Notice of Annual General Meeting

In order for a company to achieve its objectives, it must make decisions about its day-to-day operations, as well as its long-term goals and business aspirations. Hence, in this regard, you need to know how does one practically give effect to this? And between the shareholders and the board of directors (“the Board”), who is responsible for what?

As a broad construct, one can use “the tree and the fruits” metaphor, in that any decision pertaining to the tree (or the income earning structure of the company), typically falls within the realm of the shareholders, and any decision pertaining to the fruits (or the income earning operations) of the company, typically falls within the realm of the Board.

In order for a company to give effect to the above aspects of achieving its objectives, making decisions about its day-to-day operations, as well as its long-term goals and business aspirations, it is necessary for a company to conduct Annual General Meetings.

Unlike many other jurisdictions, South Africa’s statutory framework anticipates and caters for virtual AGMs and meetings. The Act provides that as long as a company’s memorandum of incorporation (“MOI“) does not preclude it, a company may provide for a shareholders’ meeting to be conducted entirely by electronic communication. The requirements for such meetings are that:

• the electronic communication used must enable all persons participating in the meeting to communicate concurrently with each other without an intermediary and to participate reasonably effectively in the meeting;
• the notice of the meeting must inform shareholders of the availability of that form of participation, and provide any necessary information to enable shareholders or their proxies to access the available electronic communication.

A notice of a shareholders’ meeting must be in writing, and must include the date, time and place for the meeting, and the record date for the meeting. Such a notice will usually denote the physical location as the ‘place of the meeting’. A close reading of section 63(2) indicates that the Act envisions situations where a shareholders’ meeting will have no physical location.

Accordingly, the procedural requirement of section 62(3)(a) of the Act would be satisfied by stipulating in the notice that the meeting will take place virtually and providing all of the information regarding the platform on which the meeting will be held and the manner in which shareholders or their proxies may access the meeting.

The Johannesburg Stock Exchange (“JSE“) has partnered with The Meeting Specialist (“TMS“) to launch the first completely virtual AGMs in South Africa. Alexander Forbes hosted South Africa’s first fully virtual general meeting by a listed company using the services provided by the JSE and TMS. Alexander Forbes issued a press release stating that a total of 90.93% of voteable shares were represented either in person or by proxy at the virtual meeting.

Certain digital service providers have developed apps that allow users access to the meeting, notices and documents, and which allows them to vote in real time. It is important to offer a technical support line or another mechanism to assist shareholders to access the electronic tool selected by the company.

In instances where shareholders do not have access to reliable internet connection, after taking account of the number of shareholders that will make use of the proxy option, and if Lockdown regulations allow, it may be prudent to make a physical location available where shareholders, who are unable to access the virtual platform, can use the facilities provided to participate and vote.

This location would not become the place of the meeting, but would allow shareholders to access the virtual meeting if they do not have access to the necessary technology to participate in the meeting electronically.

There is, however, no obligation on the company to assist shareholders in this way: access to the medium or means of electronic communication is at the expense of the shareholder or proxy, except to the extent that the company determines otherwise.

Annual General Meeting

Public companies are required to hold annual general meetings (AGMs). The first such meeting must take place within 18 months of the incorporation of the company and thereafter the meetings must be held no more than 15 months after the previous meeting (or another period as determined upon application by the Companies Tribunal).

Annual General Meetings must be held to provide at minimum for the following:

• The presentation of the directors and audit committee reports
• The presentation of the audited financial statements for the immediately preceding financial year;
• The election of directors, as required by law and the MOI;
• The appointment of the auditors and the audit committee;
• Any matters raised by shareholders, regardless of whether advance notice of the topic was given.

The company must deliver a notice of the meeting to each shareholder at least 15 business days prior to the meeting. All shareholder meetings of public companies may be held in South Africa or in another country, but must be accessible for electronic participation by all shareholders, irrespective of the location of the meeting.