Peter v Mimosa Court Shareblock RF (Pty) Ltd and Others

The applicant, René Josef Peter, a Swiss citizen residing at Mimosa Court in Seapoint, is a director and shareholder (6% shareholding) in Mimosa Court Shareblock RF (Pty) Ltd, the first respondent. The second to fifth respondents are fellow directors and shareholders. At a board meeting held via Zoom on 11 March 2024, the board resolved to remove the applicant as a director under section 71(3)(b) of the Companies Act 71 of 2008, on grounds that he had been negligent or derelict in performing his functions. This followed allegations that the applicant had provided contrived comparative quotations to the board in an effort to entice selection of his preferred contractor for renovations. The applicant delivered a review application on 16 April 2024, seeking to set aside the board's determination and reinstatement as director. The first to third respondents opposed the application on the basis that it was brought outside the 20 business day period prescribed in section 71(5) of the Act. The applicant argued he only became aware of the decision several days after the meeting and that the 20-day period should only commence upon formal receipt of the board's resolution and record of deliberations.

• Whether the section 71(5) review application was brought within the prescribed 20 business day period.
• When does the 20 business day period in section 71(5) commence – from the date of the board's determination or from the date the director receives formal notification of the determination?
• Whether a court has discretion under the Companies Act to condone non-compliance with the 20 business day period in section 71(5).

The application was dismissed with costs on scale B.

Under section 71(5) of the Companies Act 71 of 2008, the 20 business day period within which a director must apply to court to review a board's determination commences on the day following the board's determination (decision), calculated in terms of section 5(3) read with section 1 of the Act. Neither section 71(5) nor the Act generally confers a discretion on a court to condone non-compliance with this time period. In exceptional circumstances where a director has no actual knowledge of the board's determination, the 20-day period may be triggered by the director obtaining actual (not formal) knowledge of the determination, to avoid infringement of section 34 constitutional rights.

The court observed that interpreting section 71(5) such that the time period runs only from receipt of the board's resolution and record of deliberations would lead to absurdity and potential abuse of the procedure, and would not encourage efficient and responsible management of companies. The court noted that no binding authority exists on when the 20 business day period commences, but academic commentary (Professor Cassim) supports the view that it commences from the date the board takes the decision. The court further suggested that a director could launch a review application even without the record of deliberations, as the reasons for removal would already be known from the section 71(4) statement, and could supplement the application later under Rule 6 or Rule 53.

This is one of the first High Court judgments to address the commencement of the 20 business day period in section 71(5) of the Companies Act and to hold that the Act does not permit condonation for late filing of a section 71(5) review application. The judgment provides clarity on interpretation of the time bar, holding that the trigger is the board's determination, not formal receipt of the resolution. It also introduces an 'actual knowledge' exception for cases where directors are genuinely unaware of the board's determination, grounded in constitutional access to court principles.