Mawecro (Pty) Ltd v Sithole and Others

Mawecro (Pty) Ltd was a joint venture company with two shareholders: Mawewe Communal Property Association (51%) and Crooks Brothers Limited (49%). In terms of a shareholders’ agreement, each shareholder with more than 45% voting rights could appoint and remove its own representative directors. The Association appointed Sithole and Nitwane as its representative directors. Following internal disputes within the Association, the High Court granted and later confirmed an Anton Piller–type order dissolving the Association’s committee and appointing administrators (Naudé, Bouwer and Koekemoer) to control its affairs. Acting under that court order, the appointed administrators resolved on 13 March 2020 to remove Sithole and Nitwane as directors of Mawecro and to appoint replacement directors. Sithole and Nitwane approached the Mpumalanga High Court seeking declaratory relief setting aside their removal, reinstating them as directors, payment of directors’ fees, and declaring subsequent board meetings unlawful. They did not bring a review application to set aside the Association’s resolution removing them. The High Court granted the declaratory relief. Mawecro appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The High Court’s order was set aside and replaced with an order dismissing the application with costs.

The case reaffirms the Oudekraal principle in the context of company and shareholder disputes: a decision to remove directors remains effective until reviewed and set aside. It clarifies that declaratory relief cannot substitute for review proceedings and that Rule 53 should be used where the decision-making process is unclear. The judgment also distinguishes between statutory removal of directors under the Companies Act and contractual removal of shareholder-appointed representative directors under a shareholders’ agreement.