⎯⎯ KRG 200 ⎯⎯

COMPANIES
PART 2
“the Act” refers to the Companies Act

*SHs = shareholders

UNIT 2
CORPORATE GOVERNANCE - SHAREHOLDERS

GENERAL
▪ “Corporate governance”: the systems, structures and processes associated with management,
decision-making and control in organisations.
▪ Organs of company:
i. Board of directors, and
ii. Shareholders
- SHs are required to make certain substantive decisions regarding management of
company.
- Decisions made at a shareholders’ meeting.
- Act provides essential procedural rules relating to these meetings 

MEETINGS
Types of meetings:
1. Shareholders’ Meetings, and
2. Annual General Meeting

SHAREHOLDERS’ MEETINGS
▪ “Shareholders’ meeting” = a meeting of SHs of company at which SHs are given opportunity to
debate & vote on matters affecting the company.
▪ Act gives SHs at SHs’ meeting substantial constitutional and managerial powers:
- power to amend MOI;
- power to vote on & approve a rule made by Board relating to governance of company;
- power to remove directors;
- power to fill vacancies on Board;
- power to approve disposal of all or greater part of company’s assets/undertaking
May:
- Board, or any other person specified in MOI, may call SH meeting at any time.

Must:
- Company must hold SH meeting:
i. When Board is required by Act or MOI
ii. Whenever required to fill vacancy on Board (s70(3))

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iii. When AGM of public company is required

iv. Other required meetings by MOI
v. Written & signed demands for a meeting delivered to company, where each
demand describes purpose of meeting and aggregate of demands are made by
holders with >= 10% voting rights.

Notice of meetings
a) Form and content:
- In writing.
- Including date, time, place, record date for meeting & general purpose.
- Copy of any proposed resolution & % voting rights required for it to be adopted &
statement that SHs have right to appoint proxy to attend meeting for him.
- Any material defect (mistake) on the notice must be expressly ratified by 100% of SHs.
b) Notice period
- 15 business days (public & non-profit companies)
- 10 business days (any other company)
*But MOI can amend these periods.

Quorum and Conduct

▪ “Quorum” = minimum SHs required at meeting to make proceedings valid:
- Decision may not be debated until >=25% holders of shares on that matter are present
(personally or by proxy) = votes quorum.
- MOI may however set lower % (no lower limit).
- Irrespective of votes quorum, company with >2 SHs may not start meeting/debate until
>=3 SHs are present = person quorum.
▪ If votes or person quorum is not satisfied within 1 hour after appointed time at which meeting is
to begin, meeting is:
- Postponed without motion, vote or further notice for 1 week.
- If quorum is still not met at time of postponed meeting to begin, SHs present in person
or by proxy is deemed to constitute a quorum.

Resolutions (Section 65)

▪ Any resolutions must be clear & specific to enable SHs to decide whether to participate in
meeting.
Special resolution (>=75% approval of voting exercised required)
- Required for:
a) Amending MOI
b) Ratification of actions by company/directors outside their authority
c) Approval of proposed fundamental transaction (see later)
d) Approval of issue of shares or grant of rights
e) Authority to Board to grant financial assistance
f) Approval of Board for reacquisition of shares from director
g) Approve basis for compensation to directors
*see Section 65 for more details.

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Ordinary resolution (>50% approval of voting exercised required)

▪ MOI can provide for higher or lower % for special resolutions, and higher % for ordinary
resolutions.
- But >=10% gap required between highest ordinary and lowest special resolution.

General
▪ SH not obliged to personally attend shareholder’s meeting – he may appoint a proxy to attend,
participate in, speak and vote on his behalf.
- Proxy appointment must be in writing, dated & signed by SH.
▪ Meeting may be held entirely by electronic communication, and if meeting is held in person, a
SH may participate electronically.

ANNUAL GENERAL MEETING (AGM)

▪ “AGM” = annual meeting of SHs where particular business is required to be conducted.
- Also a “SHs’ meeting”, but not about a specific resolution.
- Compulsory for public companies (not for private companies)
- Gives SHs opportunity to question directors on issues relating to company’s affairs.
- 1st AGM must be held within 18 months after company’s incorporation.
- Subsequent AGMs must be once per calendar year but no more than 15 months after
previous AGM.
▪ At least the following must be transacted at AGM:
i. Presentation of:
- Directors’ report
- Audited financial statements of preceding financial year
- Audit committee report
ii. Election of directors
iii. Appointment of:
- Auditor for the ensuing financial year
- Audit committee
iv. Any matters raised by SHs, with or without advance notice to company

Sources:
- New Entrepreneurial Law, 2nd edition, LexisNexis
- Companies Act 71 of 2008

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