Chapter 9 - Corporate governance : Shareholders

Question 1

What is a proxy?

Answer 1

A person who is appointed to represent a shareholder at a meeting of shareholders.

Question 2

What is the majority rule?

Answer 2

In the affairs of a corporation, the will of those holding a majority of votes must ultimately prevail.

Question 3

What is an ordinary resolution?

Answer 3

A decision taken at the shareholders’ meeting, with the support of more than 50% of the voting rights exercised or as indicated in the MoI.

Question 4

What is a special resolution?

Answer 4

A decision taken with the support of more than 75% of the voting rights exercised or as determined in the MoI.

Question 5

What is a quorum?

Answer 5

The number of persons needed to be present at a shareholder’s meeting for the meeting to begin. Section 64 provides that a meeting may not begin until sufficient persons holding at least 25% of all the voting rights in respect of at least one matter to be decided on at that meeting are resent.

Question 6

What is a Unanimous assent?

Answer 6

Where all the shareholders agree to pass a resolution.

Question 7

How must a notice of a meeting be conveyed?

Answer 7

1. Be in writing.
2. Indicate the date, time and place of the meeting
3. Indicate the general purpose of the meeting.
4. Contain a statement that a shareholder is entitled to appoint a proxy who may participate in the meeting and vote on his or her behalf.
5. Indicate that participants in the meeting have to provide proof of identification.
6. Be accompanied by a copy of any proposed resolution to be discussed at the meeting.
7. Be given at least 10 days prior to the meeting (15 days for public companies and non-profit companies with members)

Question 8

What are the requirements with respect to the appointment of a proxy?

Answer 8

1. The appointment must be in writing.
2. The appointment is valid for one year.
3. The appointment may be for a specific period of time.
4. The appointment may be for two or more persons concurrently exercising voting rights for different shares.

Question 9

What are the effects of appointing a proxy?

Answer 9

1. A proxy may delegate authority to act on behalf of the shareholder to another person.
2. A copy of the proxy appointment to act on behalf of the shareholder must be delivered to the company before the shareholders’ meeting.
3. A shareholder is not compelled to make an irrevocable proxy appointment.
4. A shareholder may alter a proxy by cancelling it in writing, appointing another proxy, and delivering a copy of the revocation to the proxy and the company.

Question 10

Which matters must be transacted at the Annual General Meeting?

Answer 10

1. Election of directors
2. Appointment of an auditor for the following financial year.
3. Appointment of an audit committee
4. Presentation of the directors’ report
5. Presentation of audited financial statements for the immediately preceding financial year.
6. Presentation of an audit report.
7. Any matter raised by shareholders

Question 11

How to convene a meeting in special circumstances?

Answer 11

If a company cannot convene a meeting because it has no directors , it is possible to authorise another person in terms of the MoI to convene a meeting in these circumstances.

Question 12

How are voting rights exercised in a profit company with only one shareholder?

Answer 12

1. The shareholder may exercise all the voting rights
2. Rules of setting the date, written polling, convening a shareholder’s notice of meetings and the normal quorum requirements do not apply.

Question 13

How are voting rights exercised in a profit company with only one director?

Answer 13

The director may exercise any power or perform any function of the board at any time, except when the MoI provides otherwise.

Question 14

How are voting rights exercised in a company where every shareholder is also a director?

Answer 14

Shareholders may decide on any matter to be referred by the board at any time, without notice or compliance with any internal formalities, except when the MoI provides otherwise, subject to certain specified conditions.

Question 15

What are two types of special resolutions provided for by the Companies Act?

Answer 15

1. ordinary resolution requiring 50% of the votes exercised.
2. Special resolution requiring 75% of the votes exercised.

Question 16

When is a meeting postponed or adjourned?

Answer 16

If, after one hour of the appointed time of a meeting, a quorum is not present, the meeting must be postponed for one week. In exceptional circumstances, it is possible to extend the one-hour period. No new notice needs to be issued regarding the meeting that has been postponed for one week, unless the venue has changed. The shareholders entitled to vote may at any time decide to adjourn a meeting and set a date for a subsequent meeting at any agreed-upon time, as long as it is not later than 120 business days after the date of the original adjourned meeting.