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IN THE COMPANIES TRIBUNAL OF SOUTH AFRICA

 

CASE NO: CT00743ADJ2021

 

IN THE MATTER BETWEEN

 

THASANA GENERAL DEALER                                                      APPLICANT

(REGISTRATION NUMBER: 2018/453023/07)

 

MDOUVHADA RUDZANI AARON                                                   RESPONDENT

 

 

DECISION

 

 

Presiding member:            Dr. M A Chicktay

 

Date of decision:               5th March 2022

 

INTRODUCTION

 

1.         The Applicant is THASANA GENERAL DEALER (PTY) LTD. It is a duly incorporated South African company, registered under number 2018/453023/07.

 

2.         The respondent is MDOUVHADA RUDZANI AARON.

 

3.         This is an application in terms of sections 71(8) (b) of the Companies Act No. 71of 2008 (‘’the Act’’) for an Administrative Order determining the removal of the Respondent as a director of the Applicant Company.

 

APPLICANT’S SUBMISSIONS

 

4.         The Applicant through Mr Nendzhelele made the following submissions.

 

5.         In 2007 Mr Nendzhelele established a tire business under a close corporation. In 2014 the Respondent wanted an interest in the tire business and Mr Nendzhelele established the Applicant company with the Respondent. With both parties acting as shareholders and directors. The Respondent agreed to pay ten million Rands but had not done so.

 

6.         Since the Close Corporation had been converted and the Respondent became the director there was never a formal meeting held and the Bank account had not been changed.

 

7.         The Applicant still had the old banking details of the Close Corporation and Mr Nendzhelele was still the sole signatory.

 

8.         The Respondent had been very passive in the Company and Mr Nendzhelele was the only one doing all the errands and daily running of the Company.

 

9.         At the beginning of 2021 Mr Nendzhelele received a call from Phalaborwa Mining Company telling him that they are not re-newing the contract with Mvuso (PTY) LTD.

 

10.      On 01st February 2021 Mr Nendzhelele received the email of resignation as the Director of the Applicant from the Respondent.

 

11.      3.16. Mr Nendzhelele accepted the Respondent’s resignation through an email sent to the Respondent through his Attorneys. There is no proof that the Respondent had withdrawn his resignation. The Respondent also indicates that he was under duress to resign but fails to provide proof for this.

 

12.      On the 19th May 2021 the Respondent wrote a letter to the Applicant’s client UMM Contracting Services requesting them to put on hold the payments alleging that the bank account currently used by the Applicant is incorrect.

 

13.      The Respondent has resigned and lacks authority to act on behalf of the Applicant. Moreover the current bank account of the Applicant is correct.

 

14.      The bank account had never been changed it had been in operation since the Company was still a close corporation.

 

15.      The Applicant’s workers are severely prejudiced because they have not been receiving their salaries for two months now because the funds had been frozen as a result of the Respondent’s actions.

 

16.      Should the Respondent not removed as a director the Applicant will continue to suffer financial prejudice in that it is failing to operate and pay its staff and carry its daily duties.

 

17.      In a company with fewer than three directors, which would be a private company, the board of directors itself is not empowered to remove a director from its board. Instead, a director or shareholder of the company may apply to the Companies Tribunal to determine the director’s removal from office on the same grounds set out in s 71(3).The procedures which apply to the removal of a director by the board of directors, as set out in s 71(4) and outlined , would apply likewise to the determination of the matter by the Companies Tribunal.

 

18.      The Applicant argues that the Respondents name is confusingly similar to the Applicants and would deceive the public.

 

RESPONDENTS SUBMISSIONS

 

19.      The Respondent raised a preliminary point alleging that the Applicant in this matter is not Thasana General Dealer but Mr Z Nenzhele. Mr Z Nenzhele is acting without a Resolution of the majority.

 

20.      The Respondent argues that he is being prevented from managing all the affairs of the entity including the financial affairs by Mr Z Nendzhelele. Mr Z Nendzhelele is preventing the Respondent from managing the financial affairs of the entity because he refused to open a bank account for the company Thasana General Dealer (Pty) Ltd.

 

21.      The Respondent indicates that life was threatened when he wanted to open this account.

 

22.      The Respondent wanted to have a say in the financial running of the company since he would be jointly liable. The Respondent also questioned Mr Z Nendzhelele dealings with SARS. He took money without showing it to SARS.

 

23.      The Respondent indicates that he had resigned since his life was threatened but that he had later withdrawn the resignation.

 

APPLICABLE LAW

 

Section 71 of the Act provides as follows:

 

Removal of directors

 

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

 

b)     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 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.

 

9)        Nothing in this section deprives a person removed from office as a director in terms of this section of any right that person may have at common law or otherwise to apply to a court for damages or other compensation for

 

a)     loss of office as a director; or

 

b)     loss of any other office as a consequence of being removed as a director.

 

10)     This section is in addition to the right of a person, in terms of section 162, to apply to a court for an order declaring a director delinquent, or placing a director on probation.

 

EVALUATION AND FINDINGS

 

24.      In the matter before me the Respondent admits that he had resigned. He indicates further that he had resigned since his life was threatened but does not provide any proof of this. The Respondent indicates further that he cancelled his resignation which had not been accepted. If the Respondent was in fear of his life he would not have cancelled his resignation. Without any evidence that the Respondent was threatened to resign I must accept that the Respondent had resigned on his own free will. The Respondent had sent an email to Mr Nendzhelele indicating this and this was accepted by the Applicant. Once the Respondent resigns his position as director comes to an end. While the Applicant must report this to CIPC this is not a requirement for the Respondents resignation to take effect. Resignation is a unilateral act. Mr. Mr Nendzhelele now remains the only director acting on behalf of the Applicant

 

ORDER

 

a.            I find in favour of the Applicant

 

b.            The Respondent Mr. MDOUVHADA RUDZANI AARON is to be removed as director of THASANA GENERAL DEALER (PTY) LTD as he had resigned.

 

c.            The Companies and Intellectual Property Commission is hereby ordered to deregister Mr. MDOUVHADA RUDZANI AARON (the Respondent), as director of THASANA GENERAL DEALER (REGISTRATION NUMBER: 2018/453023/07) within a period of 10 (ten) days from date of receipt of this order.

 

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

 

 

MOHAMED ALLI CHICKTAY

MEMBER OF THE COMPANIES TRIBUNAL

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