CASE HIGHLIGHTS

29 September 2022

Annual General Meeting: Ebotse Golf and Country Estate Homeowners Association NPC (Applicant). The Applicant filed an application for an extension of time to hold 2022 Annual General Meeting (AGM) in terms of section 61(7) read together with section 10 of the Companies Act No. 71 of 2008 (Act) and Paragraph 12.1 of the Memorandum of Incorporation (MoI) of the Applicant. The Applicant is a non-profit company duly formed and incorporated as such in terms of the applicable laws of the Republic of South Africa. On the 08 August 2022, the Applicant filed an application requesting an extension to hold its August 2022 AGM beyond the date of 31 August 2022. Jean Pierre Busseau Okes was duly authorized by the Board of Directors of the Applicant to bring the application on behalf of the company. A copy of the resolution of the Board of Directors of the Applicant dated 17 August 2022 to that effect was attached to the Sworn Statement of Okes. The Applicant sought an extension to hold its AGM due to events the events listed below:

• In terms of Article 12.1 of the Memorandum of Incorporation of the Applicant, the directors of the Applicant are obliged to call for an AGM of the members of the Applicant within a period of 180 (One Hundred and Eighty) days after the end of each subsequent financial year.
• The financial year end of the Applicant is the last day of February each year and in terms of the MoI the AGM of the Applicant is ordinarily due on or before the 31st day of August of each year.
• The Applicant approached the Johannesburg High Court to enforce a Homeowners Association Rule against one of the residents. This resident has in turn, attacked the constitutionality and enforceability of the Homeowners Association Rules.
• The Applicant is still awaiting the judgment from the High Court which is expected to be handed down by the end of September 2022. The High Court judgment is expected to have an impact on the final rules of the Applicant.
• Based on the constitutionality and enforceability attacks by one of its residents, the Board of Directors of the Applicant are in the process of revising the Applicant’s Homeowners Association Rules from the scratch and have invited inputs from all of its residents.
• The Applicant intends to present the final rules as well as the High Court judgment to its residents at the next AGM.
• The Board of Directors of the Applicant believes that it is in the best interests of the residents that the AGM must be postponed for purposes of affording the Applicant time to obtain the judgment from the High Court and to finalise the new rules.
• The Applicant sought an extension of a period of two (2) months to hold its AGM by 31 October 2022.

The Companies Tribunal was satisfied that good cause has been shown by the Applicant. The Tribunal’s view was that the Applicant could host its AGM within a period of six (6) months from date of handing down the order. Furthermore, the Tribunal found that there was no guarantee that the judgment of the High Court could be delivered during September 2022 as indicated by the Applicant in its papers. The Tribunal also considered the fact that there is no guarantee that the new rules of the Applicant will be finalised before the end of October 2022. The Tribunal found the six (6) months period to be reasonable, and it will afford the Applicant sufficient time to finalise its new rules. Order

• The application for an extension to hold the 2022 AGM beyond the date of 31 August 2022, was granted in terms of section 61(7)(b) of the Act; and
• The Applicant is required to hold the 2022 Annual General Meeting of its members within a period of six (6) months from the date of handing down of this order.

  Directorship Dispute Morne Meyer (Applicant) v Jan-Wessel van Zyl (First Respondent) and Jacques Neethling (Second Respondent) The Applicant applied for a default administrative order determining the removal of the First Respondent as a director of Iqela Farming (Pty) Ltd (“the company”) in terms of section 71(8) of the Act. The company only has two directors, the Applicant and the First Respondent. The application, Form CTR142 and the founding affidavit were issued by the Tribunal’s Registrar on 18 July 2022 and served upon the Second Respondent who has power of attorney over the business affairs of the First Respondent while he is in the United States of America. The Applicant applied for the removal of the First Respondent as a director for the following reasons:

• On 20 May 2022, the Applicant received an email from the Second Respondent indicating that he had been appointed by means of a proxy on behalf of the First Respondent for the time the First Respondent would not be in South Africa. It seems that the First Respondent is working as a seasonal worker in the United States of America and his return date is unknown.
• The Applicant submitted that the MoI, provides for the manner of electing the directors of the company (through voting system) and that each elected director of the company serves for an indefinite term, as contemplated in section 68(1), and that the Second Respondent was never appointed as an alternative director of the company.
• The company is involved in litigation against the First Respondent’s father pertaining to a partnership dispute and certain lucerne farming operations where and in terms whereof the First Respondent does not want to give approval of the litigation against his father nor any resolution to this effect, and that as a consequence thereof he is not acting in good faith and to the detriment of Iqela. The Applicant argues that a director can be a proxy with a set of instructions on how to act on each issue that could arise and with that duty being personal and ongoing these duties cannot be delegated by a proxy, and that it is impossible to proceed with the day-to-day operations of Iqela where the First Respondent finds himself in the United States of America and no date is given as to when he is expected to return. The Applicant advised that the Second Respondent is of the view that all the duties the First Respondent has in his capacity as director of the company, have been taken over by him, whilst the First Respondent is in the United States of America.
• The Applicant further advised that the Second Respondent communicated with her, on 25 February, pointing out that the First Respondent is not a non-executive director, but a full director and a 50% shareholder of the company, contradicting an earlier communication (dated 18 June 2021), wherein the Second Respondent advised that the Applicant was the executive director and that she could address the issue of the unpaid harvest directly with the First Respondent’s father.
• From the preceding, the Applicant submitted that it is clear that there is a clear breach of duty and trust on behalf of the First Respondent by not trying to recover the losses sustained by the company as a consequence of the actions of his father, even after the Second Respondent was advised of the facts and the losses that the company had as a result, and that the Second Respondent is an accountant and he had certain fiduciary duties towards the company, which he did not comply with and whereafter the company terminated his services as their accountant.

The basis of this application for the removal of the First Respondent as a director of the company, is because of the First Respondent appointed the company’s accountant, in terms of a power of attorney, to look after his affairs in South Africa while he was away in the United States of America. The Tribunal noted that this did not qualify the Second Respondent as a director, neither was he appointed, in terms of the company’s MOI, as an alternate director, as no meeting of the directors was called, in terms of the MOI, to elect him and resolve accordingly. It seemed that the First Respondent did not even give his partner, the courtesy of advising of his planned departure from the country and the arrangements he would put in place over his business affairs, while he was away. Neither did the First Respondent give an indication how long he would be gone and when he would return to the country. The First Respondent was not divested of his responsibilities as a director of the company, and remained as such, as shown in the company’s disclosure certificate. Despite such appointment of the Second Respondent to oversee the affairs of the First Respondent, the Second Respondent has failed, noting the detriment to the financial performance of the company, to pursue the payments due to the company by the First Respondent’s father, in terms of the partnership agreement. The First Respondent has also not intervened under the circumstances, to ensure the continued financial success of the company while he is away. The Applicant has submitted that it is currently impossible to proceed with the day-to-day operations of the company where the First Respondent finds himself in the United States of America and no date is given of his expected return. The First Respondent left in or about May 2021. Section 76(3)(a)(b) and (c) of the Act provides that a director of a company must exercise the powers and perform the functions of director, in good faith, in the best interests of the company and with the degree of care, skill and diligence that may be reasonably expected carrying out the same functions in relation to the company as those carried out by that director. The First Respondent failed to exercise such powers and functions as required by the section, and in fact, only sought to protect his own personal interests and not those of the company of which he is a director. The Tribunal found that the First Respondent has neglected and been derelict in the performance of his functions as a director of the company. Order: Granted   Name Dispute The Independent Institute of Education (Pty) Ltd (Applicant) v IIE Varsity College (Pty) Ltd (First Respondent) and the Companies and Intellectual Property Commission (Second Respondent) The Applicant applied for a default order that the name of the First Respondent does not comply with section 11(2)(a)(iii) and/or (b) and/or (c)(1) of the Act. Regulations 142 and 153 of the Companies Act (GNR 351 of 26 April 2011) regulates an application to the Tribunal as well as the application for a default order under certain circumstances. The Applicant is a company as defined in section 1 of the Companies Act. The First Respondent is a company incorporated in 2019 in terms of the Act while the Second Respondent is the CIPC, established in terms of section 185 of the Companies Act, with the objectives and duties as in sections 186 and 187. The initial application (CTR 142) was brought by Darren Stevens, a senior legal advisor of ADvTECH, of which the Applicant is a wholly owned subsidiary, who has the authority to act for and on behalf of the Applicant in terms of section 66 of the Act under authority from the board of the Applicant by way of a section 74 resolution dated 20 October 2021. The application for the default order (CTR 145) was brought by Shane Peter Moore of Moore Attorney Inc, who is also duly authorised in terms of the resolution of the board referred to above to act for and on behalf of the Applicant to institute proceedings and also to make the affidavit on behalf of the Applicant. The Applicant is the registered owner of the trademark “Varsity College”; it is also the registered owner of the combination of letters “IIE” (ostensibly derived from “Independent Institute of Education”). The Applicant (or its attorneys) became aware of the company name of the First Respondent in May 2021. The Applicant contacted the First Respondent through various means and the latter, agreed to change its name from “IIE Varsity College”. This did not happen by 7 July 2021 and the Applicant applied to the Companies Tribunal for relief on 25 January 2022 as indicated on the CTR 142. The application was served by the sheriff of the High Court on 28 January 2022 “by affixing to the principal door” at the address of the First Respondent as indicated in the CIPC records, which is within the 5 business days as prescribed by regulation 142(3) and in a manner allowed in terms of Table CR 3 of Schedule 3 of the regulations. The application was also sent to the Second Respondent via email to corporatelegalservices@cipc.co.za on 31 January 2022. The First Respondent failed to respond within the 20 business days as prescribed in respect of service in regulation 143 and hence the application for a default order in terms of regulation 153 on CTR 145. The Applicant sought the following relief:

1. “directing the First Respondent to change its name to one which does not incorporate the trademarks IIE or VARSITY COLLEGE, or any other trademark/word that is confusingly or deceptively similar thereto;
2. in the event that the First Respondent fails to comply with the order set out in paragraph 1 above within 3 months from date of the order, directing the CIPC, in terms of Section 160(3)(b)(ii) read with Section 142 of the Act, to change the name of the First Respondent to an alternative name not incorporating or confusingly similar to the Applicant’s IIE or VARSITY COLLEGE trademarks; and
3. granting the Applicant further and/or alternative relief.”

The First Respondent commenced business on 24 October 2019 and the application by the Applicant was on 25 January 2022. The Applicant became aware of the name of the First Respondent in May 2021 and application was brought some seven months after that date. The Tribunal was satisfied that the First Respondent was adequately served in line with (regulation 153(2)(b)). In granting a default order, it is critical to take the rights of the First Respondent into account and to ensure that justice is done to all the parties. The Tribunal found that name of the First Respondent does not, as averred by the Applicant, comply with section 11(2)(b) and (2)(c)(1) of the Companies Act. Order:

• The First Respondent was ordered to file a notice of an amendment of its MoI within 60 days of the date of the order to change its name to exclude the words/letters “IIE” and/or “Varsity College”.
• In the event the First respondent does not comply with the order, the Second Respondent is directed, in terms of section 160(3)(b)(ii) read with sections 11(3)(a) and 14(2) of the Companies Act, to record the First Respondent’s registration number followed by “(Pty) Ltd (South Africa)”, as the First Respondent’s interim company name on the companies register. Since such an action will have the effect that the First Respondent will, for all intents and purposes, be unable to continue to operate due to statutory prescripts, such an action by the Second Respondent should be preceded by adequate notice.
• There is no order as to costs.