Sekhametsi Investment Consortium Ltd & 6 Others v Thuso Green & 23 Others [2025] LSHC 224 Comm (28 August 2025) (Mokhesi J)
1. Why this decision matters
Corporate disputes in Lesotho often escalate into urgent motion proceedings framed as “boardroom coups”. This judgment is a practical reset: it re-centres shareholder power to remove directors under section 73 of the Companies Act 2011, limits attempts by outgoing directors/shareholders to attack company contracts without authority, and signals real cost consequences where litigants plead criminality without a proper factual foundation.
At a glance, the Court does three important things:
- Rejects “agenda technicalities” used to resist a properly requisitioned removal vote.
- Enforces the derivative-action gatekeeping in section 77 for proceedings brought “for the company”.
- Punishes litigation misconduct (over-joinder and intemperate allegations) with punitive costs.
2. Factual background in brief
Sekhametsi Investment Consortium Ltd (“Sekhametsi/SMIC”) is a public company. The board (2nd–7th applicants) issued notices for special shareholder meetings intended to discuss a strategic plan and a project update. A group of shareholders (meeting the 20% threshold) requisitioned that removal of the directors be included on the agenda, giving reasons as required by section 73(1).
The board initially resisted adding the item. After correspondence and postponements, the meeting proceeded on 1 June 2025 with an agenda item dealing with “concerned shareholders’ letters on inclusion of additional agenda items.” The shareholders debated and ultimately voted to remove the incumbent directors and appoint new directors (1st–7th respondents).
The outgoing directors then launched urgent proceedings to set aside the consequences of the meeting and to restrain the new board, while also seeking (among other relief) to invalidate an investment contract involving the company and third parties.
3. The issues before the Court
Although the papers were wide-ranging, the judgment turns on four core questions:
- Was the vote removing the directors procedurally valid under section 73?
- Could the applicants obtain interim interdictory relief against the “new board”?
- Could the applicants, in their capacity as shareholders/directors, seek a declaration that a company contract with third parties was void without complying with section 77?
- Were punitive costs justified?
4. Director removal and the “agenda” argument: section 73 is not optional
The applicants’ main theme was that their removal was “outside the agenda” and therefore invalid.
The Court rejected this, emphasising the peremptory nature of section 73(1): once a valid requisition is made by shareholders holding at least 20% of the voting shares, the board must call the relevant meeting (or include removal as part of the purposes of a meeting). The Court was particularly concerned about a governance reality: if incumbents could block removal by controlling agendas, section 73 would be hollow.
On the facts, the Court found the shareholders were sufficiently alerted to the removal issue because:
- the requisition letters and reasons had been circulated and were well known; and
- the agenda expressly included discussion of the requisitioning shareholders’ letters; and
- the shareholders resolved at the meeting to proceed to a vote on removal; and
- the outgoing directors participated in the meeting.
The “removal wasn’t on the agenda” complaint therefore failed as a matter of substance and fairness: the meeting process, viewed holistically, satisfied the statutory purpose—giving shareholders a platform to consider and decide removal.
Practical takeaway: where removal is properly requisitioned under section 73, boards should treat removal as a meeting purpose, not as a negotiable “additional item” that can be delayed, reframed, or pushed to a later date.
5. Interim interdicts: no prima facie right, no protection
The applicants sought interim restraints against the newly elected board and other urgent relief. The Court applied the orthodox interdict principles (including the Setlogelo framework and the Webster v Mitchell/Gool approach to prima facie rights).
The decisive point was simple: because the shareholder vote was prima facie valid, the applicants could not show a protectable “right of incumbency”. Without that foundation, the interdicts could not stand.
Practical takeaway: in director-removal disputes, interim interdicts are unlikely to succeed if the removal vote appears procedurally compliant. Courts are reluctant to “freeze” governance where shareholders have acted within the statute.
6. The contract attack collapses on section 77: the company is the proper plaintiff
A pivotal part of the decision concerns Prayer 6: the applicants wanted a declaration that an investment contract between SMIC and third parties (13th and 14th respondents) was void and unenforceable.
The Court held the applicants could not pursue this relief in the manner framed because it implicated the company’s rights and interests. Under company law orthodoxy, the company is the “proper plaintiff”. Lesotho’s Companies Act entrenches this through section 77 (derivative actions), which requires a shareholder or director to:
- apply for leave to bring proceedings in the name and on behalf of the company, and
- satisfy the Court on statutory considerations (prospects, costs, steps already taken, company interests), and
- properly serve and involve the company in that leave process.
Because the applicants did not seek leave under section 77, their bid to invalidate the company’s contract was procedurally barred. The Court also noted that if the complaint was about unlawfulness before conclusion, an interdict route under section 76 could have been pursued earlier, yet it was not.
Practical takeaway: if the relief you want is for the company (set aside a contract, sue a third party, recover losses), section 77 is the gateway. Courts will not allow shareholders/directors to sidestep it by dressing company claims as personal grievances.
7. Misjoinder and the “who sues?” rule in removal disputes
The Court criticised the joinder of SMIC itself as an applicant when the dispute was, at its heart, about the personal rights of the ousted directors to hold office. The judgment underscores a recurring procedural principle: where office bearers challenge usurpation or procedural removal, they sue in their personal capacities, not “on behalf of” the entity whose leadership is contested (because that assumes the very question in dispute, who controls the entity).
Practical takeaway: plead carefully in governance fights. Misjoinder is not cosmetic; it signals conceptual confusion about the cause of action and can aggravate cost outcomes.
8. Punitive costs: criminal allegations in motion papers are expensive
The Court awarded attorney-and-client costs against the 2nd–7th applicants, driven by two features:
- Intemperate language and unproven accusations of criminality (including allegations against individuals and public institutions) without a proper evidentiary foundation; and
- Over-joinder of parties against whom no substantive relief was pursued, drawing unnecessary actors (including banks and regulators) into the litigation.
The message is sharp: motion proceedings are a poor vehicle for serious accusations of criminal conduct unless the facts are properly established. Speculation dressed as certainty will attract sanction.
Practical takeaway: if you allege fraud/corruption/criminality, you need a clear factual platform. If you do not have it, plead narrowly, avoid rhetoric, and separate governance relief from criminal complaints.
9. Conclusion: governance discipline, procedural discipline
This decision is a useful “how-to” guide in negative form, showing what not to do when director removals and shareholder conflicts erupt:
- Boards cannot gatekeep section 73 through agenda control.
- Ousted directors cannot rely on technicalities where shareholders were substantively alerted and lawfully voted.
- Company claims must go through section 77 (or, pre-emptively, section 76).
- Litigation tactics matter: careless joinder and ungrounded allegations will be punished in costs.
In a commercial environment where corporate conflict often turns personal and public, Sekhametsi reinforces that the Companies Act 2011 supplies structured remedies and the Court expects parties to use them precisely.