Section 61(2) of the Companies Act 71 of 2008, as amended (the “Act”) provides that a shareholder meeting of a company must be held at any time that the board is required to do so:
- by the Companies Act or the MOI to refer a matter to shareholders for decision,
- in terms of section 70(3) to fill a vacancy on the board, and
- otherwise, in terms of subsection (3) or (7), or by the company’s MOI.
Section 61(7) refers to an annual general meeting of a public company and is not relevant to this article, as recently posted by Cliffe Dekker Hofmeyr.
Request by a shareholder
Under section 61(3), a shareholder meeting must be called by the board of a company if one or more written and signed demands for such a meeting are delivered to the company. In order to be in the prescribed form, the demand must outline:
- the specific purpose for which the meeting is proposed, and
- in the aggregate, demands for substantially the same purpose must be made and signed by the holders of at least 10% of the voting rights entitled to be exercised in relation to the proposed matter to be discussed at the meeting.
The exceptions to this requirement are contained in subsections (5) and (6). These are:
- when the company or any shareholder applies to a court for an order setting aside a demand on certain grounds or
- when a shareholder(s) withdraws a demand
Weakness in the wording of Section 61
The subsection does not prescribe a time period by which a board, that has received a notice in the prescribed form, must call a shareholder meeting.
Regrettably, there is also no case law dictating a time by which a board must call a shareholder meeting after receiving a requisition notice in the prescribed form.
Perhaps it can be assumed that the board is left with a broad discretion regarding the timing of the calling of a shareholder meeting and unless the board is acting obviously irrationally, in bad faith or contrary to the best interests of the company in failing to call the meeting, shareholders will be unlikely to receive any support or intervention from the courts.
