Chapter 5 Flashcards
A company acts through its
a) shareholders in general meetings
b) directors, managers and/or its employees
Which group of persons has the right (or duty) to perform various actions on behalf of the company will usually be determined by?
Companies Act, 2008 and company’s own Memorandum of Incorporation (MOI)
Section 71 (1)
Gives power to the shareholders to remove a director at any time by ordinary resolution
Section 35
Legal nature of company shares and requirement to have shareholders
Section 36
Authorization of shares
Section 38
Issuing shares
Section 50
Securities register and numbering
Certain rights that shareholders have:
- Receiving dividends if and when declared
- when company company if liquidated
- To vote on certain matters
Shareholder
The holder of a share issued by a company and who is entered as such in the certificated or uncertificated securities register of a company.
Shareholders meeting
Is a meeting of those holders of a company’s issued securities who are entitled to exercise voting rights in relation to that matter
Two types of shareholders meetings
- General meetings: general body of shareholders.
- Class meetings: shareholders of a specific class.
Section 26(1)
A person who holds or has a beneficial interest in any securities issued by a profit company has a right to inspect and copy the information contained in certain records of the company, including the securities register of the profit company, or the members register of a non-profit company that has members.
Section 26(2)
Outsiders also have a right to inspect the securities register of a profit company, or the members register of a non-profit company that has members.
Section 41
Provides that an issue of shares to certain persons in certain circumstances can only take place if approved by special resolution of the shareholders of a company.
Section 66(9)
Provides that remuneration (directors fees) can only be paid to directors in accordance with a special resolution of shareholders.
Section 66(9)
Provides that remuneration (directors fees) can only be paid to directors in accordance with a special resolution of shareholders.
Section 15(2)(a)(iii)
Provides that the MOI of a company must include any provision imposing on the company a higher standards, greater resolution, longer period of time or any similarly more onerous requirement, than would otherwise apply to the company in terms of an unalterable provision of the Act.
Certificated and Uncertificated
Means that there is a physical share certificate and uncertificated means that there is an electronic record of the shares that have been issued.
Share
Means one of the units into which the proprietary interest in a profit company is divided.
Securities
Any shares, debentures or other instruments, irrespective of their form or title, issued or authorized to be issued by a profit company.
A shareholders meeting will be properly convened only if the
prescribed notice for convening the meeting was given by:
– the board of directors
– any other person specified in the Memorandum of Incorporation or rules
– the shareholders, by written demand (10 percent voting rights attaching to
share).
When must a public company hold its first Annual General Meeting?
A public company must hold its
first AGM no more than 18
months after the company’s date
of incorporation, and thereafter no
more than 15 months after the
date of its previous AGM.
Business to be provided for at AGM:
– Presentation of directors’ report, audited financial statements and an audit
committee report
– Election of directors
– Appointment of an auditor and an audit committee
– Any matters raised by shareholders.
Section 62(1)
A company must deliver a notice to all of the
shareholders. Failure to do so will render
decisions taken at the meeting invalid
