2012 Integrated report - Sappi

Notice to shareholders
Annexure to notice of annual general meeting:
Explanatory note to special resolution number
3 and salient features of the Memorandum of
Incorporation of the company
As explained below, the company wishes to adopt a new
Memorandum of Incorporation (‘MOI’).
The Companies Act came into effect on 01 May 2011. In terms
of the Transitional Arrangements set out in Schedule 5 to the
Companies Act, companies were given a two-year period until
30 April 2013 to bring their Memorandum and Articles of Association
in harmony with the Companies Act. During this two-year period,
if there is a conflict between a provision of the Companies Act and
a provision of a pre-existing company’s Memorandum and Articles
of Association, the provision of the company’s Memorandum and
Articles of Association prevails. After this two-year period, any
provision of the Memorandum and Articles of Association that is
inconsistent with the provisions of the Companies Act, shall be void
and unenforceable to the extent of the inconsistency. Accordingly,
the company wishes to adopt a new MOI which is consistent with
the Companies Act.
The approach that was followed in drafting the MOI was to keep the
MOI simple and let the provisions of the Companies Act govern the
company’s affairs, save for those specific instances where there was
a need to alter an alterable provision of the Companies Act, or where
an alteration was required by the JSE Listings Requirements. The
company believes that it is unnecessary and undesirable to repeat, in
the MOI, the provisions of the Companies Act that would apply to a
company unless the provision is intended to alter an alterable
provision or impose a higher standard than an alterable provision.
The MOI provides that the company is a public company.
Accordingly, the company is not prohibited from offering its securities
to the public and the transfer of the company’s securities is
unrestricted save as set out in the MOI.
The first part of the MOI (paragraph 3) deals with general matters.
In regard to amendments to the MOI, the MOI states that the
requirements set out in the Companies Act regarding proposals
for amendments to the MOI apply without amendment and any
amendment of the MOI, including an amendment for the change
of name of the company, must be approved by special resolution of
the shareholders of the company who are entitled to exercise voting
rights on the resolution unless such amendment is ordered by a
court in terms of section 16(1)(a) and 16(4) of the Companies Act.
The MOI provides that the powers of the company are not restricted
and that the board shall not have the power to make, amend or
repeal any necessary or incidental rules relating to the governance
of the company, as required by the JSE Listings Requirements.
The MOI also provides for the authority of the board to authorise
the company to provide direct or indirect financial assistance to any
person contemplated in section 45 of the Companies Act and that
the solvency and liquidity test set out in section 4 of the Companies
Act apply without amendment.
Paragraph 4 of the MOI deals with the securities of the company
and provides that all securities of each class rank pari passu in all
respects. The MOI deals with the authorisation of shares as follows:
The MOI provides that the company is authorised to issue the shares
specified in Schedule 1 to the MOI, provided that, if required by the
Companies Act or the JSE Listings Requirements, the company may
only issue:
• unissued shares to shareholders of a particular class of shares,
pro rata to the shareholders existing shareholding, unless any
such shares were issued for an acquisition of assets;
• unissued shares or grant options, to subscribe for cash,
as the directors in their discretion think fit, if approved by
the shareholders at a shareholders meeting, subject to the
JSE Listings Requirements; and
• shares that are fully paid up.
For so long as is required by the JSE Listings Requirements, any
amendment to the MOI to:
• increase or decrease the number of authorised shares of any class
of shares;
• reclassify any shares that have been authorised but not issued;
• classify any unclassified shares that have been authorised but
not issued;
• determine the preferences, rights, limitations or other terms
of any class of authorised shares or amend any preferences,
rights, limitations or other terms so determined;
• create any class of shares;
• convert one class of shares into one or more other classes;
• consolidate or sub-divide securities, and
must be approved by special resolution of ordinary shareholders,
save where such an amendment is ordered by a court in terms
of sections 16(1)(a) and 16(4) of the Companies Act.
In regard to capitalisation shares, the MOI does not limit, restrict
or qualify the authority of the board, in terms of section 47 of the
Companies Act, to:
• approve the issue of any authorised shares of the company as
capitalisation shares, on a pro rata basis to the shareholders of
one or more classes of shares;
• approve the issue of shares of one class as capitalisation shares
in respect of shares of another class; or
• permit shareholders to elect to receive a cash payment in lieu of
a capitalisation share or a scrip dividend (as defined in the JSE
Listings Requirements), at a value determined by the board.
In regard to financial assistance for the subscription or purchase
of shares, share buy-backs and debt instruments, the MOI does
not limit, restrict or qualify the authority of the board to take those
actions, subject to compliance with the requirements of the
Companies Act and the JSE Listings Requirements. For so long as
required by the JSE Listings Requirements, no repayment of capital
to shareholders shall be made on the basis that it may be called up
again and dividends must be payable to shareholders registered as
at the date subsequent to the date of declaration of the dividend.
The MOI provides for the registration of the company’s issued
securities in the name of one person for the beneficial interest
of another without limitation or restriction.
The MOI provides that the company may pay commission to any
person in consideration of such person subscribing, or agreeing
to subscribe, for any shares of the company or of such person
procuring, or agreeing to procure, subscriptions for shares, provided
that such commission shall be subject to any limitations in the
Companies Act or the JSE Listings Requirements.
The MOI provides that all authorities to sign transfer deeds granted
by holders of shares for the purpose of transferring shares that may
be lodged, produced or exhibited with or to the company at any
of its transfer offices shall, as between the company and the grantor
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