This blog is co-authored by Justine Subramoney, a candidate attorney.

A Company’s Memorandum of Incorporation or MOI is its most important document. However, section 15 of the Companies Act provided that an MOI must be consistent with the Act and any clause that is not will be void to the extent it is not. In April 2025, the High Court dealt with a dispute over the removal of a director of a company and considered the argument that a director of a company can only be removed through Section 71 (removal of directors) or 162 (delinquent directors) of the Companies Act and not a company’s MOI. The case highlights the interplay between corporate governance documents and statutory law in regulating directorships.

The applicant claimed to be the lawful CEO of Border Cricket NPC and filed an application to have a rival’s position as director and chairperson of Border Cricket declared unlawful on the basis that it violated the MOI. The MOI provides that a director is limited to serving a period of nine years, unless they served as a president or vice president during that term, or they have waited for a 2-year “cooling off” period after their previous nine years came to an end.

The applicant argued that the respondent, being the rival, had been a director of Border Cricket since August 2013, being a period of 11 years, without a cooling off period. This exceeded the nine-year limit stipulated in the MOI. In his defence, the respondent argued that the MOI was in the process of being amended to remove the 9-year limit, and his position was therefore lawful as it was aligned with the Company’s intention. The court held that the mere intention to amend is not the same as an actual amendment, and to recognise a proposed amendment as if it had already been made would violate the Companies Act. In terms of the Companies Act, an amendment requires a resolution to be filed which will take affect 10 business days after filing or any later date set out in the filing notice. These processes were not followed by the company to amend the MOI and the court accordingly found that the MOI was not amended. As a result, the respondent’s position as director and chairperson was unlawful, and the applicant was entitled to request his removal.

As it relates to his removal as director, the respondent submitted that suspensions and removals of directors are governed by Section 71 and 162 of the Companies Act. He therefore contended that he could not be removed through the provisions of the MOI. The court was asked to determine whether director-removal processes can only be done through section 71 and 162 of the Act or whether a director can be removed through processes set out in a company’s MOI. The court held that the Companies Act allows a company to remove directors through its MOI by virtue of section 66(4)(i) which states that a company’s MOI may provide for the direct appointment and removal of one or more directors by any person who is named in or determined in terms of its MOI. The court thus rejected the respondent’s argument and held that director removals can be done through processes stipulated in an MOI provided that they are not inconsistent with the Companies Act. The court further held that while the MOI is subordinate to the Companies Act, courts should prefer an interpretation of an MOI that conforms with existing laws and frameworks and that the MOI and Companies Act should not unnecessarily be read to exclude each other.

The court held that a director’s removal can be done through processes in a constituted MOI and not just section 71 and 162 of the Companies Act. The case emphasises the importance of following proper procedures for amending an MOI and ensures that corporate governance documents align with statutory requirements.

[Ramela v Ndzunza High Court Eastern Cape Division, case No 126/20222]