N9809

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 18 OF 2021 (COMM)

BETWEEN:
RODNEY POKAPIN
in his capacity as a Shareholder and Director terminated of Peren Investment Limited
- Plaintiff-

AND:
KEPO POMAT
In his capacity as Chairman of Board of Directors of Peren Investments Ltd
-First Defendant-

AND:
POSONGOL POMAT
In his capacity as director of Peren Investment Limited
-Second Defendant-

AND:
PEREN INVESTMENT LIMITED
as Acting CEO of Telikom (PNG) Limited
-Third Defendant-

AND:
HARIET KOKIVA
In her capacity as the Acting Registrar of Companies
-Fourth Defendant

Waigani: Tamade AJ
2022: 1st April, 24th June

COMPANIES ACT – section 134 (2) – statutory requirements for notice of meeting – even for a company without a constitution – notice of hearing of a meeting of directors or shareholders must be personally served on the director or shareholder concerned – notice of hearing must state the purpose of the meeting is to remove director – a director must have knowledge of the meeting – to answer at the meeting as to his or her removal – the validity of shareholders meeting without serving the notice of hearing on the director and subsequent removal of director – meeting is void – and all resolutions passed in the meeting is null and void and have no effect – plaintiff is reinstated as director of the company. 

Cases Cited:

The following case iss cited in the judgment:

Pute v Apinanung [2021] PGSC 63; SC2139 
Tavul v Konga [2018] PGNC 499; N7599 
Magasaki Ltd v Bai [2007] PGNC 75; N3221 

Legislation:

Companies Act 1997

Counsel:	

Mr. Jerome Sioni, for the Plaintiff
Mr. Carl Kuira, for the First Defendant

24th June, 2022

1.	TAMADE AJ: The Plaintiff is seeking in the Originating Summons declaratory relief to declare that a purported meeting of shareholders and directors of the subject landowner company, Peren Investment Limited, on 19 June 2019 was in contravention of the Companies Act and that all resolutions passed in that meeting including the termination of the Plaintiff as a director of Peren Investment Limited be declared null and void.

2.	Essentially it is the Plaintiff’s claim that he was not personally served notice of such a meeting and had no knowledge of the said meeting.

3.	The Plaintiff is therefore seeking reinstatement as a director and shareholder of Peren Investment Limited and that the Registrar of Companies takes steps to amend the Company Office records of Peren Investment Limited accordingly.

4.	The Plaintiff also seeks that a new shareholder’s meeting of Peren Investments Limited be ordered by the Court to be convened to address important and pertinent issues relating to the affairs of Peren Investment Limited.

5.	At the outset is the issue of whether the other Defendants named in these proceedings were served the Originating process and are aware of the hearing date of the matter.

6.	The Notice of Intention to Defend filed by Kuira Lawyers on 3 November 2021 states that the “Defendants intend to Defend these proceedings.” However, the next line in the Notice of Intention to Defend, states that “all documentation and processes in this proceeding be served on the First Defendant, care of his lawyers.”

7.	The Plaintiff then took steps to serve all court documents and any relevant notices on Kuira Lawyers as acting for all Defendants. It was only at the hearing of this matter that Mr. Kuira did clarify that he only acts for the First Defendant however the confusion in the Notice of Intention to Defend by Kuira Lawyers led the Plaintiff to treat Kuira Lawyers as acting for all Defendants.

8.	Be that as it was, the matter had commenced on the trial, Mr. Sioni of the Plaintiff had commenced his opening and made submissions and it was only when Mr. Kuira was making his reply did, he raise the issue of whether the other Defendants were served in the proceedings as they did not attend the trial of the matter. Mr. Sioni in rebuttal then referred the Court to the Notice of Intention to Defend by Kuira Lawyers that led them to believe that Kuira Lawyers acted for all Defendants in the matter. 

9.	As this issue only arose at the trial of this matter in submissions by counsels, I will accept the submissions of Mr. Kuira on behalf of his client the First Defendant, and consider the arguments on the substantive nature of the matter as is presented by the Plaintiff and the First Defendant and come to a determination accordingly.

Plaintiff’s evidence and the First Defendant’s response

10.	  It is the Plaintiff’s evidence that Peren Investment Limited was a company set up by the landowners in Manus to participate in business opportunities in Manus. The company was incorporated on 16 June 2014.

11.	  The Plaintiff and the First and Second Defendants are shareholders and directors of the company. The shareholders and directors of the company represent the interest of their various sub-clans and sit on the board as representing a voice for their sub-clans.

12.	 Peren Investment Limited went into business and eventually there were disagreements between the directors and shareholders as to how the business of Peren Investment Limited should be managed. The Plaintiff alleges that the First Defendant as the Chairman of the Board of Directors of Peren Investment Limited kept the Plaintiff out of decisions of the company and the Plaintiff was clearly aggrieved that the funds of the company were not managed the way it should as he says.

13.	On 10 May 2021, the Plaintiff accessed a copy of the Company extract of Peren Investment Limited through the IPA website and found that he was removed as a director of Peren Investment Limited.

14.	The Plaintiff then became aware that there was a meeting held on 19 June 2019 which removed him as a director however he was not informed of the meeting nor did he receive any notice as to the said meeting. The Plaintiff, therefore, states that amongst the agendas discussed at the said meeting, the Plaintiff was removed as a director of the company, and also shares belonging to the deceased brother of the First Defendant were transferred to the First Defendant himself.

15.	 The company Peren Investment Limited does not have a company constitution. The Plaintiff is seeking orders pursuant to relevant provisions in the Companies Act 1997 to declare that the said meeting of Peren Investment Limited held on 19 June 2019 is unlawful and all resolutions passed on that day be declared a nullity, that the Plaintiff is restored as a director of Peren Investment Limited and that there be ordered a new meeting of Peren Investment Limited to discuss the relevant business of the company going forward.

16.	The First Defendant in his affidavit filed on 3 November 2021 states that Peren Investment Limited is a landowner company created for the benefit of the Peren Clan in Manus Province which consists of three other sub-clans. The Company was set up to participate in business opportunities from the PNG government and the Australian government considering the refugee processing center in Manus Province.

17.	 There are allegations by the First Defendant, Mr. Kepo Pomat that the Plaintiff had acted contrary to the best interest of Peren Investment with Tasion Group of companies which led to physical confrontations at the East Lorengau Refugee Transit Centre wherein local authorities were called in to contain the situation. Mr. Pomat states that this situation created distrust amongst landowners with the Plaintiff which led to the meeting of 19 June 2019 and the removal of the Plaintiff as a director of Peren Investment Limited.

18.	 From the evidence of both the Plaintiff and the First Defendant, there was clearly a falling out of the relationship between the First Defendant and the Plaintiff with each gentleman accusing the other of what each had done for the company.

19.	 There is no evidence by the First Defendant as to whether the Plaintiff was served with a Notice of the meeting of 19 June 2019. There is admission in the submission of the First Defendant that as the company was a landowner company, shareholders live within the same locality, and therefore the requirement for notice was not strictly complied with.

The Law of shareholders meeting and directors’ meetings

20.	  Peren Investment Limited the subject company does not have a company constitution and therefore the relevant provisions of the Companies Act 1997 apply as to the calling of meetings of shareholders and directors.

21.	 Meetings of shareholders of a company be it an annual general meeting or a special shareholder meeting as per section 102 and section 103 of the Companies Act. The First Defendant has submitted that because of the serious nature of the matter, the Court should order a meeting of the shareholders and directors pursuant to section 104 of the Companies Act. Pursuant to section 105 of the Companies Act, the procedure for meetings of a company in the absence of a Constitution is provided for in Schedule 2 of the Companies Act.

22.	 Schedule 2.2 of the Companies Act states that:

Sch. 2.2. Notice of meetings.
(1) Written notice of the time and place of a meeting of shareholders shall be sent to every shareholder entitled to receive notice of the meeting and to every director and an auditor of the company not less than 14 days before the meeting.
(2) The notice shall state–
(a) the nature of the business to be transacted at the meeting in sufficient detail to enable a shareholder to form a reasoned judgment in relation to it; and
(b) the text of any special resolution to be submitted to the meeting.
(3) An irregularity in a notice of a meeting is waived where all the shareholders entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity, or where all such shareholders agree to the waiver.
(4) Subject to the constitution of a company, the accidental omission to give notice of a meeting to, or the failure to receive notice of a meeting by, a shareholder does not invalidate the proceedings at that meeting.
(5) Subject to the constitution of the company, where a meeting of shareholders is adjourned for less than one month, it is not necessary to give notice of the time and place of the adjourned meeting other than by announcement at the meeting which is adjourned.

23.	 In the Supreme Court case of Pute v Apinanung [2021] PGSC 63; SC2139 (29 July 2021), the Supreme Court agreed with the lower  Court’s decision in that case that a Notice of Hearing of a meeting of directors or shareholders has to be personally served on the director or shareholder concerned as in the case of the removal of a director, he has to have knowledge of the meeting to answer to the agenda at the meeting as to his removal as in the case in PNG and also that directors are answerable to the shareholders of the company.

24.	The Plaintiff has relied on the case of Tavul v Konga [2018] PGNC 499; N7599 (6 December 2018) where the court stated that a shareholders meeting is valid for all purposes if it complies with the Constitution of a company and or with the Companies Act and also that in a meeting of shareholders of a company, shareholders and directors including the secretary of the company must receive notice of the meeting and a meeting intending to remove a director must state that purpose as can be seen in the case of Magasaki Ltd v Bai [2007] PGNC 75; N3221 (7 May 2007)

25.	 I find that there is no evidence that the Plaintiff had received any notice of the said meeting of Peren Investment Limited on 19 June 2019 as a director and a shareholder. Accordingly, I find that the said meeting of Peren Investment Limited on 19 June 2019 is void and all resolutions passed in that meeting are null and void and of no effect. It follows that the Plaintiff is therefore reinstated as a director of Peren Investments Limited.

26.	 Term 3 of the Originating Summons seeking that the First and Second Defendants be fined K10 000 pursuant to section 114(2) of the Companies Act for acting in contravention of the Companies Act is refused as there is no evidence that the Defendants’ conduct is wilful disobedience of the provisions of the Companies Act. The Second Defendant is unrepresented in these proceedings. As this is a landowner company, the best interest of the company is served without any order penalizing the Defendants punitive in nature and that all shareholders and directors of the meeting should be ordered to convene in a properly constituted meeting with every interested person having due notice of the meeting to discuss the management and business of the company.

27.	I, therefore, make the following orders:

i)	Terms 1, 2, and 4 of the Originating Summons is granted.

ii)	Terms 3 and 5 of the Originating Summons is refused.

iii)	A meeting of the shareholders and directors of Peren Investment Limited shall be held at a venue convenient to all shareholders and directors of Peren Investment Limited in Lorengau, Manus Province within a month from today subject to appropriate notice of the meeting to be given to every shareholder, director and the secretary of the Company with fourteen (14 days) notice of the date of the meeting on the proposed agenda as in Term 4 of the Originating Summons and such other agenda as the shareholders and directors of Peren Investment Limited deem necessary.

iv)	The First Defendant shall meet the costs of the Plaintiff for these proceedings to be taxed if not agreed as the Plaintiff has come to Court to obtain a resolution of these issues.

v)	Time is abridged to the date of these orders to take effect forthwith.

Orders accordingly.
______________________________________________________________
Twivey Lawyers:  Lawyers for the Plaintiff 	
Kuira Lawyers:  Lawyers for the First Defendant