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IN THE COMPANIES TRIBUNAL OF THE REPUBLIC OF SOUTH AFRICA

(“The Tribunal”)

 

CASE NO: CT00475ADJ2020

 

 

In the matter of:

 

Selective Empowerment Investment 1 Ltd

 

(2007/033697/06)                                                             THE APPLICANT

 

Coram K. Tootla

 

Decision delivered on 26 October 2020

 

 

DECISION

 

 

INTRODUCTION:

 

[1]     Mavis Ngwenya, the Company Secretary of the Applicant Company, makes an application in terms of Section 61 (7) of the Companies Act 71 of 2008 (“Act”), for an administrative order to extend the period within which the Company’s annual general meeting (“AGM”) was to be held (on or before 27 October 2020). There is no indication of when the last annual financial statements were approved and when the next set needs to be approved.

 

[2]     The applicant made this application a month before the AGM date and the application was served on the Tribunal on 15 October 2020. The Applicant had sufficient time to make this application but delayed its application.

 BACKGROUND:

 

[3]     The Applicant is Selective Empowerment Investment 1 Ltd., a public company (“company”) as defined in Section 1 of the Companies Act, and whose registered address is 1262 Embankment Road, Centurion. The applicant is a BBBEE investment company with issued shares.

 

[4]     The applicant states on form CTR 142 that the reason for the application for the extension is that due to Covid-19 restrictions it cannot congregate the shareholders in one venue; that the restriction of 250 people indoors for a gathering will not help the Applicant to overcome the logistical issues surrounding Covid-19; and that these factors prevent the company from holding an AGM by 27 October 2020. The date of the last AGM has not been mentioned in the Applicant’s submissions nor has any mention been made of whether the annual financial statements have been prepared and are ready to be presented at the AGM on 27 October 2020.

 

[5]     As a public company, the applicant is required in terms of section 61(7) (b) of the Companies Act 71 of 2008 (the Act) to hold its subsequent AGM not more than 15 months from the date of its previous one. According to the Applicant it requires an extension of time until 31 March 2020 to hold an AGM.

 

[6]     Section 61(7)(b) of the Companies Act allows a public company not in a position to convene its AGM within the prescribed 15 months after the date of its previous AGM to approach this Tribunal for an extension of the time. This Tribunal has jurisdiction to extend the time on good cause shown by such an applicant.

 

EVALUATION:

 

[7]     The applicant states that it has in excess of 26000 shareholders and a quorum of 6000 is required which would be difficult to obtain due to Covid-19 restrictions and also due to the fact that some of its shareholders are unable to attend the AGM via electronic means, it is not possible to hold the AGM. The Memorandum of Incorporation (Moi) does make provision for the AGM to be held electronically and hence there is opportunity for the Applicant to hold it electronically in future.

 

[8]     There is in any event no guarantee that the Covid-19 restrictions will be lifted totally by 31 March 2020 and that the implications thereof may persist for some time and, thus, continue to affect the way business was previously done. Under these circumstances I would respectfully plead to the applicant to ensure that it makes preparation to convene its next AGM by means of electronic communication in terms of the Moi as set out in clause 22.

 

[9]     For the reasons set out above, it seems the Applicant is stating that it constitutes “good cause” for the applicant to be granted an extension of time to hold its AGM later, by 31 March 2021, instead of 27 October 2020. However, “good cause” is neither defined nor explained in the Act. In the decision of the Minister of Defence and Military Veterans v Motau and Others (2014(5) SA 69 (CC) 89 at par 54), the Constitutional Court, stated “ Good cause may be defined as a substantial or ‘legally sufficient reason’ for a choice made or action taken. Assessing whether there is good cause for a decision is a factual determination dependent upon the particular circumstances of the case at hand.”

 

[10] Should the option of convening its AGM via electronic communication not be utilized and in the event that Covid-19 restrictions persist, the applicant may once again be obliged to approach this Tribunal for purposes of acquiring further extensions of its AGM, given its high number of shareholders. Should the Applicant approach the Tribunal once again for another extension, it may prejudice its shareholders and stakeholders. In the circumstances and in passing the Tribunal suggests that the applicant ought to seriously consider holding its AGM electronically, alternatively in part electronically and partly in person for those who can attend within the 250 restriction imposed by Government (obviously on the same date).

 

[11] Section 61(7) of the Act provides that “a public company must (my emphasis) convene an annual general meeting of its shareholders initially, no more than 18 months after the company’s date of incorporation; and thereafter, once in every calendar year, but no more than 15 months after the date of the previous annual general meeting, or within an extended time (my emphasis) allowed by the Companies Tribunal, on good cause shown (my emphasis)”.

 

[12] In addition, the Memorandum of Incorporation of the Applicant company clearly states that the company shall hold its AGM once a year but no later than 15 months after the date of the previous AGM or within an extended time allowed by the Companies Tribunal on good cause shown.

 

[13] The application was brought before the 15 month period. Thus the next AGM should accordingly be convened no more than 15 months after the date of the previous AGM, which date is presumably 27 October 2020, alternatively an extension of time granted by the Tribunal to meet the requirements of Section 61 (7) (b).

 

[14] Section 61 (7) of the Act gives the Tribunal a discretion to grant an extension “on good cause shown” for the holding of the AGM by a public company. The discretion of the Tribunal in terms of Section 61 (7) is to grant an extended time within which to hold the AGM. This discretion is not unlimited and the section is clear that the AGM must be held within an “extended time”, i.e. a period within which or the date by when the AGM must be held.

[15]  Having considered the application and based on the aforementioned reasons, I am satisfied that the Applicant has shown good cause for the extension of the period to convene its AGM.

 

 

ORDER:

 

 

[16]       An administrative order for an extension is hereby granted to hold the AGM of the applicant by no later than 31 March 2021.

 

[17] The applicant must provide proof of the date on which the previous AGM was held and a copy of the last annual financial statement which was presented at the last AGM by Friday, 30 October 2020 failing which the matter will be reported to the CIPC for investigation

 

 

Khatija Tootla

Member of the Companies Tribunal

 

26 October 2020

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