Directorship dispute
Frederick Jacobus Van Zyl (Applicant) vs Sarel Phillip Van Zyl (Respondent)

The Applicant and the Respondent are natural brothers, and they are also the only directors of a company known as Van Zyl Sillimanite (Pty) Ltd, bearing registration number 2019/193105/07 (“the Company”). The Company is a private company with limited liability duly incorporated and registered as such in terms of the applicable laws of the Republic of South Africa.

The Applicant filed an application to remove the Respondent as a director of the Company due to alleged acts of misconduct and/or neglect of director’s duties. The Applicant sought the removal of the Respondent as director of the company as contemplated by section 71(8) of the Companies Act, 2008 (Act No. 71 of 2008) (“the Act”). The Applicant sought the following order against the Respondent:

• Ordering the Respondent to make available to the Applicant, complete financial history of the Company, including but not limited to Company’s bank statements;
• In the event that the supplied financial history shows any wrongdoing, allowing the Applicant to present further evidence in this dispute;
• Removing the Respondent from his office or position as director of the Company in terms of section 71(8) of the Act; and
• Declaring the Respondent a delinquent director in terms of section 162(5)(c) of the Act.

The Applicant filed the application on 13th September 2021, it was acknowledged and date stamped by the recording officer of the Tribunal on the 20th September 2021. The application was served on the Respondent through email communication on the 13th September 2021. The Applicant was directed by the recording officer of the Tribunal to serve the application on the Respondent within five (5) business days. As directed, the Applicant indeed proceeded to serve the application on the Respondent through email communication and such service was done on the 20th day of September 2021. Accordingly, the Tribunal was satisfied that the Application in this matter was adequately served on the Respondent through email communication.

In terms of regulation 143(1) of the Regulations, a Respondent who wishes to oppose the application must serve a copy of answer on the initiating party and file the answer with proof of service thereof with the Tribunal within twenty (20) business days after being served with an application, that has been filed with the Tribunal. Upon proper calculation by the Tribunal, the Respondent failed to serve its answer on the Applicant and to file same with the Tribunal together with proof of service thereof on or before the 19th day of October 2021. As at the date of filing of the Application for the Default Order in this matter, the Respondent had not served on the Applicant and filed with the Tribunal a copy of its answer together with proof of service thereof as prescribed by regulation 143(1) of the Regulations. The Tribunal was therefore enjoined to consider the application for Default Order (filed on the 28 October 2021) in line with the provisions of regulation 153(2) of the Regulations.

The Tribunal summarised the allegations of acts of misconduct or neglect that are levelled against the Respondent by the Applicant follows:

• The Respondent refuses to share the bank statements of the Company’s bank account with the Applicant and he has been refusing to do so since March 2020.
• The Respondent is utilizing the FNB Bank Account for the Company to pay the expenses (including his salary) for Van Zyl Mining (Pty) Limited which were outstanding at the time without consultation with the Applicant.
• An amount of R500 000.00 (five hundred thousand rands) was paid from the late estate account of the Parties’ father to the Company’s bank account on 28 February 2020. The amount was then distributed to Van Zyl Mining (Pty) Limited’s various creditors in February and March 2020 according to the transaction references. The payments amounted to R485 923.49 in account payments made by the Company on behalf of Van Zyl Mining (Pty) Limited including Respondent’s salary for employment at Van Zyl Mining (Pty) Limited.
• The Respondent views the Company as his sole property and therefore he refuses to deliberate any issue with the Applicant who is his co-director.
• The Respondent believes that since he had been the sole signatory and administrator of the Company’s bank account for a year,  it is fitting that he continues to serve in that capacity despite the issues raised by the Applicant.

The Tribunal’s view is that the Applicant succeeded in adducing the necessary evidence which proves that the Respondent is guilty of various acts of misconduct and neglect of his fiduciary duties as director of the Company. In addition, the Applicant succeeded in adducing the necessary evidence which proves that the Respondent took decisions involving the operations and finances of the Company without the Applicant’s consent and knowledge. The Tribunal found the Respondent guilty of all acts of misconduct and neglect that have been levelled against him by the Applicant.

The Tribunal is a creature of the Act and can only adjudicate on matters that is authorised to in terms of the Act. The issue relating to declaration of a director of a company to be delinquent is done in terms of specific provisions of the Act. In terms of section 162(2) of the Act, only a court is empowered to entertain an application of this nature and to make an order for declaration of a director to be delinquent. The Companies Tribunal lacks such powers and will therefore not be able to grant an order to have the Respondent declared a delinquent director.

Order:

• The Respondent was found to have been negligent in the performance of his fiduciary duties in his capacity as a director and in dealing with the funds belonging to Van Zyl Sillimanite (Pty) Limited, Registration Number: 2019 / 193105 / 07.
• The Respondent was found to have been negligent and/or to have been derelict in the overall performance of his fiduciary duties as a director of Van Zyl Sillimanite (Pty) Limited, Registration Number: 2019 / 193105 / 07.
• The Respondent was removed from the company with immediate effect.
• The Registrar of the Companies Tribunal was directed to deliver a copy of this order to the Commissioner of Companies and Intellectual Property Commission (CIPC) within 5 (FIVE) business days from date of handing down of this determination.
• The CIPC was directed to implement the removal of the Respondent within ten (10) business days from date of delivery and receiving this determination from the Registrar of the Companies Tribunal.
• There was no order with regard to costs of the application.

Name dispute

Hamba Nathi Travel (Pty) Ltd (Applicant) vs Hambanathi Travel (Pty) Ltd (Respondent)

The Applicant filed an application in terms of Section 11(2) of the Act which stipulates that a name of a company must not be the same as the name of another company, domesticated company, registered external company, close corporation or cooperative and must not be confusingly similar. Both the Applicant and the Respondent are duly incorporated in terms of the laws of the Republic of South Africa.

The Applicant filed company name objection with the Tribunal on 15th September 2021, served the Respondent by electronic mail and though the Sherriff. Despite being informed of the application, the Respondent did not oppose the application and failed to deregister its name. Hence the Applicant submitted that the Respondent’s name is confusingly similar to its name.

The Applicant has been in the travelling business for over seventeen years. The Respondent was only registered in 2019 and is in the same industry. The two names are confusingly similar and this will affect the Applicants reputation and it will also affect the Applicant financially.

The Tribunal found that the Respondent’s name sounds confusingly similar to the Applicant’s name. The names look similar and sound similar. When members of the public see the Respondent’s name they will think of the Applicant. Both the Applicant and the Respondent are in the same business. This may give members of the public the impression that it is owned by the Applicant with the potential to cause reputational damage. Since the names are so similar and the two parties are in the travel industry,  members of the public may use the Respondent’s business thinking it is the Applicant’s business causing financial harm to the Applicant.

Order:

• The Respondent was directed to change its name to one which does not incorporate and is not confusingly and or deceptively similar to Applicant’s. It should not include the word HAMBANATHI in any form.
• The Respondent is to file a notice of an amendment of its Memorandum of Incorporation, within 60 days of receipt of this order in order to change its name as per above.
• In the event that the Respondent fails to comply with the order as aforementioned, within 3 months, from the date of the order, that CIPC be directed, in terms of Section 160(3) (b) (ii) read with section 14(2) of the Act, to change the Respondent’s name to its registered company number being 2019/290523/07 as the Respondent’s interim company name on the Companies register.
• The Respondent is hereby exempted from the requirement to pay the prescribed fee for filing the notice of amendment contemplated in this paragraph.
• This Determination must be served on the Respondent and the Registrar of the CIPC

Review of CIPC decision

Mandla Stanley Mokoena (Applicant) vs Companies and Intellectual Property Commission (Respondent)

The Applicant brought this application in terms of Regulation 126(8) of the Act for a review and to set aside the refusal by the Respondent to grant him a license as a senior Business Rescue Practitioner (BRP). The Applicant conducts his business in Bokfontein, Brits, North West.

The Applicant completed form CTR 142, filed the application and served the Respondent on the 23 June 2021. The Respondent responded by filing its answering affidavit, which the Respondent has submitted is meant “to answer only but not oppose” the application.

The Applicant submitted that he has business turnaround experience in terms of the Act and Regulation 127, and that his involvement with business turnaround started in May 2008 when he was responsible for International Finance Corporation (IFC) programme which included the Lonmin Platinum Mine Joint SMME Development Programme. His key deliverables were to train SMMEs improve their efficiency and profitability and ensure they are sustainable enterprises. He submitted further that for over 12 years he has been involved in SMME development and business turnaround, and that during the period May 2008 to June 2010 “we” have developed over 100 SMMEs (Lonmin/IFC programme). Based on these projects, the Applicant believes he qualifies for a senior BRP license.

The Respondent submitted that they noted from the Applicant’s founding affidavit that the Applicant claimed had experience in turnaround in terms of the Act, and in terms of Regulation127, and that his experience in turnaround started in May 2008. The CIPC thereafter proceeds to outline the provisions of Regulation 127(2)(c)(i)-(iii), which provides the classification of practitioners as follows:

• Senior practitioner means a person who is qualified to be appointed as business rescue practitioner in terms of section 138(1) and who, immediately before being appointed as practitioner for a particular company, has actively engaged in business turnaround practice before the effective date of the Act, or as a business rescue practitioner in terms of the Act, for a combined period of at least 10 years.
• Experienced practitioner means a person who is qualified to be appointed as a business rescue practitioner in terms of section 138(1) and who, immediately before being appointed as practitioner for a particular company, has actively engaged in business turnaround practice before the commencement date of the Act, as a business rescue practitioner in terms of the Act, for a combined period of at least 5 years.
• Junior practitioner (Respondent erroneously wrote Senior practitioner) means a person who is qualified to be appointed as a business rescue practitioner in terms of section 138(1) and who, immediately before being appointed as practitioner for a particular company, has either- (aa) not previously engaged in business turnaround practice before the effective date of the Act, or acted as a BRP in terms of the Act; or (bb) has actively engaged in business turnaround practice before the effective date of the Act, or as a BRP in terms of the Act, for a combined period of less than 5 years.

Based on the aforegoing, and the fact that by his own admission, the Applicant had made reference to the period 2008 to 2010, and 2010 to 2012 with regards to his experience in turnaround, the Respondent argued that such experience falls short of 5 years, as Regulation 127 refers to active engagement in turnaround practice before the effective date of the Act, which effective date was May 2011, and therefore renders the Applicant qualified for junior BRP, as per his application with the CIPC and his affidavit for relief in this application.

The Respondent responded on 07 June 2021, and confirmed that all information that the Applicant had provided regarding his experience in business turnaround was post 2011, after the Act became effective, and in terms of Regulation 127, business turnaround experience is considered before the effective date of the Act. Having considered the CV of the Applicant, the experience submitted fell short in terms of the criteria for the classification of senior BRP in line with the provisions of regulation 127(c)(i). The request for a review of the classification was unsuccessful on that basis. The Tribunal found that the number of turnaround projects that the Applicant was involved in during this period bears no relevance to the required duration of experience.

Order:
The application for a review and to set aside the refusal by the Respondent to classify the license of the Applicant from junior to senior business rescue practitioner is dismissed. The CIPC’s decision to issue a junior BRP license is entirely confirmed.