SOUTH AFRICA Law and Practice Contributed by: Professor Michael Katz, Matthew Morrison and Madison Liebmann, ENS
5.2 Role of Shareholders in Company Management Position Under the Companies Act As mentioned in 4.4 Appointment and Removal of Directors/Officers , shareholders are respon - sible for the appointment of a certain percentage of directors to the board of a company. As set out in 4.2 Roles of Board Members , the man- agement of a company is primarily done by the directors but, in addition to matters and actions that require shareholder approval in accordance with the Companies Act provisions, a company’s MOI may set out certain actions that may not be carried out unless approved by a majority of shareholders. Such actions are generally known as reserved matters. The Companies Act enables shareholders to perform their duty of oversight by allowing them to invoke their right to a statutory derivative action (see 5.4 Shareholder Claims for further discussion). This statutory derivative action can also be brought against any third parties who have committed any wrongdoing towards the company. 5.3 Shareholder Meetings Position Under the Companies Act The Companies Act provides that a public com - pany must convene an AGM initially no more than 18 months after the company’s incorpora - tion, and thereafter must convene one annually (and within 15 months after the preceding year’s AGM). AGMs are not required for private corpo - rations; however, they are commonly included in the company’s MOI. At a minimum, the following matters must be covered at an AGM of a public company: • the presentation of the directors’ report, the audited financial statements of the company
for the immediately preceding financial year, an audit committee report, an SEC report and a remuneration report; • the election of any directors, to the extent required by the Companies Act or the com - pany’s MOI; • the appointment of the company’s auditor for the ensuing financial year, an audit commit - tee (in the case of public and state-owned companies only) and an SEC; and • any other issue presented by shareholders, irrespective of whether the company was given notice of the subject matter. Furthermore, shareholders’ meetings may be convened to deliberate on specific company matters, such as the approval of a fundamental transaction, as and when requisitioned by the board, a person indicated in the company’s MOI or rules, or shareholders who, in aggregate, hold at least 10% of the voting rights entitled to be exercised on the subject matter to be voted on (except where a court decides that the subject matter in question is frivolous or vexatious, or has already been decided by shareholders). Any general meeting of shareholders can be conducted entirely or partially by electronic com - munication, provided that the electronic medium allows all shareholders to participate reasonably effectively as set out in the Companies Act. Default positions In terms of the Companies Act, the following are the default or standard positions, which can be altered by the company’s MOI: • for a public and non-profit company, the notice period is 15 business days (in any other case, the notice period is ten business days);
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