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IN THE COMPANIES TRIBUNAL REPUBLIC OF SOUTH AFRICA

 

Case No: CT01708ADJ2024

 

In the matter between:
BABALWA TOTONGWANA	APPLICANT
and
LEBOGANG SEKETE	RESPONDENT

 

Presiding Member: Professor Marumoagae

Date of the decision: 4 June 2024

 

DECISION (Reasons and order)

 

A      INTRODUCTION

 

[1]                The Applicant is BABALWA TOTONGWANA, an adult female director of MADE IN AFRICA COSMETICS (PTY) LTD (registration number 2018/215714/07) who is residing at […] Hout Bay, Western Cape.

 

[2]                The Respondent is LEBOGANG SEKETE, an adult female director MADE IN AFRICA COSMETICS (PTY) LTD (registration number 2018/215714/07) who is residing at […].

 

[3]                This is an application for default judgment where the application seeks an order that the respondent be removed as the director of the MADE IN AFRICA COSMETICS (PTY) LTD.

 

B         FACTUAL BACKGROUND

 

[4]                The applicant and the respondent are the two directors of the MADE IN AFRICA COSMETICS (PTY) LTD. They are also the shareholders in the company with each of them owning 50% of the MADE IN AFRICA COSMETICS (PTY) LTD’s shares.

 

[5]                The applicant approached this Tribunal to assist her in resolving her dispute with the respondent through its alternative dispute resolution mechanisms.

 

[6]                Both the parties subjected themselves to the mediation process initiated by this Tribunal and were assisted in reaching a settlement, the terms of which are as follows:

 

[6.1]  The respondent would sell all her shares to the applicant for R 60 000.00.

 

[6.2] The respondent will resign in writing as a director of the MADE IN AFRICA COSMETICS (PTY) LTD.

 

[6.3] The respondent’s resignation letter should be forwarded to the Tribunal and will be made available to the applicant once the applicant has made the final payment to the respondent.

 

[7]                On 23 November 2023, the respondent resigned in writing from her position as the MADE IN AFRICA COSMETICS (PTY) LTD’s director. On the same day, the applicant accepted the respondent’s resignation in writing. The receipt of the resignation letter and the acceptance thereof suggests that the applicant paid the amount to which the parties agreed.

 

[8]                For the respondent to officially cease to be the MADE IN AFRICA COSMETICS (PTY) LTD’s director, she had to verify her profile on the Companies and Intellectual Property Commission’s website to enable the Commissioner to remove her as a director. The applicant alleges that the respondent refused to do so. The applicant contends that the respondent failed to amend the necessary documents that would lead to her removal as the MADE IN AFRICA COSMETICS (PTY) LTD’s director.

 

[9]                According to the applicant, the respondent also closed the MADE IN AFRICA COSMETICS (PTY) LTD’s bank account without her knowledge. Further, to open a new bank account for the MADE IN AFRICA COSMETICS (PTY) LTD, the applicant requires amended documents from the Companies and Intellectual Property Commission which do not include the respondent’s name.

 

[10]            According to the applicant, the respondent is not cooperating despite having resigned as the MADE IN AFRICA COSMETICS (PTY) LTD’s director. Further, the respondent is not responding to communication from the applicant and the Companies and Intellectual Property Commission.

 

[11]            The applicant is representing herself in this matter. She applied to this Tribunal in terms of Regulation 142(1) of the Companies Regulations by completing the relevant form and submitting a very brief affidavit.

 

C         LEGAL FRAMEWORK AND ANALYSIS

 

i)                         Service of process

 

[12]            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.

 

[13]            There is only one respondent cited in this matter. The company and the Companies and Intellectual Property Commission or its Commissioner are not cited in this matter. Perhaps the Applicant can be forgiven for the way this application has been lodged because she is clearly a layperson who appears to have completed the relevant documents through the guidance of the officials of this Tribunal without the benefit of legal advice.

 

[14]            This application was received by the Tribunal on 26 February 2024. From the documents provided to this Tribunal, it appears that the Applicant served her application papers by sending an email to the Respondent wherein some of the officials of this Tribunal were copied on the same day.

 

[15]            It is not clear whether the respondent received the application. It is worth noting, however, that the email used to send the application and affidavit to the respondent is the same email that the parties have been communicating with. This is the same email that the officials of this Tribunal also used to communicate with the respondent. It is reasonable to assume that the respondent received the email and decided not to respond. This is consistent with the applicant’s version that the respondent has been unresponsive since she signed the settlement agreement.

 

[16]            I am therefore satisfied that the application and accompanying affidavit in this matter were properly served on the respondent and that the method used by the applicant to effect service is acceptable and sufficient for purposes of determining this matter.

 

[17]            In terms of regulation 143(1) of the Regulations, the respondent was supposed to provide an answer to the applicant’s application within twenty (20) business days after being served with an application, if she wished to oppose this matter. In other words, the applicant had until 26 March 2024 to file her answer. The respondent failed to do so and the applicant became entitled to apply for a default judgment.

 

ii)                         Removal of a director

 

[18]            In terms of section 71(8) of the Companies Act, where a director is ineligible or disqualified from being a director, incapacitated to the extent that he cannot perform his or her functions as a director, has neglected or been derelict in the performance of the function of a director, any director or shareholder of the company may apply to the Companies Tribunal for the removal of such a director from his or her position as a director of the company.[1]

 

[19]            In this matter, the company subject to these proceedings only has two directors, the applicant and the respondent. While section 71(3) of the Companies Act does not apply in this matter, the grounds upon which the Tribunal can be approached provided in that section can be used for the removal of one of them as provided for in section 71(8)(b) of the Companies Act.

 

[20]            While the applicant is not represented and did not succinctly plead her case based on any of the provisions of the Companies Act, it would be unjust to harshly judge her as if she is legally represented, and not to carefully assess her brief affidavit to determine whether a case has been made for the removal of the respondent as a director.

 

[21]            From the applicant’s brief affidavit, it is clear that the respondent neglected her duties as the director and she has also been derelict in the performance of her duties. Even worse, the respondent has officially resigned as a director following a mediation process but she has not cooperated with the applicant to officially have her name removed as a director MADE IN AFRICA COSMETICS (PTY) LTD.

 

[22]            The respondent has also closed the company’s bank account without the applicant’s consent as a director and co-shareholder of the company. The respondent has also failed to assist the applicant in opening a new bank account because, despite her resignation, her name is still reflected on the registration documents of the company, and her consent is needed for a new bank account to be opened.

 

[23]            I am convinced that the applicant has made a case for the respondent’s removal as the director of the company. It is important to note that the decision to remove the respondent was neither taken by the shareholders nor directors through a resolution. As such, there is no need to engage the apparent contrary approaches in Pretorius and Another v Timcke and Others (15479/14) [2015] ZAWCHC 215 (2 June 2015) and Miller v Natmed Defence (Pty) 2022 (2) SA 554 (GJ).

 

[24]            It suffices to state that there was no reason for the applicant to first provide the respondent with reasons for her removal because the respondent has already resigned as a director. The respondent’s conduct is now making it difficult for the applicant to manage the affairs of the company.

 

D         CONCLUSION

 

[25]            In my view, the respondent has placed the applicant at her mercy, making it difficult for the Applicant to run the company and open a bank account. Under such circumstances, the only sensible order to be made is for this Tribunal to make an order that the Applicant should be removed as the director of the company.

 

ORDER

 

[26]            In the premises, I make the following order:

 

1.                 The relief sought by the applicant is granted.

 

2.                 The respondent is removed as a director of MADE IN AFRICA COSMETICS (PTY) LTD in terms of section 71(8) of the Companies Act.

 

3                   The Companies and Intellectual Property Commission is hereby ordered to deregister the respondent as the director of MADE IN AFRICA COSMETICS (PTY) LTD (registration number 2018/215714/07) within a period of 10 (ten) days from the date of receipt of this order.

 

4                   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 the date of handing down of this order.

 

Professor Marumoagae

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