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Blue Square Advisory Services (Pty) Ltd v Mandingoane and Another (01082/2011) [2011] ZAGPJHC 53

21st June 2011

By: Creamer Media Reporter


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  • Blue Square Advisory Services (Pty) Ltd v Mandingoane and Another (01082/2011) [2011] ZAGPJHC 53
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[1] The issue in this application is whether or not the first and second respondents were lawfully removed as directors of the applicant company by a valid members' resolution at a general meeting of members convened on 26 November 2009 in terms of the provisions of section 220 of the Companies Act, 61 of 1973 ("the 1973 Act").

[2] On 22 November 2005 one Johannes Hendrik Louw, whom I shall hereinafter refer to as "Louw", the first respondent and the applicant company, represented by Louw, executed a written document entitled "Heads of Agreement". This document served to record the intentions and agreements of the three parties thereto. Recorded therein was an envisaged transaction between Louw, the first respondent and the applicant, that the first respondent would acquire shares and claims in the applicant to the extent of 50 percent. The transaction was subject to Louw successfully buying back 50 percent of the shares and claims from one Naicker. The transaction date was to be effective 1 November 2005. Transaction documents mentioned therein were to include inter alia a new shareholders' agreement, a purchase and sale agreement, contracts of employment for the executives, and rules and procedures for the staff of the applicant. An independent party was to conduct the valuation of the business of the applicant at 1 November 2005 and the first respondent was entitled to conduct a detailed due diligence on the business of the applicant. The first respondent was appointed an employee of the applicant company. It was envisaged that a more formal contract of employment would be drafted in due course but that in the interim the heads of agreement was to govern the working relationship between the applicant and its executives.

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