NAME: ALICIA LEONORE FISHER
STUDENT NUMBER: 67949541
COMPANY LAW – LML4806
ASSIGNMENT 1
QUESTION: 1.1
The Act at Section 69 (8) specifies the persons disqualified from being a director of a
company which include:
a) a person prohibited by a court of law from becoming a director;
b) a person declared to be delinquent by a court of law;
c) an unrehabilitated insolvent;
d) a person prohibited in terms of any public regulation to be a director of a
company
e) a person removed from an office of trust on the grounds of misconduct
involving dishonesty; and
f) a person convicted, in South Africa or elsewhere, and imprisoned without the
option of a fine or fined more than the prescribed amount, for theft, fraud,
forgery, perjury and other offences specified in Section 69(8)(b)(iv).
The offences specified in s 69(8)(b)(iv) are-
i. an offence involving fraud, misrepresentation or dishonesty;
ii. an offence in connection with the promotion, formation or management of a
company and
iii. an offence under the Companies Act, the Insolvency Act 24 of 1936, the
Close Corporations Act 69 of 1984, the Competition Act 89 of 1998, the
Financial Intelligence Centre Act 38 of 2001, the Financial Markets Act 19
of 2012 Chapter 2 of the Prevention and Combating of Corrupt Activities
Act 12 of 2004.
As a consequence of being an ineligible or disqualified person, the Act at 69 (2)
provides such person may not be appointed or elected a director of the company,
and should a person become ineligible or disqualified while serving as a director of
the company, he or she will cease to be entitled to continue to do so.
In this case, Jimmy has not been convicted of an offence and may therefore not be
disqualified on this basis. However, Jimmy having been removed as chairperson of
the board of trustees of the JF Pension Fund after he forged some documents and
withdrew R2 million from the JF Pension Fund’s bank account for his personal use,
is disqualified from continuing to act as a director of Khubo Limited.
It would appear from the scenario that in terms of the Memorandum of Incorporation
(“MOI”) Jimmy is required to prepare, sign and submit the company’s annual
financial statements. However, the MOI is silent on whether such an omission would
be a ground to justify disqualification from being appointed or continuing to act as a
director of the company.
QUESTION 1.2
In terms of Section 71 of the Act, where a company has more than two directors and
it is alleged by a director that another director has become ineligible or disqualified in
terms of the Act to be a director on one of the above grounds, the board must
determine the matter by resolution and remove the director.
Section 71(3) does not provide that the allegation must be made in writing and
presumably the allegation could be made verbally at a board meeting or a
shareholders' meeting. The board of directors may remove a director only where the
company has at least three directors, and when the board of directors’ votes to
remove a director, the director concerned does not participate in the vote.
Unless otherwise provided in the MOI, the resolution to approve the removal of a
director must be by the majority.
In terms of section 71(4), before the resolution is put to the vote by the board of
directors, the director in question must be given notice of the meeting and a copy of
the proposed resolution to remove him accompanied by a statement setting out the
reasons for the resolution with sufficient specificity to reasonably permit the director in
question to prepare and present a response. In Pretorius v PB Meat (Pty) Ltd
(1057/2013) [2013] ZAWCHC 89 (14 June 2013), the court held that the phrase
'sufficient specificity' meant 'sufficiently detailed reasons to mount a response' to the
case for the proposed removal. The director in question must also be given a
reasonable opportunity to make a presentation to the board of directors in person or
through a representative before the resolution is put to the vote.
QUESTION 2
In terms of Section 86(1) of the Act, it is mandatory for a public or state-owned
company to appoint a company secretary. In the instance of any other company, it is
not mandatory to appoint a company secretary unless required to do so in terms of
its MOI.
The Act at Section 86(3) provides that the first company secretary of a public or
state-owned company may be appointed by incorporators of the company, or within
40 business days by the directors after the incorporation of the company. The
company secretary’s appointment is made either by the company's directors or an
ordinary resolution of the shareholders.
At Section 87(1) the Act makes provision for a company secretary to be either an
individual, a juristic person or a partnership. However, these provisions require that
every employee of that juristic person or partnership is not disqualified to serve as a
director of a company, and at least one employee of that juristic person or one
partner is a permanent resident of South Africa.
In light of the provisions of the Act above, RLV Corporate Services (Pty) Ltd can
validly be appointed as the company secretary of TN Engineering Group Ltd
provided none of its employees is not disqualified to serve as a director of a
company
REFERENCES
Cassim FHI, Cassim MF, Cassim R, Jooste R, Shev J and Yeats J The Law of
Business Structures Second Edition (2021) Juta & Company (Pty) Ltd Cape Town
Juta’s Pocket Statutes The Companies Act 71 of 2008 and Regulations 16th edition
(2021) Juta Cape Town
STUDENT’S STATEMENT ACKNOWLEDGING AN UNDERSTANDING OF
PLAGIARISM AND THE CONSEQUENCES THEREOF
This is to state that I have read all the documentation about plagiarism that I have
received.
I also fully understand what plagiarism is.
I also accept that if I commit plagiarism, I will be severely penalized.
NAME: ALICIA LEONORE
SURNAME: FISHER
STUDENT NO.: 67949541
MODULE: COMPANY LAW (LML4806)
SIGNATURE: DATE: 07 MARCH 2023
