Discuss the legality of Thyme Sage’s removal from the board of directors (matter 1).
HealthCo (Pty) Ltd is a company responsible for the manufacturing of herbal medicines. Thyme Sage, the sole non-executive director of the company, has consulted you regarding a number of concerns which he has, arising out of a recent meeting of the company’s board of directors. None of the directors holds any shares in the company. Your discussions with Thyme Sage revealed that he had opposed the matters described below and a number of other matters, but that they had ultimately all been approved by the board of directors.
Matter 1
He informed you that Basil Dill, the managing director, had ended the meeting by announcing that he could not work with a person who responded negatively to virtually everything that he proposed. He put it to the board that either Thyme Sage or he himself should leave the board. The rest of the board of directors unanimously resolved to remove Thyme Sage from the board with immediate effect.
Matter 2
A contract for R16 million, to refurbish the company’s offices, had been awarded to Chic Designs, ahead of three other contractors who had tendered for the job. Thyme Sage had opposed this decision as he preferred a far less expensive proposal made by one of the other contractors. Basil Dill was, however, very much in favour of the Chic Designs proposal and had convinced the rest of the board to vote accordingly. Thyme Sage had coincidentally found out, subsequent to the meeting, that Chic Designs was owned by Rose and Mary Dill, Basil Dill’s daughter and wife respectively.
Matter 3
Cinn Coriander, the marketing director of HealthCo (Pty) Ltd, had asked at the board meeting whether it would be possible for the company to provide him with an interest free loan of R2 million to assist him in the purchase of a new house, into which he and his family are planning to move. Basil Dill had responded by telling Cinn Coriander that he would, in his capacity as Chairman, personally authorise the loan (provided the other directors agreed). Basil Dill added that he would
probably arrange for the loan to be made by Natural Remedies (Pty) Ltd, a wholly owned subsidiary of HealthCo (Pty) Ltd rather than by HealthCo (Pty) Ltd as Cinn Coriander is not a director of Natural Remedies (Pty) Ltd.
Matter 4
Joe Masala, one of five directors of HealthCo (Pty) Ltd, is aware that his wife Lavender will earn a commission of R200 000 if a contract to be approved by the directors, between HealthCo (Pty) Ltd and another company, is entered into. Lavender is not a director of HealthCo (Pty) Ltd or the other company. Thyme Sage would like to know what duties or obligations this imposes on Joe Masala as a director of HealthCo (Pty) Ltd?
|
2.1 |
Discuss the legality of Thyme Sage’s removal from the board of directors (matter 1). |
Step by step
Solved in 2 steps
