SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
The Shareholders The following matters require shareholder approval by a special resolution (generally by 75% of shareholders, although the threshold may be higher or lower if specified in terms of a company’s MOI, provided it must be 10% higher than the threshold for an ordinary resolution): • amending the MOI, or ratifying a consolidated revision thereof; • ratifying ultra vires acts by the board; • providing financial assistance to directors or to related companies (such as group compa - nies); • providing financial assistance to acquire securities of the company or of a related company (the Companies Amendment Act has amended the Companies Act so that Section 45, which governs financial assis - tance, no longer applies to the giving by a company of financial assistance to or for the benefit of its subsidiaries); • approving certain “fundamental transactions” such as major asset disposals, schemes of arrangement or statutory mergers/amalgama - tions; • certain issues of shares, securities or options; • certain share repurchases; • remunerating directors in that capacity; and • winding up the company on a voluntary basis. Shareholders must approve the appointment of auditors and an audit committee where appli - cable, by way of an ordinary resolution (gener - ally 50% plus one vote). A company’s MOI may stipulate particular “reserved matters” that can only be considered after shareholder approval. Moreover, the Listings Requirements require shareholder approval before the implementa - tion of certain transactions, either by ordinary resolution (eg, a category 1 major transaction) or by special resolution (eg, a share buy-back). The
approval threshold of JSE-listed companies for special resolutions is 75% and 50% for ordinary resolutions.
4. Directors and Officers 4.1 Board Structure
South African company law provides for a sin - gle-tier, unitary board structure. The Companies Act does not distinguish between executive and non-executive directors, and both are full board members. King IV does, however, distinguish between and recommend specific roles for executive and non-executive directors. In terms of the Companies Act, a private com - pany or personal liability company must have a minimum of one director, whereas a pub - lic, a non-profit and a state-owned company must have a minimum of three directors. Cer - tain industries, such as the banking and finan - cial sector, may impose additional governance requirements on boards. King IV recommends that the governing body (ie, the board of directors) should assume respon - sibility for its composition, including setting out the processes required for it to achieve the appropriate balance of knowledge, experience, skills, independence and diversity to effectively and objectively perform its governance respon - sibilities. King IV recommends that the board should consist of a majority of independent non- executive members. In determining the required number of board members, King IV recommends that the board considers, inter alia: • the appropriate mix of executive, non-execu - tive and independent non-executives;
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