LML4806 NOTES.
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LEARNING UNIT 1
Shareholders and company meetings
This learning unit deals with the provisions of the Companies Act 71 of
2008 (hereinafter referred to as “the Companies Act” or “the Act”) relating to
the types and convening of meetings, voting rights, and...
This learning unit deals with the provisions of the Companies Act 71 of
2008 (hereinafter referred to as “the Companies Act” or “the Act”) relating to
the types and convening of meetings, voting rights, and resolutions at
meetings of shareholders.
Study the prescribed sections in Chapter 11 of your prescribed
textbook. Study sections 58 to 65 and section 66(1) of the Companies
Act.
1.1 INTRODUCTION AND DEFINITIONS
Section 11.2 of the prescribed textbook
Section 66(1) of the Companies Act
1. Section 66(1) of the Companies Act provides that the business of the
company must be managed by, or under the direction of, its board,
which has the authority to exercise all the powers and perform any of
the functions of the company, except to the extent that the Act or the
company’s Memorandum of Incorporation (MOI) provides otherwise.
2. The directors therefore have a duty to manage the company, but
shareholders retain control over the directors by their power to appoint
and remove directors.
3. Some important decisions taken by directors must also be approved by
the shareholders.
You will know that you understand this learning unit if you are able to
answer the following key questions:
What is a record date?
What kinds of meetings can be held by a company?
Why and how are the meetings convened?
What is representation by proxy?
Which decisions require a special resolution?
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How do shareholders exercise their voting rights?
This learning unit is based on the following structure:
record date
calling of shareholders’ meetings
notice of meetings
postponement and adjournment of meetings
representation by proxy
quorum
conduct of meetings
majority rule
some exceptions to applicable rules and formalities
shareholders acting other than at a meeting
annual general meeting
convening a meeting in special circumstances
decisions of shareholders and others
1.2 RECORD DATE (As per the Act)
Section 11.3 of the prescribed textbook
Section 59 of the Companies Act
The board of directors may set a record date for determining the right of
shareholders regarding the following:
receiving a notice of a shareholders’ meeting
participating in and voting at a shareholders’ meeting
deciding any matter by written consent or electronic communication
Notes
RECORD DATE IS THE DATE ON WHICH A COMPANY DETERMINES
THE IDENTITY OF ITS SHAREHOLDERS AND THEIR
SHAREHOLDINGS.
1. The term "record date" is defined in section 1 of the 2008 Act as the
"date established under section 59 on which a company determines the
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identity of its shareholders and their shareholdings for the purposes of
this Act".
2. The 2008 Act introduces new provisions enabling the board to set one
or more appropriate record dates for determining which shareholders
should:
receive notice of a shareholders meeting,
participate in and vote at a shareholders meeting,
decide a matter by written consent
exercise pre-emptive rights,
receive a distribution, or
be allotted or exercise other rights.
3. The record date may not be earlier than the date on which the board
sets the record date, nor more than 10 business days before the date
on which the event or action for which the record date is being set, is
planned.
4. The method for calculating the number of business days is set out in
section 5(3) of the 2008 Act.
5. Where the board has set a record date, shareholders must be notified
of the record date as prescribed in the 2008 Act If the board does not
determine a record date, then the record date for convening a meeting,
is:
the latest date by which the company is required to give
shareholders notice of that meeting
or in the case of another event or action, the date of the event or
action, unless the company's Memorandum of Incorporation ("MOI")
or Rules provide otherwise.
1.3 CALLING OF SHAREHOLDERS’ MEETINGS
Section 11.7 of the prescribed textbook
Section 61 of the Companies Act
Notes
Note that the directors or other person specified in the MOI may call a
meeting at any time.
Instances when a company must hold a shareholder’s meeting
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