COURSE: LML 4806

ASSIGNMENT 01: SEMESTER 1

DUE DATE: 17 March 2023
Albertine Mkhosi

Student number: 49685627

ACADEMIC HONESTY DECLARATION

Declaration: .............................................
• I understand what academic dishonesty entails and am aware of UNISA’s
policies in this regard.
• I declare that this assignment is my own, original work. Where I have used
someone else’s work, I have indicated this by using the prescribed style of
referencing. Every contribution to, and quotation in, this assignment from the
work or works of other people has been referenced according to this style.
• I have not allowed, and will not allow, anyone to copy my work with the intention
of passing it off as his or her own work.
• I did not make use of another student’s work and submit it as my own.

NAME: .............Albertine Mkhosi........................................................

SIGNATURE: ....................................................................................
STUDENT NUMBER: ...49685627...................................................
MODULE CODE: ..LML 4806...............................................................
DATE: .......08 March 2023................................................................
Question: 1
1.1 Whether under the circumstances of this case the board of directors of Khubo
Limited will have valid grounds to remove him (Jimmy) as a director of the company.
Khubo Limited is a private company with four (4) directors. Jimmy, one of the director’s
was appointed has the executive director on a five year employment contract; which
is currently in its third year.
Under Jimmy’s leadership the following were reported:
1. Untimely preparation and submission of company’s annual financial
statements;
2. Non signature of the annual financial statements
3. Jimmy’s removal as chairperson of board of trustee for JF Pension Fund after
he had joined Khubo Limited on the following grounds:
§ Forging of documents
§ Withdrawing of R2 Million for his personal use.
Jimmy seeks advise on whether, Khubo limited board of directors have valid grounds
to remove him as a director.
Section 30 (1) of the Companies Act 711, requires that an annual financial statement
must be prepared within six months after the end of its financial year for the purpose
of compliance and providing the required notice of an annual general meeting.
Section 30(3)(c) Companies Act states; the annual financial statements of a company
must be approved by the board and signed by an authorised director.
Section 69 (8) (b) (iii)Companies Act 71, states a person is disqualified to be a director
of a company if he has been removed from an office of trust, on the grounds of
misconduct involving dishonestly and committed offences specified in section
69(8(b)(iv) an offence involving fraud, misrepresentation or dishonesty.
Section 69 (4) Companies Act 71, states that a person who becomes disqualified while
serving as a director of a company ceases to be a director immediately.

The Companies Act makes provision for the removal of a director by shareholders and
the board of directors; provided the company has more than two directors. This

1
Juta’s Pocket Statutes The Companies Act 71 of 2008 and Regulations 16th edition (or later edition)
(2021) Juta Cape Town

2
circumstances requires that a director or a shareholder can allege that the director has
become disqualified in terms of the Act and he has neglected his performance of
functions. (Cassim H, et all; section12).2
Based on the above facts, Musa has expressed his concerns therefore fulfilling the
Companies Act requirements, Jimmy’s performance concerns were orally expressed.
Our advice to Jimmy is that :
The directors in terms of section 66 (1) of the Companies Act have the mandate to
manage and exercise all powers and perform functions as prescribed by the Act and
the Memorandum of Incorporation. They have grounds to request for his removal as
a result of non-performance of his function in terms of his role as an executive director,
this is govern by the Labour Relations Act and Companies Act. The second ground
will be on his removal from a position of trust, which rendered Jimmy being disqualified
and which will result in his immediate removal as a director of Khubo Limited.

1.2 The procedure that the board of directors must follow and the rights that Jimmy
has in terms of the Companies Act 71 of 2008 should the board of directors decide
to remove him as a director. (8)
The removal of a director is by means of an ordinary resolution.
1. Notice of meeting presented to concerned director.
• Proposed resolution for his removal.
• A clear and specific statement elaborating the reasons for the resolution.
2. Jimmy’s presentation to the board of directors
• Reasonable opportunity must be afforded to Jimmy.
• To Prepare and present response to the resolution statement – before the voting
process.
• Representation can be done in person or through a representative.
3. Board decision
• Voting by directors on the proposed resolution apart from the concerned Director
(Jimmy)
4. Review of the resolution outcome.

2
Cassim FHI, Cassim MF, Cassim R, Jooste R, Shev J and Yeats J The Law of Business
StructuresSecond Edition (2021) Juta & Company (Pty) Ltd Cape Town

3
 • The director concern has 20 business days to apply for a review of the
determination of the board (on an informed basis and in good faith, on the basis
of such relevant factors as the Directors consider, in
their judgment, appropriate, by the vote of a majority of the Directors present at
a meeting of the Board if a quorum of the Directors is present at such meeting).
5. The court decision
• Confirm the determination of the board or
• Remove the director from office.
• Cost to the application will be charged to applicant unless the court reverses the
board decision.
• The director who voted against the resolution can also make application to the
court for the review of the outcome of the vote.
6. Other recourse
• The Director can seek compensation in terms of the Labour Relations Act or
section 163 of the Companies Act.

Question: 2

Section 86 of the companies Act states that, a public company or state – owned
company must appoint a person knowledgeable or experienced in relevant laws as a
company secretary. The secretary must be a permanent resident of RSA and must
remain so while serving in that capacity, irrespective of whether the appointment is
made as required by section (1) or voluntarily as contemplated in section 34(2).
Section 87(1) confirms that a juristic person may be appointed to hold the office of
company secretary provided section 84(5) disqualification and s86(2) (a) & (b) of the
company Act requirements are complied with.
RLV Corporate Services confirms their compliance to section 86 as they are:
1. A South African company
2. Provide customised compliance, governance and company secretarial
services. This is vital to the role of a company secretary to bring awareness to
directors in terms of laws which affects their organisation.
3. However, TN Engineering needs to conduct its own due diligence to ensure
compliance with section 84(5) of the companies Act prior to their appointment.