REPRESENTATION BY PROXY APPOINTMENT – IMPORTANT CONSIDERATIONS
It seems most people you meet today are pressed and imposed with strict deadlines. People are always in a hurry to get somewhere, and in today’s fast-paced world, where time is money, time constraints are not just that much more noticeable but can have result in lost opportunities. It seems there are always more things to do than time to do them in and more activities to complete than hours in the day, the situation compounded for shareholders of companies. A solution is however available in Section 58 of the Companies Act 71 of 2008 (“the Act”) which provides shareholders the right to be represented by proxy appointment. This section can be very instrumental when it is applied correctly.
It is imperative to note that a shareholder of a company may appoint, at any time, any individual, including an individual who is not a shareholder of that company, as a proxy to participate in, speak and vote at a shareholder meeting on behalf of the shareholder or give or withhold written consent on behalf of the shareholder to a decision. Bearing this in mind, the Act requires that a proxy appointment must be in writing, dated and signed by the shareholder, and state that it remains valid for one year after the date on which it was signed or any longer or shorter period expressly set out in the appointment, unless it is revoked or expires earlier, as provided.
In addition to the above, the Act stipulates that except to the extent that the Memorandum of Incorporation of a company provides otherwise, a shareholder of that company may appoint two or more persons concurrently as proxies, and may, appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder, and that, a proxy may delegate the proxy’s authority to act on behalf of the shareholder to another person, subject to any restrictions set out in the instrument appointing the proxy ,and further, that a copy of the instrument appointing a proxy must be delivered to the company, or to any other persons on behalf of the company, before the proxy exercises any rights of the shareholder at a shareholders meeting.
It is also added that irrespective of the form of instrument used to appoint a proxy, the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the exercise of any rights as a shareholder, or, the appointment is revocable unless the proxy appointment expressly states otherwise, or if the appointment is revocable, a shareholder may revoke the proxy by cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy, and to the company.
It is explained that the revocation of a proxy appointment constitutes a complete and final cancelation of the proxy’s authority to act on behalf of the shareholder as of the later of the date stated in the revocation instrument, if any, or the date on which the revocation instrument was delivered as required. The Act provides however that if the instrument appointing a proxy or proxies has been delivered to a company, as long as that appointment remains in effect, any notice that is required by the Act or the company’s Memorandum of Incorporation to be delivered by the company to the shareholder must be delivered by the company to the shareholder or the proxy or proxies, if the shareholder has directed the company to do so, in writing and paid any reasonable fee charged by the company for doing so.
The Act stipulates that a proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction, except to the extent that the Memorandum of Incorporation, or the instrument appointing the proxy, provides otherwise. It is directed that if a company issues an invitation to shareholders to appoint one or more persons named by the company as a proxy, or supplies a form of instrument for appointing a proxy, the invitation must be sent to every shareholder who is entitled to notice of the meeting at which the proxy is intended to be exercised, and, the invitation, or form of instrument supplied by the company for the purpose of appointing a proxy must bear a reasonably prominent summary of the rights established by this section, and, contain adequate blank space, immediately preceding the name or names of any person or persons named in it, to enable a shareholder to write in the name and, if so desired, an alternative name of a proxy chosen by the shareholder and provide adequate space for the shareholder to indicate whether the appointed proxy is to vote in favour of or against any resolution or resolutions to be put at the meeting, or is to abstain from voting.
The company must not require that the proxy appointment be made irrevocable, and the proxy appointment remains valid only until the end of the meeting at which it was intended to be used. In some instances, it should however be pointed out that certain sections do not apply if the company merely supplies a generally available standard form of proxy appointment on request by a shareholder.
Taking into consideration the above, it is prudent to make use of a proxy appointment, but it is opined that the requirements must be complied with, otherwise it may hold disastrous consequences. It is always advisable to be current on any updates as to law developments, hence it is hinted to always be in the loop of any such developments. In the result, it is paramount to clearly understand the requirements and what it entails. As said, it is wiser to be cautious and careful than to be hasty and so do something you may later regret!
Article by Marinus Barnard (L.LB) Associate
For more information, contact Marinus by e-mail, marinus@rgprok.com or 044 601 9900. www.rgprok.com
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Disclaimer
Nothing contained in this publication is to be considered as the rendering of legal advice for specific cases, and readers are responsible for obtaining such advice from their own legal counsel. This publication is intended for educational and informational purposes only.
