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Companies - Shareholders And Their Rights And Obligations (Ss 90-110)

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90.     Meaning of "shareholder"

            In this Act, the term "shareholder", in relation to a company, means -

     (a)     in the case of a company having a share capital -

           (i)       a person whose name is entered in the share register as the holder for the time being of one or more shares in the company,

          (ii)       until the person’s name is entered in the share register, a person named as a shareholder in an application for the registration of a company at the time of registration of the company, or

          (iii)       until the person’s name is entered in the share register, a person who is entitled to have that person’s name entered in the share register under a registered amalgamation proposal as a shareholder in an amalgamated company;

     (b)     in the case of a close company or a company limited by guarantee -

           (i)       a person, or

          (ii)       until the person’s name is entered in the register of members, a person named as a member in an application for the registration of the company at the time of registration of the company; and

     (c)     in the case of a company limited by guarantee, until the person’s name is entered in the register of members, a person who is entitled to have that person’s name entered in the share register under a registered amalgamation proposal as a member in an amalgamated company.

91.     Liability of shareholders

            (1) A shareholder is not liable for an obligation of the company by reason only of being a shareholder.

            (2) The liability of a shareholder or member to the company is limited to -

     (a)     in the case of a company limited by shares any amount unpaid on a share held by the shareholder;

     (b)     in the case of a company limited by guarantee any amount which the member has undertaken to contribute to the company in the event of its being wound up;

     (c)     in the case of a close company any amount which the member has contributed to the company or undertaken or agreed to contribute to the company under section 250;

     (d)     any liability expressly provided for in the constitution of the company;

     (e)     any liability under sections 130, 158 and 160;

     (f)      any liability to repay a distribution received by the shareholder or member to the extent that the distribution is recoverable under section 63; or

     (g)     any liability under section 92.

            (3) Nothing in this section affects the liability of a shareholder or member to a company under a contract, including a contract for the issue of shares, or for any delict, or breach of a fiduciary duty, or other actionable wrong committed by the shareholder.

92.     Liability for calls and forfeiture of shares

            (1) Where a share renders its holder liable to calls, or otherwise imposes a liability on its holder, that liability attaches to the holder of the share for the time being, and not to a prior holder of the share, whether or not the liability became enforceable before the share was registered in the name of the current holder.

            (2) Where -

     (a)     all or part of the consideration payable in respect of the issue of a share remains unsatisfied; and

     (b)     the person to whom the share was issued no longer holds that share, liability in respect of that unsatisfied consideration does not attach to subsequent holders of the share, but remains the liability of the person to whom the share was issued, or of any other person who assumed that liability at the time of issue.

            (3) The calls on shares, in respect of any amount unpaid on the shares by the shareholders, and the forfeiture of shares, where any person fails to pay on any call or any instalment of a call for which such person is liable at the time appointed for payment, shall be made in accordance with the provisions of the Seventh Schedule.

93.     Shareholders not required to acquire shares by alteration to constitution

            Notwithstanding anything in the constitution of the company, a shareholder is not bound by an alteration of the constitution of a company that -

     (a)     requires the shareholder to acquire or hold more shares in the company than the number held on the date the alteration is made; or

     (b)     increases the liability of the shareholder to the company, unless the shareholder agrees in writing to be bound by the alteration either before, on, or after it is made.

94.     Exercise of powers reserved to shareholders

            (1) Subject to section 247, powers reserved to the shareholders of a company by this Act may be exercised only -

     (a)     at a meeting of shareholders pursuant to section 105 or section 106; or

     (b)     by a resolution in lieu of a meeting pursuant to section 107.

            (2) Powers reserved to the shareholders of a company by the constitution of the company may be exercised -

     (a)     subject to the constitution, at a meeting of shareholders pursuant to section 105 or section 106;

     (b)     by a resolution in lieu of a meeting pursuant to section 107; or

     (c)     in the case of a private company or a close company by a unanimous agreement under section 247.

95.     Exercise of powers by ordinary resolution

            (1) Unless otherwise specified in this Act or the constitution of a company, a power reserved to shareholders may be exercised by an ordinary resolution.

            (2) An ordinary resolution is a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the question.

96.     Powers exercised by special resolution

            (1) Notwithstanding the constitution of a company, when shareholders exercise a power to -

     (a)     adopt a constitution or alter or revoke the company’s constitution;

     (b)     approve a major transaction;

     (c)     approve an amalgamation of the company under section 224; or

     (d)     wind up the company, the power shall be exercised by special resolution.

            (2) A special resolution pursuant to paragraph (a), (b) or (c) of subsection (1) can be rescinded only by a special resolution.

            (3) A special resolution pursuant to paragraph (d) of subsection (1) cannot be rescinded in any circumstances.

            (4) At any meeting at which a special resolution is submitted, a declaration of the chairman that the resolution is carried, shall unless a poll is demanded, be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour or against the resolution.

97.     Management review by shareholders

            (1) Notwithstanding anything in this Act or the constitution of the company, the chairman of a meeting of shareholders of a company shall allow a reasonable opportunity for shareholders at the meeting to question, discuss, or comment on the management of the company.

            (2) Notwithstanding anything in this Act or the constitution of the company, a meeting of shareholders may pass a resolution under this section which makes recommendations to the Board on matters affecting the management of the company.

            (3) Unless carried as a special resolution or unless the constitution so provides, any recommendation under subsection (2) shall not be binding on the Board.

98.     Shareholder may require company to purchase shares

            Where -

     (a)     a shareholder is entitled to vote on the exercise of one or more of the powers set out in-

           (i)       section 96(1)(a), and the proposed alteration imposes or removes a restriction on the business or activities in which the company may engage, or

          (ii)       section 96(1)(b) or (c);

     (b)     the shareholders resolved, pursuant to section 96, to exercise the power;

     (c)     the shareholder cast all the votes attached to shares registered in the shareholder’s name and having the same beneficial owner against the exercise of the power; or

     (d)     the resolution to exercise the power was passed under section 107, the shareholder did not sign the resolution, that shareholder is entitled to require the company to purchase those shares in accordance with section 99.

99.     Notice requiring purchase

            (1) A shareholder of a company who is entitled to require the company to purchase shares by virtue of section 98 may -

     (a)     within 10 working days of the passing of the resolution at a meeting of shareholders; or

     (b)     where the resolution was passed under section 107, before the expiration of 10 working days after the date on which notice of the passing of the resolution is given to the shareholder, give a written notice to the company requiring the company to purchase those shares.

            (2) Within 20 working days of receiving a notice under subsection (1), the Board shall -

     (a)     agree to the purchase of the shares by the company;

     (b)     arrange for some other person to agree to purchase the shares;

     (c)     apply to the court for an order under section 102 or section 103; or

     (d)     arrange, before taking the action concerned, for the resolution to be rescinded in accordance with section 96 or decide in the appropriate manner not to take the action concerned, as the case may be.

            (3) The Board shall, within the 20 working days give written notice to the shareholder of the Board’s decision under this subsection.

100.   Purchase by company

            (1) Where the Board agrees under section 99(2)(a) to the purchase of the shares by the company, it shall, on giving notice under that subsection or within five working days thereafter -

     (a)     nominate a fair and reasonable price for the shares to be acquired; and

     (b)     give notice of the price to the holder of those shares.

            (2) A shareholder who considers that the price nominated by the Board is not fair or reasonable, shall forthwith give notice of objection to the company.

            (3) If, within 10 working days of giving notice to a shareholder under subsection (1), no objection to the price has been received by the company, the company shall, on such date as the company and the shareholder agree or, in the absence of agreement, as soon as practicable, purchase all the shares at the nominated price.

            (4) If, within 10 working days of giving notice to a shareholder under subsection (1), an objection to the price has been received by the company, the company shall -

     (a)     refer the question of what is a fair and reasonable price to arbitration and nominate a suitably qualified and independent arbitrator;

     (b)     give notice to the shareholder of the reference to arbitration and the name and particulars of the arbitrator; and

     (c)     within five working days, pay a provisional price in respect of each share equal to the price nominated by the Board.

            (5) A reference to arbitration under this section is deemed to be a submission to arbitration.

            (6) The arbitrator shall expeditiously determine a fair and reasonable price for the shares on the day prior to the date on which the vote of the shareholders authorising the action was taken or the date on which written consent of the shareholders without a meeting was obtained excluding any appreciation or depreciation directly or indirectly induced by the action, and that price shall be binding on the company and the shareholder for all purposes.

            (7) In the case of shares which are listed on a Stock Exchange or traded on a stock market, the arbitrator shall determine the price for the shares as being the price at which such shares are traded on the Stock Exchange or stock market as at the close of business on the day prior to the date on which the vote of shareholders authorising the action was taken or the date on which written consent of shareholders without a meeting was obtained, excluding any appreciation or depreciation directly or indirectly induced by the action, and that value shall be binding on the company and the shareholder for all purposes.

            (8) The arbitrator may -

     (a)     award interest on any balance payable or excess to be repaid under subsection (7) of this section at such rate as he considers appropriate having regard to whether the provisional price paid or the reference to arbitration, as the case may be, was reasonable;

     (b)     provide for interest to be paid to or by the shareholder whose shares are to be purchased; and

     (c)     award costs to the shareholder where the arbitrator considers this to be just.

            (9) If -

     (a)     the company fails to refer a question to arbitration in accordance with subsection (4); or

     (b)     the arbitrator to whom the matter is referred by the company is not independent of the company, or is not suitably qualified to conduct the arbitration the shareholder who has given a notice of objection under subsection (2) may apply to the court to appoint an arbitrator, and the court may appoint such person as it considers appropriate to act as arbitrator for the purposes of this section.

            (10) A purchase of shares by a company under this section -

     (a)     is deemed not to be a distribution for the purposes of section 58;

     (b)     is deemed to be a distribution for the purposes of section 63(1) and (3).

101.   Purchase of shares by third party

            (1) Section 100 applies to the purchase of shares by a person with whom the company has entered into an arrangement for purchase in accordance with section 99(2)(b) subject to such modifications as may be necessary, and, in particular, as if references in that section to the Board and the company were references to that person.

            (2) Every holder of shares that are to be purchased in accordance with the arrangement is indemnified by the company in respect of loss suffered by reason of the failure by the person who has agreed to purchase the shares to purchase them at the price nominated or fixed by arbitration, as the case may be.

102.   Court may grant exemption

            (1) A company to which a notice has been given under section 99 may apply to the court for an order exempting it from the obligation to purchase the shares to which the notice relates on the grounds that -

     (a)     the purchase would be disproportionately damaging to the company; or

     (b)     the company cannot reasonably be required to finance the purchase; or

     (c)     it would not be just and equitable to require the company to purchase the shares.

            (2) On an application under this section, the court may make an order exempting the company from the obligation to purchase the shares, and may make any other order it considers appropriate, including an order -

     (a)     setting aside a resolution of the shareholders;

     (b)     directing the company to take, or refrain from taking, any action specified in the order;

     (c)     requiring the company to pay compensation to the shareholders affected; or

     (d)     that the company be put into liquidation.

            (3) The court shall not make an order under subsection (2) on either of the grounds set out in paragraph (a) or paragraph (b) of subsection (1) unless it is satisfied that the company has made reasonable efforts to arrange for another person to purchase the shares in accordance with section 99(2)(b).

103.   Court may grant exemption if company is insolvent

            (1) If -

     (a)     a notice is given to a company under section 99;

     (b)     the Board has resolved that the purchase by the company of the shares to which the notice relates would result in it failing to satisfy the solvency test; and

     (c)     the company has, having made reasonable efforts to do so, been unable to arrange for the shares to be purchased by another person in accordance with section 99(2)(b), the company shall apply to the court for an order exempting it from the obligation to purchase the shares.

            (2) The court may, on an application under subsection (1), if it is satisfied that the purchase of the shares would result in the company failing to satisfy the solvency test, and the company has made reasonable efforts to arrange for the shares to be purchased by another person in accordance with section 99(2)(b), make -

     (a)     an order exempting the company from the obligation to purchase the shares;

     (b)     an order suspending the obligation to purchase the shares; or

     (c)     such other order as it considers appropriate, including any order referred to in section 102(2).

            (3) For the purposes of this section, the stated capital of a company shall not be taken into account in determining whether the company will, after the purchase, fail to satisfy the solvency test provided that if a company has entered into an agreement with a creditor pursuant to section 59(3) the stated capital shall be taken into account to the extent required by that agreement unless the creditor’s prior consent is obtained.

104.   Variation of class rights

            (1) Where the share capital of a company is divided into different classes of shares, a company may not take action which varies the rights attached to a class of shares unless that variation is approved by a special resolution or with the consent in writing of the holders of 75 per cent of the shares of that class.

            (2) Where the variation of rights attached to a class of shares is approved under subsection (1) and the company becomes entitled to take the action concerned, the holder of a share of that class, who did not consent to or cast any votes in favour of the resolution for the variation, may apply to the court for an order under section 174, or may require the company to purchase those shares in accordance with sections 98 to 103.

            (3) The expression "variation" in this section includes abrogation and the expression "varied" shall be construed accordingly.

            (4) A resolution which would have the effect of diminishing the proportion of the total votes exercisable at a general meeting of the company by the holders of the existing shares of a class or of reducing the proportion of the dividends or distributions payable at any time to the holders of the existing shares of a class, shall be deemed to be a variation of the rights of the class.

            (5) The company shall within one month from the date of the consent or resolution referred to in subsection (1) file with the Registrar in the prescribed form the particulars of such consent or resolution, and if default is made in complying with this provision, the company, and every director and officer thereof who knowingly is a party to the default, shall be guilty of an offence and shall be liable on conviction to the penalty set out in section 492(1).

105.   Annual meeting of shareholders

            (1) Subject to subsection (2) the Board of a company shall call an annual meeting of shareholders to be held -

     (a)     once in each calendar year;

     (b)     not later than six months after the balance sheet date of the company; and

     (c)     not later than 15 months after the previous annual meeting.

            (2) A company need not hold its first annual meeting in the calendar year of its registration but shall hold that meeting within 18 months of its registration.

            (3) The company shall hold the meeting on the date on which it is called to be held.

            (4) The business to be transacted at an annual meeting shall, unless already dealt with by the company, include -

     (a)     the consideration and approval of the financial statements;

     (b)     the receiving of any auditor’s report;

     (c)     the consideration of the annual report;

     (d)     the appointment of any directors whose appointment on an annual or rotational basis is required by the constitution of the company;

     (e)     the appointment of any auditor pursuant to section 195, where relevant; and

     (f)      an opportunity for shareholders to question, discuss or comment on the management of the company in accordance with section 97(1).

106.   Special meetings of shareholders

            (1) A special meeting of shareholders entitled to vote on an issue may be called at any time by -

     (a)     the Board; or

     (b)     a person who is authorised by the constitution to call the meeting.

            (2) A special meeting shall be called by the Board on the written request of shareholders holding shares carrying together not less than 10 per cent of the voting rights entitled to be exercised on the issue.

107.   Resolution in lieu of meeting

            (1) A company need not hold any particular meeting if all members entitled to attend that meeting agree thereto in writing and in that event a unanimous resolution shall be deemed to be a resolution passed at that meeting on the date on which the last signature to that resolution is affixed.

            (2) It shall not be necessary for a private company to hold an annual meeting of shareholders under section 105 of this Act if everything required to be done at that meeting (by resolution or otherwise) is done by unanimous resolution in accordance with subsection (1).

            (3) A resolution may be signed under subsection (1) without any prior notice being given to shareholders.

108.   Court may call meeting of shareholders

            (1) If the court is satisfied that -

     (a)     it is impracticable to call or conduct a meeting of shareholders in the manner prescribed by this Act or the constitution; or

     (b)     it is in the interests of a company that a meeting of shareholders be held, the court may order a meeting of shareholders to be held or conducted in such manner as the court directs.

            (2) Application to the court may be made by a director, or a shareholder, or a creditor of the company.

            (3) The court may make the order on such terms as to the costs of conducting the meeting and as to security for those costs as the court considers appropriate, and the court may give such directions as it considers appropriate including the direction that the legal personal representative of any deceased member may exercise all or any of the powers that the deceased member could have exercised if he or she were present at the meeting.

109.   Proceedings at meetings

            (1) Subject to subsection (2) the provisions of the Second Schedule govern proceedings at meetings of shareholders of a company.

            (2) The constitution of the company may make provision for any of the matters that the Second Schedule states may be subject to the constitution of the company.

110.   Shareholders entitled to receive distributions, attend meetings and exercise rights

            (1) Shareholders may be entitled to -

     (a)     receive distributions;

     (b)     exercise pre-emptive rights to acquire shares in accordance with section 52; or

     (c)     exercise any other right or receive any other benefit under this Act or the constitution.

            (2) The shareholders entitled under subsection (1) are -

     (a)     if the Board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date;

     (b)     if the Board does not fix a date for the purpose, those shareholders whose names are registered in the share register on the day on which the Board passes the resolution concerned.

            (3) A date shall not be fixed under subsection (2) that precedes by more than 20 working days the date on which the proposed action will be taken.

            (4) The shareholders who are entitled to receive notice of a meeting of shareholders are -

     (a)     if the Board fixes a date for the purpose, those shareholders whose names are registered in the share register on that date;

     (b)     if the Board does not fix a date for the purpose, those shareholders whose names are registered in the share register at the close of business on the day immediately preceding the day on which the notice is given.

            (5) A date shall not be fixed under subsection (3) that precedes by more than 30 working days or less than 10 working days the date on which the meeting is to be held.