Under the South African Companies Act, 2008, shareholder resolutions can be either ordinary or special. Ordinary resolutions require more than 50% approval of the voting rights exercised, while special resolutions need at least 75% approval. A company’s MOI can increase these thresholds (except for the removal of directors) to reflect its unique governance needs, but must maintain a 10% difference between the two.
Shareholders can also consent in writing to decisions that would otherwise be voted on at a meeting under section 60 of the Act. It is not necessary to seek out the consent of every shareholder to the written resolution (section 60 is similar in this respect to the equivalent sections of the UK Companies Act, 2006). A key difference between written and in-meeting shareholder resolutions is that in meetings, voting percentages apply to those who vote (in person or by proxy), whereas with written resolutions, voting percentages apply to those entitled to vote. This means that passing a written resolution require the consent of a higher percentage of shareholders compared to passing a resolution at a shareholders' meeting.
The importance of clarity and specificity in board and shareholder resolutions cannot be overstated. Precise articulation is crucial to enable informed decision-making, reduce disputes, and uphold strong corporate governance. Any caveats or conditions to approval must be explicitly stated, rather than granting general authority to directors and leaving their scope of authority open to interpretation. Whether dealing with ordinary or special resolutions, adhering to these principles is essential for compliance and maintaining shareholder trust.
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