The Companies Act, 2008 (Act) makes provision for shareholders to remove directors by ordinary resolution. Although the Act requires that notice of such a decision be given to the affected directors, and that the affected director may make representations at the shareholders meeting, the Act does not require reasons for the proposed removal to be provided.

Unfortunately, the court in Pretorius and Another v Timcke and Others (2015) held in 2015 that such a removal, without shareholders providing reasoning to the affected director, is akin to bad faith and presupposes an ulterior motive for such a removal, and that reasons are therefore required.

However, in the recent judgment of Weir v Wiehahn Formwork Solutions (Pty) Ltd and others [2025] JOL 68636 (WCC) delivered by the Western Cape Division of the High Court, the court concluded that shareholders do not need to give reasons for the removal of directors.

Jonathan Weir was an executive director of PR Wiehahn Proprietary Limited and was given notice of a shareholders’ meeting to discuss his removal as a director. Weir requested reasons for his intended removal, but the shareholders declined to provide any, stating that he would have the opportunity to discuss this at the meeting. The meeting proceeded, and Weir was ultimately removed as a director by a unanimous shareholder resolution.

The crux of the Weir judgment lies in the interpretation of Section 71 of the Act. Section 71(1) and (2) outline the procedure for the removal of directors by shareholders. Specifically, Section 71(2) requires that the director be given notice of the meeting and the resolution, and be afforded a reasonable opportunity to make a presentation before the resolution is put to a vote. However, the Act does not explicitly state that shareholders must provide reasons for the removal.

The Weir judgment emphasized that the statutory requirements for the removal of directors by shareholders are less stringent than those for removal by fellow directors. Section 71(4)(a) of the Act, which deals with the removal of directors by other directors, explicitly requires that reasons be provided. The absence of such a requirement in section 71(2) for shareholders indicates a deliberate legislative choice to preserve the shareholders’ right to remove directors without needing to justify their decision.

The court also highlighted the different roles and rights of shareholders and directors. Shareholders, as the owners of the company, have a proprietary right to vote in their own interests. This right traditionally includes the power to appoint and remove directors, to align the board with the Shareholders’ vision for the company. Directors, on the other hand, have fiduciary duties to act in the best interests of the company. The requirement for directors to provide reasons for the removal of a fellow director is sensible, given the need to ensure that such decisions are made in good faith and for valid reasons.

The judgment in Weir underscores the principle that shareholders’ power to remove directors is a critical tool for corporate democracy. It strikes a balance between the directors’ powers of management and the shareholders’ powers of control. Shareholders dissatisfied with the management of the company can exercise their ultimate power of control by removing directors, ensuring accountability and protecting their investment.

This judgement reaffirms that shareholders do not need to provide reasons for the removal of directors. This decision aligns with the legislative intention of the Act, which seeks to give shareholders greater control over the administration of the company. By preserving the shareholders’ right to remove directors without needing to justify their decision, the judgment enhances corporate governance and ensures that directors remain accountable to the shareholders who elected them.