Application to deal with Removal of a Director
The Tribunal is mandated by section 71(8) read with section 69 of the Companies Act 71 of 2008 to adjudicate on applications to remove a director from office. Companies with less than three directors may apply to the Tribunal for the removal of a director by completing form CTR 142 and supporting affidavit.
After filing an application for a removal of a director with the Tribunal, the Applicant must serve the Respondent within five business days and provide proof of service to the Tribunal. If the Respondent wishes to oppose the application, he or she must within twenty business days after being served, serve a copy of an answering affidavit to the Applicant and file the answer with proof of service with the Tribunal.
After receiving an answer from the Respondent, the Applicant may reply within fifteen business days, such response must be in an affidavit format in terms of Regulation 144. The Applicant must serve the replying affidavit on the Respondent and file proof of service with the Tribunal.
Upon completion of the exchange of documents, the Tribunal will set the matter down for hearing and inform parties about the date, time and place of hearing. A director may be removed from office on ground of ineligibility, disqualification, incapacitation, neglect or derelict.
Ineligibility means being incapable of running an office. A person is ineligible to be a director of a company if the person is:
(b) unemancipated minor or under a similar legal disability; or
(c) does not satisfy any qualification set out in the company’s Memorandum of Incorporation
Disqualification may be due to the fact that the court has prohibited the person to be a director or declared the person to be delinquent.
• Is an unrehabilitated insolvent;
• is prohibited in terms of any public regulation to be a director of the company
• has been removed from an office of trust on the grounds of misconduct involving dishonesty; or has been convicted, in the Republic or elsewhere, and imprisoned without option of a fine, or fined more than the prescribed amount, for theft, fraud, forgery, perjury or an offence.
(iii) Incapacitation 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 a person is deemed to be incapacitated if that person cannot perform their usual functions or duties due to a mental or physical disability.
(iv) Neglect or derelict in the performance of director’s functions refers to any director who does not act:
a. In good faith and for a proper purpose;
b. In the best interests of the company; and
c. With the degree of care, skill and diligence that may reasonably be expected of a person.
A party who is not satisfied with the decision of the Tribunal may approach the High Court within 20 business days to review the Tribunal’s decision. The court may uphold, confirm or set aside the decision of the Tribunal.
The Tribunal also has a mandate to resolve directorship disputes through Alternative Dispute Resolution (ADR). Applications for ADR are made in terms of form section 166. In a case where a company has three or more directors, the shareholder or directors may instead of invoking the provisions of subsection 71(3), refer a matter for ADR in terms of section 166 of the Act. The referral for the resolution in terms of this section may be for mediation, conciliation or arbitration. Section 167(1)(a) and (b) states that if the Tribunal succeeds in assisting parties in dispute resolution, the Tribunal record the resolution as an order and either party to the dispute can take such an order to the court to be made an order of court.