Chapter 5

Question 1

A company acts through its

Answer 1

a) shareholders in general meetings

b) directors, managers and/or its employees

Question 2

Which group of persons has the right (or duty) to perform various actions on behalf of the company will usually be determined by?

Answer 2

Companies Act, 2008 and company’s own Memorandum of Incorporation (MOI)

Question 3

Section 71 (1)

Answer 3

Gives power to the shareholders to remove a director at any time by ordinary resolution

Question 4

Section 35

Answer 4

Legal nature of company shares and requirement to have shareholders

Question 5

Section 36

Answer 5

Authorization of shares

Question 6

Section 38

Answer 6

Issuing shares

Question 7

Section 50

Answer 7

Securities register and numbering

Question 8

Certain rights that shareholders have:

Answer 8

1. Receiving dividends if and when declared
2. when company company if liquidated
3. To vote on certain matters

Question 9

Shareholder

Answer 9

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.

Question 10

Shareholders meeting

Answer 10

Is a meeting of those holders of a company’s issued securities who are entitled to exercise voting rights in relation to that matter

Question 11

Two types of shareholders meetings

Answer 11

• General meetings: general body of shareholders.
• Class meetings: shareholders of a specific class.

Question 12

Section 26(1)

Answer 12

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.

Question 13

Section 26(2)

Answer 13

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.

Question 14

Section 41

Answer 14

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.

Question 15

Section 66(9)

Answer 15

Provides that remuneration (directors fees) can only be paid to directors in accordance with a special resolution of shareholders.

Question 16

Section 66(9)

Answer 16

Provides that remuneration (directors fees) can only be paid to directors in accordance with a special resolution of shareholders.

Question 17

Section 15(2)(a)(iii)

Answer 17

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.

Question 18

Certificated and Uncertificated

Answer 18

Means that there is a physical share certificate and uncertificated means that there is an electronic record of the shares that have been issued.

Question 19

Share

Answer 19

Means one of the units into which the proprietary interest in a profit company is divided.

Question 20

Securities

Answer 20

Any shares, debentures or other instruments, irrespective of their form or title, issued or authorized to be issued by a profit company.

Question 21

A shareholders meeting will be properly convened only if the
prescribed notice for convening the meeting was given by:

Answer 21

– 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).

Question 22

When must a public company hold its first Annual General Meeting?

Answer 22

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.

Question 23

Business to be provided for at AGM:

Answer 23

– 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.

Question 24

Section 62(1)

Answer 24

A company must deliver a notice to all of the
shareholders. Failure to do so will render
decisions taken at the meeting invalid

Question 25

Proxy

Answer 25

A proxy is an agent appointed by a shareholder to attend, participate in, speak and vote on his or her behalf at a shareholder’s meeting.

Question 26

Ordinary resolution

Answer 26

A decision taken at a general meeting with the support of more than 50% of the voting rights exercised on the resolution.

Question 27

Special resolution

Answer 27

A decision taken at a general meeting with the support of at least 75% of the voting rights exercised on the resolution.