Monday 3 April 2017

South Africa: unalterable provisions of the Companies Act and the appointment of proxies

Judgment was given last month by the Supreme Court of Appeal in Richard Du Plessis Barry v Clearwater Estates NPC and others (187/2016) [2017] ZASCA 11: see here or here (pdf). A press summary is available here (pdf). At issue was the validity of a provision in a company's memorandum of incorporation requiring notice to be served at least 48 hours before a general meeting where a shareholder wished to appoint a proxy.

Swain JA delivered the judgment (Leach, Willis, Mbha JJA and Schippers AJA concurring) and held that this provision was void because it was inconsistent with an unalterable provision of the Companies Act 2008 - section 58 - which stated that a proxy could be appointed at any time. It had been argued before the court that such a conclusion would impose practical difficulties on companies, to which Swain JA responded (para. [22]):
It was submitted that should a corporation be unable to regulate the submission of proxies by the imposition of a deadline before a meeting, general meetings of corporations, particularly large corporations, will become unworkable. The situation is postulated of a large company with thousands of shareholders being hamstrung by the submission of thousands of proxies on the day of a scheduled meeting ... If these practical difficulties are real and not simply apparent, their resolution lies not in a strained interpretation of the Act, but by legislative intervention".

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