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:

1. Declaring
   1st and 2nd Applicants as properly constituted directors of the
   Company Lesotho Public Motor Transport Company (Proprietory)

   Limited.

   
   

2. Declaring
   the 1st, 2nd and 3rd Respondents are not properly constituted
   directors of the Lesotho Public Motor Transport Company

   (Proprietory) Limited.

   
   

3. Directing
   the 1st, 2nd and 3rd Respondents to pay the costs of this
   application.

   
   

4. 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

2

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,

3

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

4

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

6

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.