CIV/APN/289/85
IN THE HIGH COURT OF LESOTHO
In the Application of :
ABISAIA SELLO......................... 1st Applicant
EUGENE MAKHABA ....................... 2nd Applicant
and
SETENANE MAPHELEBA.................... 1st Respondent
THABANG MOSHE ........................ 2nd Respondent
MASUPHA KATISO ........................ 3rd Respondent
REGISTRAR OF COMPANIES................ 4th Respondent
LESOTHO PUBLIC MOTOR COMPANY (Pty)Ltd.. 5th Respondent
JUDGMENT
Delivered by the Hon. Mr. Justice B.K. Molai on the 6th day of April, 1987.
On 2nd December, 1985 the Applicants herein filed with the Registrar of the High Court, an application (on " notice of motion) in which they moved the court for an order against the 1st, 2nd, 3rd and 4th Respondents. The order was framed in the following terms:
Declaring 1st and 2nd Applicants as properly constituted directors of the Company Lesotho Public Motor Transport Company (Proprietory)
Limited.
Declaring the 1st, 2nd and 3rd Respondents are not properly constituted directors of the Lesotho Public Motor Transport Company
(Proprietory) Limited.
Directing the 1st, 2nd and 3rd Respondents to pay the costs of this application.
Granting the 1st and 2nd applicants further and/or alternative relief that the Honourable Court may deem fit."
On 26th August, 1986 the applicants filed with the Registrar of the court a notice of application for joinder of the Lesotho Public Motor Company (Pty) Ltd on the ground
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that the company had an interest in the outcome of the proceedings. Although it was opposed, the application for joinder was on 28th August, 1986 granted by my brother Kheola, A.C.J. and the Lesotho Public Motor Company (Pty) Ltd accordingly joined as the 5th Respondent.
The 1st, 2nd and 3rd Respondents have intimated their intention to oppose the present application. The 4th and the 5th Respondents have, however, not filed any notice of intention to oppose it and it can savely be assumed that they are prepared to abide by whatever decision the court will arrive at.
The parties duly filed their affidavit's, the gist of which is that on 10th August, 1978 an Association by the lame of the "Lesotho Bus and Taxi Owners Association" was registered with the Registrar of Companies. It was subsequently resolved by members of the Association that a proprietory company be formed to acquire property and conduct business on behalf of and for the benefit of the Association.
On 12th July, 1979 a private company named "Lesotho Public Motor Company (Pty) Ltd was duly floated and registered in accordance with the provisions of the companies Act No. 25 of 1967. The 1st and 2nd Applicants and the 1st Respondent were the shareholders and the first directors of the company.
In 1980 the shareholders of the company adopted a resolution in terms of which the 2nd Respondent and one S.R. Makoloane were appointed
additional shareholders and directors of the company. It was then realised that the memorandum and articles of Association of the
company did not make it clear that in recommending its formation the intention of the Association was that the company would hold property and conduct business on behalf of, and for the benefit of the Association. It became necessary, therefore, to rectify the position.
On 19th August, 1981 the shareholders convened a special meeting at which it was accordingly resolved, inter alia,
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that the memorandum and Articles of Association be amended to reflect the true position of the intention of the Association A copy of the minutes of the proceedings at that meeting was attached as annexure "B1". Thereafter the 1st Respondent, through the offices of Messrs E.G. Cooper and Sons, lodged with the Registrar of Companies, a statutory Form I of the Special Resolutions adopted at the meeting of 19th August, 1981. However, under para. (2) of the Statutory Form I (an-nexure ("B2") 1st Respondent added that the 3rd Respondent had been appointed an additional director of the company.
1st Applicant contended that the appointment of 3rd Respondent as the additional director of the company was neither discussed nor resolved at the meeting of 19th August, 1981. The inclusion of 3rd Respondent's name in the statutory Form I as additional director of the company was, for that reason, improper and of no legal force. The contention was disputed by the 1st, 2nd and 3rd Respondent according to whom the 3rd Respon-dent was duly appointed as additional director of the com-pany.
On 7th December, 1982, 1st Applicant served the shareholders of the 5th Respondent with notices calling for a meeting on 8th January, 1983 to adopt a resolution that 1st and 2nd Respondents be removed as directors of the com-pany. The 1st and 2nd Respondents and S.R. Makoloane ignored the notices and did not attend the meeting of the 8th January, 1983. Only the 1st and 2nd applicants attended. In terms of the provisions of Clause 51 of the Articles of Association, two shareholders were sufficient to constitute a quorum. The 1st and 2nd applicants accordingly held the meeting and adop-ted a resolution removing the 1st and 2nd Respondents as direc-tors of the company.
The 1st and 2nd Respondents averred that they were entitled to ignore the 1st applicant's notices calling for the purported meeting of 8th January, 1983 for the simple reason that the said notices were undated, hence irregular and of no legal force. They (1st and 2nd Respondents) further
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averred that they in turn issued and served notices properly dated 14th December, 1982 calling for a meeting on 6th January 1'983 to adopt, inter alia, a resolution for the dismissal of the two applicants as directors of the company. The applicants did not attend the meeting which nevertheless, proceeded in their absence on 6th January 1983 when a resolution to dismiss them forthwith as directors of the company was adopted-vide annexure "G ",minutes of the shareholders' meeting held on 6th January, 1983 at the office of the company.
I must say I have carefully read through annexure "B ", the minutes of the proceedings of the meeting of 19th August, 1981. Nowhere is the question of the appointment of the 3rd Respondent as the additional director of the company mentioned. It seems toj me, therefore, that the applicants' contention that the appointment of 3rd Respondent as the additional director of the company was neither discus-sed nor resolved at the meeting of 19th August, 1981 was well taken. The inclusion of the 3rd Respondent's name under para (2) of the statutory Form.I as one of the additional directors of the company was clearly an attempt to make him a director of the company through the back door. That in my view, should not be allowed.
S. 99(1) of the Companies Act No. 25 of 1957 under the provisions of which the parties issued notices calling for meetings to unseat each other reads as follows:-
"99(1) On the requisition of members of a company holding at the date of the deposit of the requisition not. less than one-twentieth * of such of the paid up capital of the company as at the date of the deposit carries the right of voting at general meetings of the company, or in the case of a company not having a share- capital, members of the company representing not less than one-twentieth of the total voting rights of all the members having at the said date a right to vote at, general meetings of the company, the directors of the company, notwithstanding anything in its articles, shall within twenty-one days of the deposit of the requisition issue a' notice to members convening an extraordinary general meeting of the company for a date not less than fourteen nor more than twenty-eight days from the date of
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the notice;
Provided that if a special resolution is to be submitted the period of the notice shall not be less than twenty-one days." (My underlining)
I have underlined the word "shall" in the above cited section of the companies Act, supra, to indicate my view that it was mantatory for the 1st applicant's notice calling-for the meeting of 19th August, 1981 to be clearly dated. To hold the contrary would make it impossible to establish whether or not the 8th January, 1983 was a date not less than fourteen nor more than twenty-eight days from the date of the notice. Assuming the correctness of this view, it must be accepted that the 1st Applicant's failure to give a date to the notices was a serious irregularity rendering the said notices void and of do legal force. The 1st and 2nd Respondents and S.R. Makoloane could not, therefore, be legally bound by such notices.
As it was convened without a proper notice, the meeting of 8th January, 1983 was not properly convened. The resolution to remove the 1st and 2nd Respondents, taken at such a meeting was for obvious reasons null and void.
It would appear from annexure "G", the minutes of the meeting of 6th January, 1983 that the meeting was attended by the 1st, 2nd and 3rd Respondents together with five (5) other people including S.R. Makoloane. The resolution to remove the applicants as directors of the company was therefore, discussed and adopted not only by 1st and 2nd Respondents and S.R. Makoloane but by the 3rd Respondent and the other 4 people.
It has already been pointed out, in the course of this judgment, that the 3rd Respondent was never lawfully appointed a director of the 5th Respondent. Similarly there. is no indication that shareholders of the 5th Respondent ever appointed the other 4 gentlemen as the directors. Although the 1st Respondent's notice to convene the meeting of 6th
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January, 1983 apparently complied with the provisions of the Companies Act, supra, it would appear that some people who were not directors of the 5th Respondent did not only attend the purported meeting but actually took part in the discussions and the taking of the resolution to remove the applicants as directors of the company. This was an irregularity rendering the resolution null and void, for in my opinion, only members and not non-members of the company are empowered to remove directors - see S. 146 of the Companies Act, supra,
In the premises, I come to the conclusion that the 3rd Respondent was never lawfully appointed and is not a director of the 5th Respondent. The 4th Respondent is accor-dingly ordered to amend his register to reflect this position. The attempts by the two factions of the directors to unseat each other as directors of the 5th Respondent were fruitless exercises. Wherefore not only the applicants but the 1st and 2nd Respondents and, indeed, S.R. Makeloane are still the lawful directors of the company.
As regards the costs, I take into account the fact that either party has partly succeeded and partly failed in this matter. Consequently, I make no order as to costs.
B.K. MOLAI
6th April, 1987.
For Applicant : Mr. Matsau
For Respondent : Mr. Fishers.