SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
3.3 Decision-Making Processes The board of directors, management team and shareholders ordinarily make decisions in the following ways. The Board of Directors The board acts through board resolutions and makes decisions by a majority vote, with each director normally carrying one vote, although this may be varied in the MOI. Board meetings must be called on reasonable notice, and the quorum necessitates the presence of a major - ity of directors at the meeting. It is important to note that a company’s MOI may require unani - mous or another consent threshold, if the default position (ie, the majority requirement) in the Companies Act is altered. Moreover, instead of holding a board meeting, the board can make decisions via “round robin” written resolutions, which require approval by a majority of directors of the subject matter of the round robin resolu - tions. These resolutions generally have the same status as if passed at a meeting of the board. The board of directors may appoint as many committees as it deems necessary and assign any of its authority to them (while maintaining ultimate accountability for their decisions and conduct). Please see 1.2 Sources of Corporate Governance Requirements regarding the man - datory committees to be appointed by public companies. Management The management team implements board deci - sions within its delegated and prescribed author - ity. Management may include prescribed offic - ers of a company (see 3.1 Bodies or Functions Involved in Governance and Management ).
the right to apply to a court in order to prevent a company from doing anything inconsistent with the Companies Act, and a trade union or employee representative may invoke the statu - tory derivative action. 3.2 Decisions Made by Particular Bodies A company’s MOI ordinarily designates the decision-making powers to the board of direc - tors (although there are some decisions that are reserved for shareholder consideration). The main decisions made at each level of the man - agement of the company are as follows. • The board of directors – the board makes the majority of decisions customarily related to a company’s strategy and general manage - ment. In this regard, the business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that the Companies Act or the company’s MOI provides otherwise. • Management – in instances where the board of directors is different to the management team, the latter will make decisions on a com - pany’s day-to-day operations within the ambit of the powers delegated to management by the board. • The shareholders – in accordance with the Companies Act, there are a number of deci - sions that are specifically reserved for share - holders and that can only be passed by either a special or ordinary shareholder resolution (see 3.3 Decision-Making Processes for fur- ther details). A company’s MOI might include matters in addition to those required in terms of the Companies Act. In certain instances, the shareholders’ approval relates to deci - sions of directors.
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