Business law 220 (BER 220) summary of Shareholders, Organs and Officers; Winding-up, Business Rescue and Deregistration; Close Corporations. Chapter 27, 29, 20, 31, 32, 33
• person who holds a share or shares issued by a company and who is registered as such in the
certificated or uncertificated shares register of the company
• person ceases to be a shareholder
▪ Death
▪ Insolvency
▪ Dissolution of the company
▪ Transfer and sale of shareholder’s shares to another by a company (quasi lien)
Certificated and uncertificated securities & securities register
• Certificated shares = evidenced by certificate
• Uncertificated shares = x evidenced by certificate
• certificate = name of company, name of shareholder, number and class of shares held by
shareholder and restriction on the transfer of those shares.
• uncertificated shares = administered + maintained by central securities depository or participant
at CSD.
• Public company = securities held by nominee → shareholder has duty to disclose:
o identity of person on whose behalf security is held
o identity of persons with beneficial interest in securities held
o number of securities
o class of securities
o extent of beneficial interest
• regulated company = maintain register of disclosers
Transfer of securities
• transferred by means of cession (ceding of personal rights cedent to a cessionary)
o the right to share in the dividends when they are declared,
o right to participate in meetings and votes
o right to share in net asset value upon winding up of company
• transfer of shares & registration of the transfer of shares = x same → take place separately
Statutory remedies for unlawful conduct by majority shareholders:
➢ Section 20(4): restrain company from transgressing Act
➢ Section 20(6): each shareholder has claim against anyone who intentionally, fraudulently or due
to gross negligence causes company to transgress the Act or MOI.
➢ Section 218(2): any person who transgresses Act = liable to person who suffers loss or damage
due to transgression of act
➢ Section 161 - Declaratory order: court can declare, protect, rectify harm done by company or
directors in contravention of the Act, MOI, rules or violation of any right
, ➢ Section 163(1) - Oppression remedy: Shareholder or director may apply to court for relief if an
act or omission of the company, business or powers directors are exercised in a manner that is
oppressive (tramples), unfairly prejudicial or disregards interests of applicant
➢ Section 164 - Dissenting shareholder’s appraisal right: shareholder may serve written demand
that company pay fair value for shares of shareholder if the shareholder opposes and opposed
resolution that materially and adversely affect their shares
➢ Section 165(2) - Statutory derivative action: shareholder, director, prescribed officer, trade union
or any other representative of employees or any person granted leave by court (locus standi)
may serve demand on company to commence/continue legal proceedings or related steps to
protect legal interests of company
Organs and Officers:
General
• Organs = shareholders, directors, SEC & Audit committee
• Social and Ethics committee (SEC) - ensures that companies are responsible citizens. Companies
like natural persons in community, should subscribe to principle of Ubuntu. Companies should
contribute to the betterment of the community and the community should reciprocate. They
should also conduct their affairs ethically.
• Audit committee - members ensure proper appointment of an auditor and that auditor execute
duties properly
Meetings of shareholders
1. Annual General Meetings (‘AGM’)
• within 18 months after incorporation
• thereafter: once every calendar year & x more than 15 months after previous AGM
2. General Meetings
• Board/other person specified in MOI/rule may call meeting any time:
o Board is required by Act/MOI to refer matter to shareholdres for decision
o Section 70(3) requires – fill a vacancy on board
o AGM of public company is required
o 1+ written & signed demands for meeting delivered (demand describes purpose of
meeting & aggregate demands signed and made by holders of 10%+ voting rights)
Resolutions
1. Ordinary resolution – 51% + voting rights
2. Special resolution – 75% + voting rights
Directors
• companies cannot represent themselves in transactions ∴ directors = controlling minds of
companies serve that purpose’
• directors= member of board/alternative director +person occupying position of director
/alternative director
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