires, in the

case of a company whose Memorandum of Incorporation

provides for fixed terms, as contemplated in section 68(1);

or

(b)    in any case, if the person-

(i)       resigns or dies;

(ii)     in the case of an ex officio director, ceases to hold

the office, title, designation or similar status that

entitled the person to be an ex officio director;

(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);

(iv)  is declared delinquent by a court, or placed on

probation under conditions that are inconsistent

with continuing to be a director of the company, in

terms of section 162;

(v)     becomes ineligible or disqualified in terms of section

69, subject to section 71(3); or

(vi)  is removed:-

(aa)   by resolution of the shareholders in terms of

section 71(1);

(bb)    by resolution of the board in terms of section

71(3); or

(cc) by order of the court in terms of section 71(5)

or (6). [Own emphasis added.]

 

[31]    Section 70(1)(b)(vi) of the Act provides for removal of a person as a director of a company under any of the following circumstances:

 

31.1    By resolution of the shareholders of a company in terms of section 71(1) of the Act;

 

31.2    By resolution of the board of a company in terms of section 71(3) of the Act; or

 

31.3    By order of the court in terms of section 71(5) or (6) of the Act.

 

[32]    Section 71 of the Act deals with the removal of directors of companies under various circumstances. The provisions of section 71 of the Act that are relevant for purposes of my determination of this matter read as follows:

 

“(1)  Despite anything to the contrary in a company’s Memorandum of Incorporation or rules, or any agreement between a company and a director, or between any shareholders and a director, a director may be removed by an ordinary resolution adopted at a shareholders meeting by the persons entitled to exercise voting rights in an election of that director, subject to subsection (2).

(2)          Before the shareholders of a company may consider a resolution contemplated in subsection (1)—

(a)          the director concerned must be given notice of the meeting and the resolution, at least equivalent to that which a shareholder is entitled to receive, irrespective of whether or not the director is a shareholder of the company; and

(b)         the director must be afforded a reasonable opportunity to make a presentation, in person or through a representative, to the meeting, before the resolution is put to a vote.

(3)          If a company has more than two directors, and a shareholder or director has alleged that a director of the company—

(a)          has become—

 

(i)            ineligible or disqualified in terms of section 69, other than on the grounds contemplated in section 69 (8) (a); or

(ii)          incapacitated to the extent that the director is unable to perform the functions of a director, and is unlikely to regain that capacity within a reasonable time; or

(b)         has neglected, or been derelict in the performance of, the functions of director,

the board, other than the director concerned, must determine the matter by resolution, and may remove a director whom it

has determined to be ineligible or disqualified, incapacitated, or negligent or derelict, as the case may be.

(4)          Before the board of a company may consider a resolution contemplated in subsection (3), the director concerned must be given—

(a)          notice of the meeting, including a copy of the proposed resolution and a statement setting out reasons for the resolution, with sufficient specificity to reasonably permit the director to prepare and present a response; and

(b)         a reasonable opportunity to make a presentation, in person or through a representative, to the meeting before the resolution is put to a vote.

(5)          If, in terms of subsection (3), the board of a company has determined that a director is ineligible or disqualified, incapacitated, or has been negligent or derelict, as the case may be, the director concerned, or a person who appointed that director as contemplated in section 66 (4) (a) (i), if applicable, may apply within 20 business days to a court to review the determination of the board.

(6)          If, in terms of subsection (3), the board of a company has determined that a director is not ineligible or disqualified, incapacitated, or has not been negligent or derelict, as the case may be—

(a)          any director who voted otherwise on the resolution, or any holder of voting rights entitled to be exercised in the election of that director, may apply to a court to review the determination of the board; and

(b)          the court, on application in terms of paragraph (a), may—

 

(i)            confirm the determination of the board; or

 

(ii)          remove the director from office, if the court is satisfied that the director is ineligible or disqualified, incapacitated, or has been negligent or derelict.

(7)          An applicant in terms of subsection (6) must compensate the company, and any other party, for costs incurred in relation to the application, unless the court reverses the decision of the board.

(8)          If a company has fewer than three directors—

 

(a)          subsection (3) does not apply to the company;

 

(b)         in any circumstances contemplated in subsection (3), any director or shareholder of the company may apply to the Companies Tribunal, to make a determination contemplated in that subsection; and

(c)          subsections (4), (5) and (6), each read with the changes required by the context, apply to the determination of the matter by the Companies Tribunal.”

 

[33]    Sections 71(1) and (2) of the Act deal with the removal of a director and the procedure to be followed thereof by shareholders of a company. Such removal should be done by means of an ordinary resolution taken by shareholders of a company at a shareholders’ meeting. The resolution for the removal of a director can only be taken after a proper notice had been given to the director to be removed and such director having been afforded a reasonable opportunity to make representation in line with the procedure outlined in section 71(2) of the Companies Act.

 

[34]    Sections 71(3) and (4) of the Act deal with the removal of a director of a company and the procedure to be followed thereof by the board on the request of a shareholder or director. The director to be removed is not allowed to participate during deliberations of the board and the voting for his removal. The removal in terms of section 71(3) should be done by means of a resolution of the board of a company taken at the board meeting and in line with the procedure outlined in section 71(4) of the Act.

 

[35]    Sections 71(5) and 71(6) of the Act deal with the institution of review proceedings against the of the board of a company before a court of law. The Companies Tribunal clearly does not have any jurisdiction to entertain any review proceedings contemplated in sections 71(5) and 71(6) of the Act.

 

[36]    In terms of section 166 of the Act and as an alternative to applying to a court of law, a person who would be entitled to apply for relief in terms of the Act may refer a matter that could be subject of such an application for resolution by mediation, conciliation or arbitration to the Companies Tribunal. It follows therefore that instead of instituting review proceedings in terms of sections 71(5) and 71(6) of the Act, a director or shareholder may refer a dispute about the removal or non-removal of a director for resolution by mediation, conciliation or arbitration to the Companies Tribunal.

 

[37]    In the event that a company has fewer than three directors, section 71(8) of the Act kicks in. It is expressly stipulated that section 71(3) of the Companies Act does not apply to such a company. In terms of section 71(8)(b) of the Act, if any of the circumstances contemplated in section 71(3) of the Act applies, any director or shareholder of the company may bring an application to the Companies Tribunal, to make a determination contemplated in section 71(3).

 

[38]    The Companies Tribunal is vested with the necessary jurisdiction to hear the current application in terms of section 71(8). The provisions of section 71(8) apply to this application because the Respondent currently has fewer than three directors. In its determination of the application, the Companies Tribunal is required to apply the provisions of sections (71)(4), (5) and (6), each read with the changes required by the context.

 

D.        THE STANDARD OF PROOF

 

[39]    It is trite law that he who alleges something bears the burden of proof of such allegation on a balance of probabilities to sustain his or her claim. The standard of proof in a civil action is the well-known balance of probabilities which requires of the party on whom the onus lies, in order to be successful, to satisfy the court

or tribunal that he or she is entitled to succeed on his or her claim or defence, as the case may be.[2]

 

[40]     According to Voet (22:3:10) the position is:

“He who asserts, proves, and not he who denies, since a denial of a fact cannot naturally be proved, provided that it is a fact that is denied and that the denial is absolute.”

 

[41]    The person who makes the claim in this application and who accordingly bears the onus of proof, is invariably the Applicant. However, there are situations in which the respondent or defendant bears the onus. This ordinarily happens when the respondent or defendant is not content with a mere denial of the claim against him but sets up a special defence. In respect of the special defence the defendant becomes the claimant. For the special defence to succeed the defendant must satisfy the court that he is entitled to succeed on it.

 

[42]    The Applicant is therefore required to allege and proof the allege misconduct levelled against the Respondent and same will be measured on a balance of probability standard. The balance of probability standard means that the Companies Tribunal is satisfied that an event occurred if it considers that, on the evidence presented before it, the occurrence of the event was more likely to have happened than not.

 

[43]    When assessing the probabilities the Companies Tribunal will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the Companies Tribunal concludes that the allegation is established on the balance of probability.

 

[44]    It would therefore need more persuasive evidence to satisfy a presiding member that the allegations of misconduct were more likely than not to have occurred. If the evidence is such that the Companies Tribunal can conclude that it is more probable than not that the alleged occurrence happened then the burden is discharged. But if the probabilities are equal then the scales will be balanced and the burden is not discharged. I will now proceed to check if the Applicant managed to adduce proof on a balance of probabilities that the Respondent had committed the misconduct that is alleged.

 

E.        ANALYSIS OF THE EVIDENCE

 

[45]    There are two chief characters in this case and they are also the main players in relation to this dispute before me. The first player is the Applicant himself and the second player is the Respondent. The ultimate resolution of the issues in this Application involves, inter alia, a careful appraisal of their respective characters, dispositions, and proclivities. To provide some background to the case it is convenient at this juncture to mention a few personal details concerning these two men, and to give a thumbnail sketch of their respective backgrounds.

[46]    I wish to make it clear that, in my view, this is one of those relatively rare cases where the probabilities are evenly balanced and, therefore, the case must be decided according to the incidence of the onus of proof. In this determination I intend merely to highlight the factors which particularly impel me to the view that in the end I am convinced that Applicant managed to adduce proof on a balance of probabilities that the Respondent is guilty of the alleged misconduct.

 

[47]    I gathered from the documents and evidence placed before me that this application concerns the removal of the Respondent as a director of Thee Truth Technology due to the reason that the Respondent is alleged to have done the following:

 

47.1    The Respondent requested the Applicant to remove him as director of Thee Truth Technology on the 03rd day of September 2019. The Applicant proceeded to remove the Respondent as director of Thee Truth Technology but using the wrong procedure.

 

47.2    The Respondent is a director in several companies that are competitors of Thee Truth Technology and he is fully employed by Siyakhulisa.

 

47.3    The Respondent is going around to the clients of Thee Truth Technology telling them that the Applicant is a fraudster. As a result of the aforementioned defamatory statements, the Applicant had to seek a protection order against the Respondent. A protection order was granted protection order against the Respondent on the 13th day of March 2020.

 

 

47.4    Despite the partnership termination between Thee Truth Technology and Siyakhulisa, the Respondent continued working for Siyakhulisa behind the Applicant’s back.

 

47.5    The Respondent continued to conduct training on behalf of Siyakhulisa and the Applicant only found out about it when clients told him that they had trained elsewhere with the Respondent. The Applicant further discovered that the books of Thee Truth Technology were used during the process.

 

47.6    Upon finding out about the dealings between the Respondent and Siyakhulisa, the Applicant did confront the Respondent about it. The Respondent denied that he had any dealings with Siyakhulisa and from the date of the confrontation, the Respondent started to be totally unavailable for the projects and meetings of Thee Truth Technology and he gave several excuses for his unavailability. The Applicant later found out that the Respondent was dedicating his time to conduct the projects for Siyakhulisa while neglecting the projects and business affairs of Thee Truth Technology.

 

47.7    The Applicant did send the Respondent several messages asking him for a meeting in order to discuss the way forward with regard to the business operations of Thee Truth Technology. The Respondent later sent a message to the Applicant indicating that he wants to pull out of Thee Truth Technology and further requested the Applicant to pay him for the work that he did for Thee Truth Technology.

 

47.8    The Applicant agreed to part ways with the Respondent because the Respondent was holding the business of Thee Truth Technology back. On or about the 03rd day of September 2019, the Applicant went to the Respondent’s house and asked him to sign a mandate to lodge the change of directorship forms with the CIPC. On the same day, the Respondent asked that he should be removed as a director of Thee Truth Technology . The Applicant went ahead to lodge an application to have the Respondent removed as a director of Thee Truth Technology with the CIPC.

 

47.9    Through the conduct outlined above, the Respondent has demonstrated that he does not have the best interest of Thee Truth Technology in his heart. The Respondent has also demonstrated that he will not act in good faith in as far as the business affairs and interests of Thee Truth Technology and its shareholders are concerned.

 

[48]    In my view, a director of a company is relied on for his or her expertise and experience in the business of the company. As such directors have a fiduciary duty towards the company that in essence demands that a director be loyal to the company and act in good faith and in the best interest of the company when conducting business on behalf of the company. Such a duty includes avoiding conflicts of interest and the promotion of self-interest.

 

[49]    The duties of a directors were previously embodied in our common law, but they are now given statutory force through section 76 of the Act. The relevant provisions are contained in section 76(2) and (3) and they read as follows:

 

“(2)   A director of a company must-

 

(a)         not use the position of director, or any information obtained while acting in the capacity of a director-

(i)          to gain an advantage for the director, or for another person other than the company or a wholly-owned subsidiary of the company; or

(ii)         to knowingly cause harm to the company or a subsidiary of the company; and

(b)        communicate to the board at the earliest practicable opportunity any information that comes to the director’s attention, unless the director-

(i)         reasonably believes that the information is- (aa) immaterial to the company; or

(bb) generally available to the public, or known to the other directors; or

(ii)        is bound not to disclose that information by a legal or ethical obligation of confidentiality.

 

(3)       Subject to subsections (4) and (5), a director of a company, when acting in that capacity, must exercise the powers and perform the functions of director-

(a)       in good faith and for a proper purpose;

(b)       in the best interests of the company; and

(c)       with the degree of care, skill and diligence that may reasonably be expected of a person-

(i)        carrying out the same functions in relation to the company as those carried out by that director; and

(ii)       having the general knowledge, skill and experience of that director.”

 

[50]    A director or prescribed officer of a company is bound by the standards of directors conduct that are provided for in section 76(2) and (3) of the Act that have been outlined above. In simple terms, by accepting their appointment to the position, directors and prescribed officers effectually agree that they will perform their duties to a certain standard . It is therefore a reasonable assumption of the shareholders that every individual director and prescribed officer will apply their skills, experience and intelligence to the advantage and best interests of the company.

 

[51]    The standards contained in section 76 set the bar for the conduct of directors and prescribed officers very high. The intention of the legislature seems to be to encourage directors and prescribed officers to act honestly and to bear responsibility for their actions. In performing their duties, directors and prescribed officers should be accountable to shareholders and other stakeholders for their decisions and their actions.

 

[52]    The codified standards therefore apply to all directors, prescribed officers or any other person who is a member of a board committee irrespective of whether or not that the person is also a member of the company’s board. It is important to highlight the fact the Act makes no distinction between executive, non-executive or independent non-executive directors. The standards, and consequent liability where the standard or standards are not met, applies equally to all directors.

 

[53]    Based on the reading of section 76, it is clear that when acting in the capacity of a director or prescribed officer a person must, amongst other things, exercise the powers and perform the functions of a director:

 

53.1    in good faith and for a proper purpose;

 

53.2    in the best interests of the company;

 

53.3    with the degree of care, skill and diligence that may reasonably be expected of a person carrying out the same functions in relation to the company as those carried out by that director;

53.4     while avoiding any harm to the company; and

 

53.5    without having any conflict of interests.

 

[54]    The rules outlined above are specifically put in place for the protection of the person to whom the duty is owed. Thus the company is entitled to the undivided loyalty of its directors and prescribed officers. The Act contains a number of provisions that directly impact all directors and the prescribed officers. These provisions relate to, amongst others, the following:

 

54.1    The codified standard of conduct;

 

54.2    Personal liability where a third party suffers loss or damage where a director or prescribed officer did not adhere to the standard of conduct;

 

54.3    Declaration of conflicts of interest and the consequences of non- compliance;

 

54.4    Disclosure of all remuneration received by directors and prescribed officers in the annual financial statements.

 

[55]    It is important to take note of these provisions when assessing the conduct of the Respondent. The conduct of the Respondent as a direct is required to meet the requirements of the Act and the Respondent must always be aware of the implication and potential consequences of non-compliance with the Act.

 

F.        FINDINGS

 

[56]    The Applicant did succeed to show on a balance of probabilities that the Respondent might have committed all the acts of misconduct that are alleged by the Applicant in his papers.

 

[57]    Based on the papers placed before me, I find that the Respondent did use his position as director for Thee Truth Technology to gain an advantage for himself. The Respondent also knowingly caused harm to Thee Truth Technology by taking away its clients to his financial benefit.

 

[58]    I am therefore satisfied that the Respondent has been negligent and/or derelict in the performance of his duties as director of Thee Truth Technology as contemplated in section 71(6)(b)(ii). I therefore find that the Respondent must be removed from the position of director of Thee Truth Technology with immediate effect.

 

G.       THE ORDER

 

[59]    I therefore make the following order:

 

59.1 The Respondent, one Fanyana Gideon Thusi with Identity Number: xxxxxxxxxxxxx, is hereby found to have been negligent and/or to have been derelict in the performance of his duties as a director of Thee Truth Technology Training and Projects (Pty) Limited, Registration Number: 2016 / 420619 / 07.

 

589.2 The Respondent, one Fanyana Gideon Thusi with Identity Number: xxxxxxxxxxxxx, is hereby removed as a director of Thee Truth Technology Training and Projects (Pty) Limited, Registration Number: 2016 / 420619 / 07 with immediate effect.

 

59.3    The Registrar of the Companies Tribunal is hereby directed to deliver a copy of this order to the Commissioner of Companies and Intellectual Property Commission within 5 (FIVE) business days from date of handing down of this determination.

 

59.4    The Commissioner of Companies and Intellectual Property Commission is hereby directed to implement paragraph 52.2 of this order within a period of 10 (TEN) business days from date of delivery and it receiving this determination from the Registrar of the Companies Tribunal.

 

59.5    There is no order with regard to costs of the application.

 

 

LINDELANI DANIEL SIKHITHA

Member of the Companies Tribunal 27 JULY 2022

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