Reference no: EM133226219

Question: Zelda is an executive director and chief executive officer (CEO) of Pristine Estates Ltd (Pristine). Velaphi has been serving as a non-executive director and chairperson of the board of directors of Pristine since 2010. AGI Group Limited (AGI) recently increased its shareholding in Pristine to 50.1% of the issued ordinary shares. Consequently, AGI directly holds 50.1% of the general voting rights associated with the issued shares of Pristine. Realty (Pty) Ltd (Realty), a wholly-owned subsidiary of AGI, holds 2% of the ordinary shares issued by Pristine. AGI and Realty subsequently delivered a written and signed demand to Pristine to call a shareholders' meeting for the purposes of considering and approving the resolutions to:

1. Remove Zelda as an executive director and CEO of Pristine;

2. Remove Velaphi as a non-executive director and chairperson of the board of directors of Pristine;

3. Elect Muthu (who is currently an executive director of Realty) as an executive director and CEO of Pristine;

and 4. Elect Sunelle (who is currently an executive director of AGI) as a non-executive director and chairperson of the board of directors of Pristine.

Following extensive discussions, the board of directors of Pristine has resolved to convene a meeting of the shareholders of Pristine for the purposes of consideration and approval of the above resolutions. Zelda and Velaphi approach you for legal advice. They are of the view that AGI and Realty did not have the right to demand that Pristine call a shareholders' meeting and that the demand submitted by AGI and Realty to that effect was was invalid. They believe that the other directors of Pristine merely succumbed to the pressure from AGI and Realty and that, in the circumstances, there was no legal obligation on the Pristine board to call a shareholders' meeting to consider the resolutions proposed by AGI and Realty. They further indicate that, in their view, AGI and Realty do not have any right or power to remove them from the board of Pristine. Zelda and Velaphi are also concerned that no explanation has been provided for their envisaged removal from the board of Pristine. They are concerned whether they will be entitled to be heard before any resolutions pertaining to their removal as directors are voted on should Pristine proceed to hold the envisaged shareholders' meeting. Zelda further indicates to you that she was appointed as an executive director and chief executive officer (CEO) of Pristine on 5 December 2020 in terms of a five-year contract of employment.

1.1 With reference to appropriate authority and the relevant facts provided, what is your legal opinion to Zelda and Velaphi in which you address their views, concerns and legal rights.

1.2 Explain whether Pristine Estates Ltd and Realty (Pty) Ltd are related.