Maseru, Feb. 06 — The High Court has in its judgment in a case in which former Board members of the Lesotho Electricity Corporation (LEC) were challenging their dismissal says they do not have standing to challenge the shareholders non-compliance with section 50 procedure within the Companies Act.
It stated that where a company has a shareholder, the shareholder can exercise his right to pass a resolution to remove a director without complying with the internal formalities. It added that a request for a special meeting is unnecessary because there is only one shareholder. It further added that the shareholder does not require the assistance of the Board to call his own meeting.
“The section 50 procedure for calling a meeting is out of place. What is necessary is that the directors should be given notice of the intended removal and make representations to the shareholder if they so wish,” said the court.
It emphasized that on receipt of representations, the shareholder can take a decision at his own pleasure because the right to remove them is a proprietary right and their removal is not impeachable on the ground that it is made in bad faith and is not in the interests of the company. It added that a shareholder’s right to have a special meeting called is inherent in the ownership of shares further adding that it cannot be challenged or frustrated by the Board.
