Minority protection

Question 1

Relief from oppressive or prejudicial conduct - S 163

Answer 1

1. Order restraining the conduct complained of
2. Order appointing a liquidator 3. Order company to amend MOI
3. Order directing an issue or exchange of shares
4. Order appointing directors in place of or in addition to all or any of the directors then in office
5. Order directing the company to restore to a shareholder any part of the consideration that the shareholder paid for shares
6. Order to pay compensation to an aggrieved person

Question 2

Statutory derivative action

Answer 2

Section 165 of the Companies Act 71 of 2008 provides that applicants with locus standi who are aware of a wrong perpetrated against the company and who wish to pursue a derivative action against the company must have served a demand on the company requiring it to commence or continue legal proceedings to protect it

Question 3

Statutory Derivate action: Who can claim

Answer 3

Shareholder
Director
Trade union
Other person – granted leave by the court

Question 4

Statutory Derivate action: steps of action

Answer 4

1) Within 15 days apply to set the demand aside; or
-Application to set demand aside: frivolous, vexatious or without merit (denoting an action or the bringer of an action that is brought without sufficient grounds for winning, purely to cause annoyance to the defendant.)

2) Report back to the person in 60 days having-
- Independent third party or committee appointed to investigate the materiality of the complaint

Board must:
1. Initiate legal proceedings;
2. Continue legal proceedings; or
3. Serve notice on the person who served the demand that the company is refusing to comply

Question 5

Statutory Derivate action: Applicant

Answer 5

1. The company failed to appoint an investigator or committee
2. The investigator or committee appointed was not independent and impartial
3. Accepted a report that was inadequate in its preparation, or was irrational or unreasonable in its conclusions or recommendations
4. Acted in a manner that was inconsistent with the reasonable report of an independent, impartial investigator or committee
5. Served a notice refusing to comply with the demand

Question 6

Statutory Derivate action: convincing the court

Answer 6

1. The applicant is acting in good faith
2. Proceedings will involve a trial of a matter of material consequences to the company
3. It is in the best interest of the company that leave be granted to the applicant to institute or continue proceedings