Two directors of a joint venture company challenged a decision by one of the joint venture corporate partners to replace them as directors of the joint venture company. They had been removed as directors in terms of a resolution of the joint venture partner (a Communal Property Association). The shareholders agreement provided for replacement of directors by shareholders.

The directors succeeded in the High Court on the basis that the process in section 71 of the Companies Act, 2008 for removal of directors was not followed.

As the Supreme Court of Appeal held, that misconceived the enquiry. The respondents served as directors of the company and as representatives of the Association. The resolution of the Association had not been challenged. The adoption of the resolution had the effect that the directors could no longer serve as directors of the company. They were not being removed, they were being replaced in terms of the shareholders agreement which provided that each shareholder may appoint and replace three directors to the company’s board as representatives of the shareholder.

The application was dismissed.

[Mawecro (Pty) Ltd v Sithole and Others [2024] ZASCA 91 (10 June 2024)]