You are a chartered accountant (SA) and an expert on the Companies Act.

Document Exchange Ltd (Docex) specialises in the distribution of local and international mail and parcels. Docex has branches countrywide to spread its service delivery footprint and its customers range from individuals to large companies.

Docex holds a 70% interest in Carrier and Freight Company Ltd (CFC).

An extract of the minutes of the meeting of the board of directors of Docex is provided below:

Present:

Mr Fana Freight, chairman, independent non-executive director

Mr Clement Courier, non-executive director

Mr Tim Transport, sales and marketing director

Mr Lesley Logistics, managing director

Ms Patricia Post, financial director

Mr Mannie Mail, company secretary

Apologies:

Mr Rocky Road, executive director

Matters for discussion:

Dismissal of a director

Fana Freight presented to the board that allegations recently arose against Rocky Road regarding his involvement in a fraudulent scheme where R3 million was stolen from Docex.

Fana Freight explained that Rocky Road has not been found guilty yet; however, it is in the best interest of the company to dismiss Rocky Road immediately.

The board agreed and approved the decision to remove Rocky Road as director of Docex.

Appointment of director

The board resolved that Rocky Road will be replaced as director. Clement Courier presented a list of recommended candidates to be considered for the position to replace Rocky Road as director.

The following candidates appeared on the list:

·       Mr Air Mail, Patricia Post’s 17-year-old son who obtains high marks for Accounting

·       Container Incorporated, a personal liability company

·       Ms Delores Stamp, chartered accountant (SA), the court declared her as a rehabilitated insolvent

·       Mr Louis Letter was convicted and imprisoned due to his involvement in fraudulent activities at his previous company

The board resolved that the appointment of the new director from the list of recommended candidates will be made at the next board meeting.

REQUIRED:

Explain to the board which of the candidates listed under “Appointment of director” will be permissible and which of the candidates will not be permissible in terms of the requirements of the Companies Act to be appointed as the new director of Docex.

Discuss whether it was legal in terms of the Companies Act for the board to dismiss the director.