EGM Notice & Proposed Constitution - samro

SOUTHERN AFRICAN MUSIC RIGHTS ORGANISATION LIMITED(a pre-existing company originally incorporated as a limited by guarantee company)(Registration No. previously 1961/002506/09 currently recorded as 1961/002506/07)(“SAMRO” or “the Company”)NOTICE OF EXTRAORDINARY GENERAL MEETINGNOTICE IS HEREBY GIVEN that an extraordinary general meeting of members of SAMRO (“ExtraordinaryGeneral Meeting”) will be held on Friday, 30 November 2012, at 10h00, at SAMRO Place, Ground Floor, 20De Korte Street, Braamfontein, Johannesburg.NOTE: THE SOLE REASON FOR CONVENING THIS EXTRAORDINARY GENERAL MEETINGSEPARATELY FROM THE ANNUAL GENERAL MEETING IS TO ENSURE COMPLIANCE WITH THEREQUIREMENT OF THE CO-OPERATIVES ACT THAT THE CHAIRMAN MUST ATTEST THAT THEMEETING WAS SPECIFICALLY CONVENED TO CONSIDER THE CONVERSION TO A CO-OPERATIVE.The following business will be transacted at the Extraordinary General Meeting:1. To resolve that SAMRO apply to convert to a primary co-operative as contemplated in the CooperativesAct, No. 14 of 2005 (“the Co-operatives Act”) and to adopt a constitution intended tocomply with the Co-operatives Act, substantially on the terms as contained in the proposedconstitution annexed hereto and marked as Annexure A, if the application for conversion is granted.2. To resolve, subject to the resolution to convert to a co-operative being adopted and the applicationbeing granted, to change of the name of SAMRO to the “Southern African Music Rights OrganisationCo-operative Limited”.3. To resolve, subject to the resolution to convert being adopted and the application being granted, tochange the current rules of SAMRO and to adopt Grant of Rights Payment Rules to apply asgovernance rules of the co-operative upon conversion to a co-operative.4. To authorise the board of directors of SAMRO (“the Board”) or its delegee to do all things and settleand sign all returns and other documentation and to take such other steps as may be required tocomplete and implement the resolutions adopted at the meeting.The record date for the meeting shall be 30 November 2012.The annexures to this notice form part of this notice and are incorporated by reference.The information in this notice and the annexures do not constitute legal or professional advice and if you arein any doubt as to the action you should take and the consequences, please consult your accountant,attorney, tax expert or other appropriate professional adviser immediately.

2The members will be requested to consider and, if deemed fit, to pass, with or without modification, thefollowing resolutions:1. SPECIAL RESOLUTION 1 – Conversion to a primary co-operative and adoption of constitution“It is hereby resolved that, subject to the approval of the Registrar of Co-operatives:(a) the Company converts to a primary co-operative in accordance with the Co-operativesAct; and(b) that the Company’s existing Memorandum of Incorporation is abrogated in its entirety andreplaced with a new constitution complying with the Co-operatives Act, tabled at themeeting (and initialled by the chairperson for identification purposes).”It is intended that the new constitution to be tabled at the meeting will be substantially the same as theconstitution attached hereto as Annexure A.Explanatory information in respect of Special Resolution 11.1. SAMRO was incorporated as a company limited by guarantee and not having a share capitalunder the Companies Act, No. 46 of 1926, as amended, and recognised as a pre-existingcompany in terms of the Companies Act, No. 61 of 1973, as amended. The currentCompanies Act, No. 71 of 2008 (“the Companies Act”) came into effect on 1 May 2011 andonly recognises two types of companies, namely ‘profit companies’ and ‘non-profit companies’and no longer permits the continuation of limited by guarantee companies. Under theCompanies Act, SAMRO is regarded as a pre-existing company and there is some room todebate its current categorisation.1.2. The Board has considered adapting to the Companies Act by converting to a profit companywith shares or adapting to a non-profit company. However, after wrestling with the issues, theBoard proposes that SAMRO rather try and convert to a co-operative regulated by the CooperativesAct. The Board is of the view that a co-operative is likely to be better suited to themanner in which SAMRO conducts its business, and the arrangements between SAMRO andits members, even though there are some associated uncertainties and negatives. A summaryof the reasons for the Board proposing a conversion to a co-operative and related informationare set out in Annexure B hereto. Supplementing this are extracts of the key transitionaryprovisions and some extracts of further relevant provisions of the Companies Act set out inAnnexure C.

31.3. Extracts of the Co-operatives Act providing for companies converting to a co-operative areattached hereto as Annexure D for reference.1.4. In terms of the Co-operatives Act, a company that wishes to convert to a co-operative mustpass a resolution at a general meeting authorising the conversion. The company must thensubmit an application for conversion, in the prescribed form, to the Registrar of Co-operativesin terms of the Co-operatives Act (which is now the Commissioner of the Companies andIntellectual Property Commission) (“the Registrar of Co-operatives”).1.5. If SAMRO decides to convert to a co-operative, its existing constitution will no longer beappropriate and, in terms of sections 14 and 66 of the Co-operatives Act it is required to adopta constitution complying with the Co-operatives Act. Accordingly, it is necessary to adopt aresolution to replace the current Memorandum of Incorporation (being the Memorandum andArticles of Association) of SAMRO with a new constitution.1.6. The proposed constitution has been prepared with the intention of complying with the CooperativesAct. The conversion will change members’ rights. If approved, members’ rights willbe regulated by the new constitution (and rules) read together with the Co-operatives Act. Theproposed constitution updates the current Memorandum of Incorporation of SAMRO andadapts it to the Co-operatives Act. However, there was reference to the current Memorandumof Incorporation and efforts were made to retain some of its essence. See Annexure B forfurther information in this regard and Annexure E for the salient features of the proposedconstitution. It is noted that subsequent to consultations with members changes were made tothe prior draft constitution provided to members and, accordingly, the Proposed Constitutiondiffers from such prior draft constitution.1.7. If this special resolution is adopted, it is intended that the Board will then submit an applicationto the Registrar of Co-operatives for SAMRO to convert to a co-operative with the adoptedconstitution and, if such application is approved, SAMRO will convert to a co-operative ascontemplated in section 68 of the Co-operatives Act, which provides:“68. As from the date on which the entry is made in terms of section 67(3)(a) in theregister of co-operatives:(a)the company is converted into a co-operative;(b)the company ceases to exist;

5It is intended that the new rules to be tabled will be substantially the same as those rules annexedhereto as Annexure F1 (Membership Rules), Annexure F2 (Performing Rights Royalty PaymentRules), Annexure F3 (Reproduction Rights Royalty Payment Rules) and Annexure F4 (Grant ofRights Payment Rules), respectively.Explanatory information in respect of Ordinary Resolution 13.1. Changes have been made to SAMRO’s current governance rules to update the rules to caterfor the conversion to a co-operative, correlate with the co-operative’s constitution andSAMRO’s information technology systems and to remove typographical errors and improveclarity. However, the intention has been to try and preserve their essence and to limitamendments. In addition, the proposed rules regulating the ‘Grant of Rights Payments’ (asdefined in the co-operative constitution) have been compiled, and such payments will replacethe current Non-Royalty Revenue distributions, but are anticipated to be substantially similar.3.2. The effect of adoption of this resolution is that, upon conversion to a co-operative, the existingrules of SAMRO will be replaced by the governance rules in as Annexure F1 to AnnexureF4.4. ORDINARY RESOLUTION 2 – Authorisation“It is hereby resolved that the board of directors (or its delegee) be and is hereby empowered to do allthings and settle and sign all returns and other documentation and to take such other steps as may berequired to complete and implement the Ordinary Resolution and the Special Resolutions adopted atthis meeting. Insofar as such signature or acts occurred before the adoption of the OrdinaryResolution and the Special Resolutions, such signature and/or acts are hereby ratified.”GENERAL1. Subject to the conditions set out in each Ordinary Resolution, each of the above OrdinaryResolutions is effective as from the time of adoption thereof. However, the adoption of new rules inOrdinary Resolution 1 will only take effect on the date that the necessary entry is made in theregister of co-operatives, as contemplated in section 68 of the Co-operatives Act. For each of theabove Ordinary Resolutions to be adopted, it must be supported by more than 50% (fifty percent) ofthe voting rights exercised on the applicable resolution.2. Subject to the conditions set out in each Special Resolution, unless stated otherwise, each of theabove Special Resolutions is effective from the date of adoption. Accordingly, Special Resolution 1immediately upon adoption will authorise the application for conversion to a co-operative, but the

6conversion to a co-operative and the adoption of the new constitution and the name change inSpecial Resolution 2 (name change) will only be effective on the date on which the necessary entryregistering the conversion to a co-operative is made in the register of co-operatives, ascontemplated in section 68 of the Co-operatives Act. For each of the above Special Resolutions tobe adopted, it must be supported by at least 75% (seventy five percent) of the voting rightsexercised on the resolution.3. PROXY/IESA MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT APROXY (OR MORE THAN ONE PROXY) TO ATTEND, SPEAK AND TO VOTE IN ITS STEAD, BYCOMPLETING THE PROXY FORM ATTACHED HERETO AND DELIVERING SUCH PROXYFORM TO THE REGISTERED OFFICE OF SAMRO. PROXY FORMS MUST BE FORWARDED (IFSIGNED IN A REPRESENTATIVE CAPACITY, TOGETHER WITH THE POWER OF ATTORNEYOR OTHER AUTHORITY, OR A NOTARIAL COPY THEREOF) TO REACH THE REGISTEREDOFFICE OF SAMRO NOT LESS THAN TWENTY-FOUR (24) HOURS BEFORE THE TIME FORHOLDING THE MEETING, OR THE ADJOURNED MEETING. A PROXY NEED NOT BE AMEMBER OF SAMRO.4. In accordance with section 63(1) of the Companies Act, please note that all members of SAMROparticipating in the meeting, and/or their duly appointed proxies, must provide satisfactoryidentification to SAMRO upon arrival at the meeting. In this regard, subject to the chairperson’sdiscretion, generally only a valid green bar-coded South African Identity Book, a valid passport or avalid driver’s licence shall constitute satisfactory identification. The representative of a juristicmember must provide satisfactory proof of his/her authorisation to represent such juristic member, inthe chairperson’s discretion.5. If no quorum is present within half an hour of the time for commencement of the ExtraordinaryGeneral Meeting on 30 November 2012, the Board has determined in accordance with clause 21 ofSAMRO’s Articles of Association that the meeting shall stand adjourned to 10h00 on7 December 2012 at the same location and, if at such reconvening of the adjourned meeting aquorum is not present by 10h30 for the meeting, then any number of full members present (inperson or by proxy) shall constitute a quorum.By order of the BoardJOHANNESBURG5 November 2012

7SOUTHERN AFRICAN MUSIC RIGHTS ORGANISATION LIMITED(a pre-existing company originally incorporated as a limited by guarantee company)(Registration No. previously 1961/002506/09 currently recorded as 1961/002506/07)(“SAMRO” or the “Company”)PROXY FORMFor completion by members unable to attend the Extraordinary General Meeting of members of SAMRO to be held onFriday, 30 November 2012, at 10h00, at SAMRO Place, Ground Floor, 20 De Korte Street, Braamfontein, Johannesburg (the“EGM”).I/Weof___________________________________________________________ (Name in Block Letters)____________________________________________________________(Address in Block Letters)being a member of SAMRO:do hereby appointor, failing him/her,________________________________ of ________________________________________________________________________ of ________________________________________or, failing him/her, Mr Ngomusa Abraham SIBIYA (Chairman of the Board), failing which, Adv. Steven KEKANA (Vice-Chairman), failing which, Mr Nicholas MOTSATSE (Chief Executive), as my/our proxy to attend, speak, and, on a poll, vote onmy/our behalf at the EGM, and at any adjournment thereof, and to vote or abstain from voting as follows on the resolutions tobe proposed at such meeting:Special Resolution 1 – Conversion to a primary co-operative and the adoption ofconstitutionFor Against Abstain1. Special Resolution 2 – Change of name For Against Abstain2. Ordinary Resolution 1 – Adoption of new rules For Against Abstain3. Ordinary Resolution 2 – Empowering the Board to carry out all such actsnecessary to complete and implement the Ordinary Resolution and SpecialResolutions adopted and ratifying all acts carried out before the adoption of theOrdinary Resolution and Special ResolutionsFor Against AbstainPlease indicate with an ‘X’ in the appropriate spaces above how you wish all your votes to be cast or specify the number ofvotes you wish to cast in the appropriate spaces. The total votes cast on a resolution may not exceed the total votes themember is entitled to cast.A member entitled to attend and vote at the abovementioned EGM is entitled to appoint a proxy or proxies to attend, speakand, on a poll, vote in his/her stead. A proxy need not be a member of SAMRO.Every person present and entitled to vote at the EGM as a member shall on a show of hands have one vote only.Signed at on 2012.Signature ______________________________________ Name _____________________________________(who warrants his/her authority to do so)Please seen notes on next page.

8Note: Proxy forms must be forwarded to reach the registered office of SAMRO not less than twenty-four (24) hours before thetime for holding the EGM, or the reconvening of the adjourned EGM. In accordance with section 63(1) of the Companies Act,please note that all members of SAMRO participating in the EGM, and/or their duly appointed proxies, must providesatisfactory identification to SAMRO upon arrival at the EGM.Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity (e.g. for acompany, close corporation, trust, pension fund, deceased estate, etc.) must be attached to this form of proxy, unlesspreviously recorded by SAMRO (notarially certified copies of powers of attorney or other authorities are acceptable).SUMMARY OF RIGHTS CONTAINED IN SECTION 58 OF THE COMPANIES ACTIn terms of section 58 of the Companies Act (references to shareholders replaced with members):• a member of a company may, at any time and in accordance with the provisions of section 58 of theCompanies Act, appoint any individual (including an individual who is not a member) as a proxy to participatein, and speak and vote at, a members’ meeting on behalf of such member;• a proxy may delegate her or his authority to act on behalf of a member to another person, subject to anyrestriction set out in the instrument appointing such proxy;• irrespective of the form of instrument used to appoint a proxy, the appointment of a proxy is suspended at anytime and to the extent that the relevant member chooses to act directly and in person in the exercise of any ofsuch member's rights as a member;• any appointment by a member of a proxy is revocable, unless the form of instrument used to appoint suchproxy states otherwise;• if an appointment of a proxy is revocable, a member may revoke the proxy appointment by (i) cancelling it inwriting, or making a later inconsistent appointment of a proxy and (ii) delivering a copy of the revocationinstrument to the proxy and to the relevant company;• a proxy appointed by a member is entitled to exercise, or abstain from exercising, any voting right of suchmember without direction, except to the extent that the relevant company's memorandum of incorporation, orthe instrument appointing the proxy, provides otherwise; and• if the instrument appointing a proxy or proxies has been delivered by a member to a company, then, for solong as that appointment remains in effect, any notice that is required in terms of the Companies Act or suchcompany’s memorandum of incorporation to be delivered to a member must be delivered by such company tooothe relevant member; orthe proxy or proxies, if the relevant member has: (i) directed such company to do so, in writing and (ii)paid any reasonable fee charged by such company for doing so.SAMRO Place, 20 De Korte Street, Braamfontein, Johannesburg 2001P O Box 31609, Braamfontein, 2017Fax number: 011 403 1949Email: secretary@samro.org.za.

1Annexure APROPOSED CONSTITUTIONRepublic of South AfricaCo-operatives Act, 2005CONSTITUTION FOR APRIMARY CO-OPERATIVEName of co-operative: SOUTHERN AFRICAN MUSIC RIGHTS ORGANISATION CO-OPERATIVELIMITEDRegistration No.: []Abbreviated name of the co-operative: SAMRO (CO-OP) LTD

2TABLE OF CONTENTSClause number and descriptionPage1. INTERPRETATION ...................................................................................................................................... 4 2. RECORDAL ............................................................................................................................................... 18 3. FORM OF CO-OPERATIVE ....................................................................................................................... 19 4. BUSINESS OF THE CO-OPERATIVE ....................................................................................................... 19 5. OBJECTIVES OF THE CO-OPERATIVE ................................................................................................... 19 6. POWERS AND CAPACITY OF THE CO-OPERATIVE ............................................................................. 23 7. AMENDMENTS TO THE CONSTITUTION ................................................................................................ 24 8. GOVERNANCE RULES ............................................................................................................................. 24 9. MEMBERS AND QUALIFICATION FOR AND DETERMINATION OF MEMBERSHIP ............................. 26 10. TERMINATION OF MEMBERSHIP ........................................................................................................ 29 11. PROHIBITION ON TRANSFER OF MEMBERSHIP ............................................................................... 37 12. REPRESENTATION ............................................................................................................................... 40 13. FINANCIAL YEAR .................................................................................................................................. 40 14. ACCOUNTING RECORDS AND FINANCIAL STATEMENTS ............................................................... 40 15. AUDIT COMMITTEE AND AUDITOR ..................................................................................................... 42 16. GENERAL MEETINGS ........................................................................................................................... 46 17. RECORD DATE ...................................................................................................................................... 55 18. STATUTORY RECORDS ....................................................................................................................... 55 19. ELECTION OF DIRECTORS AND CASUAL VACANCIES .................................................................... 56 20. CESSATION OF OFFICE AS DIRECTOR ............................................................................................. 59 21. REMUNERATION OF DIRECTORS AND MEMBERS OF BOARD COMMITTEES .............................. 61 22. GENERAL POWERS AND DUTIES OF DIRECTORS ........................................................................... 62

323. BOARD COMMITTEES .......................................................................................................................... 64 24. PROCEEDINGS OF DIRECTORS ......................................................................................................... 65 25. DISCLOSURE OF INTERESTS OF DIRECTORS AND MANAGERS ................................................... 68 26. INDEMNITY AND INSURANCE ............................................................................................................. 70 27. FINANCIAL ASSISTANCE ..................................................................................................................... 71 28. SOCIAL AND CULTURAL ...................................................................................................................... 71 29. ADMINISTRATION OF IP RIGHTS ........................................................................................................ 72 30. ROYALTY PAYMENT EXPENSE AND GRANT OF RIGHTS PAYMENT EXPENSE ........................... 80 31. OPERATING SURPLUS PAYMENT ...................................................................................................... 82 32. GENERAL PROVISIONS REGARDING PAYMENTS TO MEMBERS .................................................. 83 33. RESERVE FUNDS ................................................................................................................................. 84 34. MEMBERS’ FUNDS ............................................................................................................................... 85 35. MEMBERS’ DUTIES AND SUSPENSION OF MEMBERSHIP .............................................................. 85 36. THIRD PARTY AGREEMENTS .............................................................................................................. 86 37. LOSS OF DOCUMENTS ........................................................................................................................ 87 38. NOTICES ................................................................................................................................................ 87 39. WINDING-UP .......................................................................................................................................... 88 Schedule 1 - Methods of delivery ...................................................................................................................... 1

41. INTERPRETATIONIn this Constitution, unless the context clearly indicates otherwise:1.1. the terms defined below shall have the corresponding meaning when used in this Constitution:1.1.1. “Administer” includes the rights of the Co-operative to hold, control, administer,make use of, commercialise, license, or enforce the relevant IP Rights (being theAdministered IP Rights) and the exercise of such rights on behalf of or for thebenefit of Members, Affiliates or Contracting Participants, as the case may be, inaccordance with this Constitution and the Administration of IP Rights Agreementor an agreement contemplated in clause 36 (Third Party Agreements); and“Administered”, “Administration” and “Administering” shall havecorresponding meanings;1.1.2. “Administered IP Rights” means all IP Rights which are Administered by theCo-operative in accordance with this Constitution and the related Administrationof IP Rights Agreement, which IP Rights shall continue to be associated with theparticular Member, Affiliate or Contracting Participant, as the case may be, whoagreed to them being Administered by the Co-operative and where the Member’sinterest in such rights has been transferred to a Permitted Successor, the IPRights associated with the relevant Permitted Successor;1.1.3. “Administration of IP Rights Agreement” means an agreement concluded fromtime to time between the Co-operative and an Applicant or a Member (including aPermitted Successor), or a Contracting Participant or an Affiliate pursuant towhich such a Person appoints the Co-operative to Administer their IP Rights, ascontemplated in clause 29 (Administration of IP Rights) and:1.1.3.1. in the case of Members, includes any further agreement oraddendum entered into in accordance with clauses 29.4 or 29.5; or1.1.3.2. in the case of Contracting Participants and Affiliates, in accordancewith clause 36 (Third Party Agreements),as amended, supplemented or replaced from time to time;1.1.4. “Administration Rights” means the rights granted to or vested in the Cooperativefor the purposes of Administering the Administered IP Rights as

5required by or contemplated in this Constitution read together with theAdministration of IP Rights Agreement;1.1.5. “Affiliate” means an Affiliated Society and, where relevant, includes its members,and “Affiliates” shall have a corresponding meaning;1.1.6. "Affiliated Society" means any Person in the Principal Territory or othercountries which conducts a business similar or related to that of the Co-operativeand that the Co-operative becomes a member of or enters into any joint venture,union of interests, co-operation, reciprocal concession or other arrangement with,in connection with the administration, commercialisation or use of IP Rights or forsharing profits in relation to the administration, commercialisation or use of IPRights at the relevant time;1.1.7. “Applicant” has the meaning ascribed thereto in clause 9.4;1.1.8. “Annual General Meeting” means an annual meeting of the Members to interalia consider the matters set out in clause 16.2;1.1.9. “Assign” has its ordinary meaning, read together with the IP Related Legislationand, in regard to Members and Applicants, unless agreed otherwise in writing,includes Assignment that results in the transfer of the rights comprising theAdministered IP Rights to the Co-operative by the Applicant or Member vestedwith such rights (“Assignor”) to the Co-operative for the purpose of empoweringthe Co-operative to exclusively (unless otherwise agreed as contemplated inclause 29.9) Administer the Administered IP Rights in its own name, for thebenefit of the Assignor (or the Assignor’s Permitted Successor) as contemplated,and subject to the terms, deductions and restrictions in this Constitution and theAdministration of IP Rights Agreement and “Assignment” shall have acorresponding meaning;1.1.10. "Associate Member" means a member of the Co-operative elected to AssociateMembership pursuant to clause 9.6 or clause 9.10 or clause 11.4.7 and havingthe rights, privileges and obligations as set out in this Constitution applicable toAssociate Membership;1.1.11. “Audit Committee” means any audit committee of the Co-operative that may beappointed or elected in accordance with clause 15.3, and which may becombined with a risk committee, or any other committee of the Co-operative;

61.1.12. “Auditing Profession Act” means the Auditing Profession Act (26 of 2005), asamended from time to time or any legislation which replaces it;1.1.13. “Auditor” means the auditor of the Co-operative, appointed in accordance withclause 15.4;1.1.14. "Author" means an ‘author’ as defined in section 1 of the Copyright Act and theequivalent in jurisdictions outside South Africa, including, without limitation, alyricist, Composer, adapter or translator of any words which are (or may be)associated with any music, but excludes any Permitted Successors (e.g. Author’sHeirs) entitled to an Author’s interests in the relevant copyright, unless expresslystated otherwise;1.1.15. “Author’s Heirs” means the Heirs of an Author in respect of the Author’s interestin the relevant IP Rights authored by the Author and any successive Heirs ofsuch Heirs;1.1.16. "Ballet" means a choreographic work having a story, plot or abstract idea,devised or used for the purpose of interpretation by dancing and/or miming, butdoes not include country or folk dancing, nor tap dancing, nor precision dancesequences;1.1.17. “Board” means the board of Directors of the Co-operative, tasked to manage theaffairs of the Co-operative;1.1.18. “Business Day” means any day which is not a Saturday, Sunday or recognisedpublic holiday in South Africa;1.1.19. “Business Rescue” means business rescue as contemplated insection 128(1)(b) of the Companies Act, or the equivalent in any otherjurisdiction;1.1.20. “Business Rescue Practitioner” shall have the meaning ascribed thereto insection 128(1)(d) of the Companies Act, or the equivalent in any otherjurisdiction;1.1.21. "Candidate Member" means a member of the Co-operative elected to CandidateMembership pursuant to clause 9.6, and having the rights, privileges andobligations as set out in this Constitution applicable to Candidate Membership;

71.1.22. “CISAC” means the Confédération Internationale des Sociétés d´Auteurs etCompositeurs (English translation: ‘International Confederation of Societies ofAuthors and Composers), an international, non-governmental, not for profitorganisation composed of societies administering rights in all categories ofcopyright, founded in France in 1926 and currently having its headquarters inParis;1.1.23. “Cinematograph Film” means any fixation or storage by any means whatsoeveron film or any other material of data, signals or a sequence of images capable,when used in conjunction with any other mechanical, electronic or other device,of being seen as a moving picture and of reproduction, and includes the soundembodied in a sound track associated with the film, but shall not include acomputer program unless the computer program forms part thereof;1.1.24. “Companies Act” means the Companies Act (71 of 2008), as amended fromtime to time or any legislation which replaces it;1.1.25. "Composer" means a composer or arranger of any music;1.1.26. "Constitution" means this constitution including all schedules and annexureshereto;1.1.27. “Contracting Participants” are those Persons who, as clients of the Cooperative,contract with the Co-operative to Administer their Administered IPRights on a purely contractual basis as contemplated in clause 36 and who donot become Members of the Co-operative;1.1.28. “Contracting Participant Administration Rules” means, if any, the GovernanceRules relating to the agreements with Contracting Participants and theAdministration of their IP Rights;1.1.29. "Conversion Date" means the date on which the entry of the conversion from acompany to a co-operative (as contemplated in section 67(3)(a) read with section68 of the Co-operatives Act) is made in the register of co-operatives and thesubstitution of the Co-operative’s previous constitutional documents (as acompany) with this Constitution becomes effective as contemplated insection 68(f) of the Co-operatives Act;1.1.30. “Co-operative” means the co-operative intended to be called the SouthernAfrican Music Rights Organisation Co-operative Limited in respect of which this

8Constitution is adopted, by whatever other name it may be known from time totime;1.1.31. "Co-operatives Act" means the Co-operatives Act (14 of 2005), as amendedfrom time to time or any legislation which replaces it;1.1.32. “Copyright Act” means the Copyright Act (98 of 1978), as amended from time totime or any legislation which replaces it;1.1.33. “Deceased Member’s Interest” has the meaning ascribed thereto inclause 10.8;1.1.34. “Diffusion Service” means a telecommunication service of transmissionsconsisting of sounds, images, signs or signals, which takes place over wires orother paths provided by material substance and intended for reception by specificmembers of the public; and diffusion shall not be deemed to constitute aPerformance or a broadcast or as causing sounds, images, signs or signals to beseen or heard; and where sounds, images, signs or signals are displayed oremitted by any receiving apparatus to which they are conveyed by diffusion insuch manner as to constitute a Performance or a causing of sounds, images,signs or signals to be seen or heard in public, this shall be deemed to be effectedby the operation of the receiving apparatus;1.1.35. “Director” means a person appointed as member of the Board in terms ofsection 33 of the Co-operatives Act and clause 19.3 of this Constitution;1.1.36. "Dramatico-musical Work" means an opera, operetta, musical play, revue,pantomime or sketch, in so far as it consists of words and music writtenexpressly therefore (but does not include a Cinematograph Film);1.1.37. "Electronic Address" means, in regard to Electronic Communication, any emailaddress furnished to the Co-operative by the Member;1.1.38. “Electronic Communication” means communication by means of a telephonic,electronic or other communication facility, as contemplated in the ElectronicCommunications and Transactions Act (25 of 2002);1.1.39. “Exchange Control Regulations” means the South African exchange controls ofthe South African Reserve Bank regulated and promulgated in terms of the

9Currency and Exchanges Act (9 of 1933) and the related regulations, includingthe Exchange Control Regulations (1961), as amended or replaced from time totime;1.1.40. "Full Member" means a member of the Co-operative elected to Full Membershippursuant to clauses 9.6, 9.10 or 9.13, and having the rights, privileges andobligations as set out in this Constitution applicable to Full Membership;1.1.41. “General Meeting” means a meeting of the Members who are entitled toexercise Voting Rights in relation to a matter to be considered at such meetingand includes an Annual General Meeting;1.1.42. “Governance Rules” means rules as contemplated in section 14(2)(i) of the CooperativesAct and clause 8 (Governance Rules) of this Constitution;1.1.43. “Grand Rights” means Performing Rights in respect of the following classes ofworks, unless such acts are done by means of Cinematograph Films:1.1.43.1. Dramatico-musical Works in their entirety;1.1.43.2. excerpts from Dramatico-musical Works consisting of a complete act;1.1.43.3. excerpts from Dramatico-musical Works which, not consisting of acomplete act, have a total duration in excess of 20 (twenty) minuteswhen broadcast by television, or in excess of 25 (twenty-five)minutes when broadcast by sound radio or performed otherwise thanby broadcasting, and excerpts which, not consisting of a completeact and not exceeding the durations mentioned in this clause, form aconsecutive sequence which preserves all the essential elements ofthe original work and does not interrupt the dramatic action; and1.1.43.4. the music and any words associated therewith composed or used fora Ballet, if accompanied by a visual representation of such Ballet inexcess of 15 (fifteen) minutes in total duration of 50% (fifty percent)of the total length of the Ballet;1.1.44. “Grant of Rights Payment” has the meaning ascribed thereto in clause 30.3;1.1.45. “Heir” means the widow(er), child or other relative, next of kin, beneficiary underthe will or in terms of intestate succession of a deceased Member;

101.1.46. “Intellectual Property” means the subject matter of any IP Rights;1.1.47. “IP Related Legislation” means:1.1.47.1. the Copyright Act;1.1.47.2. the Performers’ Protection Act; and/or1.1.47.3. any other legislation applicable in respect of the Administered IPRights and/or the Administration of the Administered IP Rights;1.1.48. “IP Rights” includes all Performing Rights, Reproduction Rights, NeedletimeRights and similar rights under any IP Related Legislation in the PrincipalTerritory or anywhere else in the world, subsisting now or in the future;1.1.49. “Licence Revenue” means the royalties, licence fees, and other proceeds (allexcluding VAT) received by the Co-operative directly from the Co-operative’sAdministration of the Administered IP Rights of Members (to be determined andattributed by the Board in applying the Payment Rules);1.1.50. "Member" means a registered member of the Co-operative, whether a FullMember, an Associate Member or a Candidate Member, and “Membership”shall have a corresponding meaning;1.1.51. “Membership Rules” shall have the meaning attributed to it in clause 8.7,essentially being the Governance Rules principally relating to Membership of theCo-operative at the relevant time;1.1.52. “Member’s Administered IP Rights” means the Administered IP Rightsassociated with a Member that are Administered by the Co-operative at therelevant time, whether or not such rights are vested in the Co-operative;1.1.53. “Member’s Certificate” means the certificate issued to a Member by the Cooperativereflecting such Member’s Membership, which certificate shall be signedby a Director and countersigned by a duly authorised officer or manager of theCo-operative, and be in such form as the Board may determine from time to time;1.1.54. “Members’ Register” means a register including information in respect ofMembers as set out in clause 14.6.6;

111.1.55. “Musical Work” means a work consisting of music, exclusive of any words oraction intended to be sung, spoken or performed with the music;1.1.56. “Needletime Right” means the rights conferred on a Performer in respect of hisRecorded Performance in terms of section 5(1)(a) of the Performers ProtectionAct granting him the right to enforce and protect such rights and authorise andreceive remuneration in respect of the broadcast, transmission in a DiffusionService and communication to the public of his Recorded Performance;1.1.57. “Needletime Rights Members” means those Members whose NeedletimeRights are Administered by the Co-operative at the relevant time underconsideration in regard to their Needletime Rights only;1.1.58. “Needletime Trust” means the Performers Organisation of South Africa Trust(Master’s reference number IT1991/10) which has been established by the Cooperativefor the purpose of, amongst other things, Administering NeedletimeRights;1.1.59. “Net Licence Revenue” means the amount equal to the Licence Revenue minusthe Permitted Royalty Deductions;1.1.60. “Non Licence Revenue” means proceeds received by the Co-operative from itsvarious investments, including without limitation interest earned on Net LicenceRevenue (excluding interest on Royalty Payment credits as contemplated inclause 30.2), rental and administration fees received from Subsidiaries, butexcluding VAT in respect of all of such proceeds;1.1.61. “Ordinary Resolution” means a resolution adopted with the support of morethan 50% (fifty percent) of the Voting Rights exercised thereon at a GeneralMeeting (abstentions to be ignored for the purpose of calculating the majority);1.1.62. “Operating Surplus” means ‘surplus’ as defined in section 1 of the CooperativesAct, being the financial surplus arising from the operations of the Cooperativein a financial year;1.1.63. “Operating Surplus Payment” means a payment of Operating Surplus toMembers as defined in clause 31 (Operating Surplus Payment);

121.1.64. “Payment Rules” shall have the meaning attributed to it in clause 8.8, essentiallybeing the Governance Rules principally relating to the attribution of LicenceRevenue and payments to Members, applicable at the relevant time;1.1.65. “Payment Cycle” means the cycle during which the Royalty Payments relating toallocated Net Licence Revenue received in a particular financial year (or anyother period as may be determined by the Board in respect of the particularcontext) are paid, as determined by the Board having regard to any relevantGovernance Rules;1.1.66. “Performance” means:1.1.66.1. in respect of a Work of Music, doing any act falling within thePerforming Right as contemplated in clauses 1.1.70.1 to 1.1.70.3;and1.1.66.2. in respect the act of a Performer, a rendition by him of a Work ofMusic,and “Performed” shall have a corresponding meaning;1.1.67. “Performer” means a natural person falling within the definition of a “performer”in section 1 of the Performers’ Protection Act, who has an interest in a RecordedPerformance;1.1.68. “Performer’s Heir” means the Heir of a Performer in respect of any interest inthe Needletime Rights performed by the Performer, and any successive Heirs ofsuch Heirs;1.1.69. “Performers’ Protection Act” means the Performers’ Protection Act (11 of1967), as amended from time to time or any legislation which replaces it;1.1.70. "Performing Right" includes the right under the copyright in a Work of Music todo or authorise the doing of, any of the following:1.1.70.1. Performing the Work of Music in public;1.1.70.2. broadcasting the Work of Music;

131.1.70.3. causing the Work of Music to be transmitted in a Diffusion Service,unless that service transmits a lawful broadcast, including the Workof Music, and is operated by the original broadcaster, and includesthe comparable right in any jurisdiction outside of South Africa;1.1.71. “Permitted Royalty Deductions” has the meaning ascribed thereto inclause 30.4;1.1.72. “Permitted Successor” means a Person who is permitted to acquire an interestin a Member’s Administered IP Rights in terms of clause 10, 11 or 12.5, inrelation to the acquired interest in the Member’s Administered IP Rights and theAdministration of IP Rights Agreement;1.1.73. “Person” includes natural and juristic persons;1.1.74. “Predecessor” in relation to a Permitted Successor, means the Member of theCo-operative that originally appointed the Co-operative to Administer hisassociated Administered IP Rights;1.1.75. “Present” means, in the context of any General Meeting, a Member:1.1.75.1. present in person; or1.1.75.2. represented by proxy who is present in person;1.1.76. “Previous Constitutional Documents” means the Memorandum and Articles ofAssociation of the Co-operative as a company prior to its conversion to a cooperativewhich were in effect immediately prior to the Conversion Date;1.1.77. “Primary Co-operative” has the meaning ascribed thereto in section 1 of the CooperativesAct;1.1.78. “Principal Territory” means South Africa, the Kingdom of Lesotho and theKingdom of Swaziland;1.1.79. “Proprietor” means, subject to any express categorisation Governance Rules:1.1.79.1. prior to application for Membership, a Person who owns or controlsthe whole, or a portion of, any IP Rights, other than as (i) a Publisher(ii) an Author of a Work of Music; (iii) an Author’s Heir; (iv) aPerformer in relation to any Needletime Rights; or (v) a Performer’s

14Heir, generally being the successor in title of an Author or Performerother than as their Heirs;1.1.79.2. after application for Membership, a Person (including PermittedSuccessors) who has granted the Co-operative Administration Rightsrelating to his/her interest in a Works of Music (e.g. share) in respectof which they are not (i) the Publisher (ii) the Author; (iii) an Author’sHeir; (iv) the Performer in relation to any Needletime Rights; or (v) aPerformer’s Heir; and1.1.79.3. for the sake of clarity excludes a Person in respect of his/her interestin a Work of Music (e.g. share) in respect of which he/she is (i) aPublisher (ii) an Author; (iii) an Author’s Heir; (iv) a Performer; or (v) aPerformer’s Heir;1.1.80. "Publisher" means, subject to any express categorisation in the GovernanceRules, a publisher of any Work of Music as the term is generally understood inthe music licensing industry;1.1.81. "Record" shall have the meaning ascribed to the term in section 1(1) of theCopyright Act but shall include the fixation of a Performer’s Performance;1.1.82. “Record Date” means the date set by the Board for the purpose of determiningwhich Members are entitled to:1.1.82.1. receive notice of a General Meeting;1.1.82.2. participate in and vote at a General Meeting;1.1.82.3. receive a payment; or1.1.82.4. be allotted or exercise other rights;1.1.83. “Recorded Performance” means a Record embodying a Performance of aPerformer;1.1.84. “Registered Office” means the registered office of the Co-operative, ascontemplated in section 20 of the Co-operatives Act, at the Conversion Datesituate at Fifth Floor, SAMRO Place, 20 De Korte Street, Braamfontein, 2001,Johannesburg;

151.1.85. “Registrar” means the Registrar of Co-operatives as in terms of the CooperativesAct, being the Commissioner of the Companies and IntellectualProperty Commission established in terms of the Companies Act;1.1.86. “Reproduction” in relation to:1.1.86.1. a Work of Music or a broadcast, includes a reproduction in the formof a Record or a Cinematograph Film;1.1.86.2. a Work of Music, includes an adaptation of it; and1.1.86.3. any work, includes a reproduction made from a reproduction of thatwork,and references to “Reproduce” and “Reproducing” shall be construedaccordingly;1.1.87. “Reproduction Rights” includes the right under the copyright in a Work of Musicto do, or to authorise, the making of a Reproduction of the work;1.1.88. "Round Robin Resolution" means a resolution passed other than at a meetingof the Directors, being a resolution signed by the required number of Directors,as contemplated in section 34(5) of the Co-operatives Act and clause 24.13 ofthis Constitution;1.1.89. “Royalty Payment” has the meaning ascribed thereto in clause 30.2;1.1.90. “Run-out Period” has the meaning ascribed thereto in clause 10.16.1;1.1.91. “Section 14 Associates” means an associate member appointed in terms ofclause 36.7;1.1.92. “South Africa” means the Republic of South Africa;1.1.93. “Special Resolution” means a resolution adopted with the support of at least75% (seventy five percent) of the Voting Rights exercised thereon at a GeneralMeeting (abstentions to be ignored for the purpose of calculating the majority);1.1.94. “Statutory Reserve Fund” means the reserve fund set up in compliance withsection 46 of the Co-operatives Act, as contemplated in clause 33.1 below;

161.1.95. “Subsidiary” has the meaning ascribed thereto in section 1 of the CompaniesAct, mutatis mutandis;1.1.96. “Taxes” means all forms of taxation including income, withholding, corporation,capital gains, inheritance, VAT, employment, property, sales, goods, wealth,provisional tax, customs and other import or export duties, excise duties, stampduties, transfer taxes, royalties, annual fees owing to the Companies andIntellectual Property Commission in South Africa, social security or other similarcontributions and all charges, duties, imposts and levies of a similar nature, andany interest, penalty, surcharge or fine relating to such taxation;1.1.97. “Territory Performing Rights Royalty Payments” means the amount of theRoyalty Payments paid or credited to Members, attributed by the Board to thePerforming Rights in the Principal Territory (having regard to the Payment Rules)forming part of the Administered IP Rights, which (for the sake of clarity)excludes, without limitation, amounts paid or credited to Members in respect ofReproduction Rights, Needletime Rights and any Administered IP Rights outsideof the Principal Territory, regardless of the nature of the rights;1.1.98. “Transitionary Period” has the meaning ascribed thereto in clause 10.8.2;1.1.99. “VAT” means value-added tax in terms of the Value-Added Tax Act (89 of 1991)as amended from time to time and any comparable replacement tax;1.1.100. “Voting Right” means the right of a Member to vote on the matter underconsideration;1.1.101. “Work of Music” means the whole or a part of a Musical Work or of a MusicalWork in combination with lyrics, words or any other literary work written for thepurpose of accompanying the music, such as a song;1.1.102. “Worldwide Basis” in regard to IP Rights and the Administration of IP Rightsmeans the relevant IP Right (including comparable rights where there is no directcorrelation in the relevant jurisdiction) in every jurisdiction and nation in the worldand if such rights are included in the Administered IP Rights then theAdministration of such IP Rights shall extend to all such jurisdictions and nationsand “Worldwide” shall have a corresponding meaning; and

171.1.103. "Writing" and “Written” includes Electronic Communication but, as regards anyMember entitled to vote, only to the extent that such Member has notified the Cooperativeof an Electronic Address;1.2. it is noted that the terms Publisher, Author, Proprietor, Author’s Heir, Performer and/orPerformer’s Heir are determined with reference to particular IP Rights and the same Personcan be a Publisher, an Author a Proprietor and/or a Performer in respect of different IP Rights(even in respect of the same Work of Music) and the Governance Rules may regulate suchcategorisation;1.3. references to Members represented by proxy shall include Members entitled to voterepresented by an agent appointed under a general or special power of attorney;1.4. references to Members entitled to vote Present or acting in person shall include juristicpersons represented by duly authorised representatives as contemplated in section 30 of theCo-operatives Act;1.5. all references to "section/s" in this Constitution refer to the sections of the Co-operatives Actunless the context indicates otherwise;1.6. the headings are for reference purposes only and shall not affect the interpretation of thisConstitution;1.7. words in the singular number shall include the plural, and words in the plural number shallinclude the singular, words importing the masculine gender shall include the other genders;1.8. if any provision in a definition is a substantive provision conferring rights or imposingobligations on any party, notwithstanding that it is only in the definition clause, effect shall begiven to it as if it were a substantive provision in the body of the Constitution;1.9. if any term is defined within the context of any particular clause in the Constitution, the term sodefined, unless it is clear from the clause in question that the term so defined has limitedapplication to the relevant clause, shall bear the meaning ascribed to it for all purposes interms of this Constitution, notwithstanding that that term has not been defined in thisinterpretation provision;1.10. where any clauses of this Constitution must be interpreted, a reasonable interpretation shouldbe allowed that accords with the context of the relevant clause, this Constitution as a wholeand the Co-operatives Act;

181.11. the rule of construction that a contract shall be interpreted against the party responsible forthe drafting or preparation of the contract, shall not apply to this Constitution;1.12. when a particular number of days is provided for between the happening of one event andanother, the number of days must be calculated by:1.12.1. excluding the day on which the first such event occurs;1.12.2. including the day on or by which the second event is to occur; and1.12.3. in the case of Business Days, excluding any official public holiday in the SouthAfrica, a Saturday or Sunday that falls on or between the days contemplated inclauses 1.12.1 and clause 1.12.2 respectively; and1.13. references to the Co-operatives Act and the IP Related Legislation shall be read as includingreferences to any related applicable ordinance or regulation to the extent applicable to the Cooperative.2. RECORDAL2.1. The Co-operative is converted from a company to a co-operative (as contemplated in section68 of the Co-operatives Act) with effect from the Conversion Date and the members of thecompany accordingly become the Members of the Co-operative, provided that nothing in thisConstitution shall purport to amend any existing contractual rights or obligations of anyMember as at the Conversion Date that cannot be amended by way of an amendment to thePrevious Constitutional Documents.2.2. Those persons who served as directors of the company shall continue to serve as Directors ofthe Co-operative, except if a person is incompetent to be a Director (as contemplated inclause 19.8) or is not a Full Member (as contemplated in clause 19.3.1), in which case suchperson shall be deemed to have resigned with effect from the Conversion Date.2.3. Any resolutions or authorisations adopted or granted by the members of the company prior tothe Conversion Date, shall continue to apply in respect of the Co-operative, as if adopted bythe Members of the Co-operative in accordance with the terms of this Constitution, however,any restrictions or requirements related to such resolutions or authorisations that wererequired by the Companies Act or the Previous Constitutional Documents by virtue of the Cooperativehaving been a company at the time, shall no longer apply, the Co-operative insteadbeing regulated by the Co-operatives Act.

193. FORM OF CO-OPERATIVEThis is the Constitution of a business undertaking formed as a Primary Co-operative with separatejuristic personality and limited liability in terms of the provisions of the Co-operatives Act. A Person isnot, solely by reason of being a Member or a Director of the Co-operative, liable for any liabilities orobligations of the Co-operative.4. BUSINESS OF THE CO-OPERATIVEWithout limitation to the capacity and powers of the Co-operative, the main business of the Cooperativeshall be to Administer the IP Rights of its Members, Affiliates and Contracting Participantsand to pursue the Co-operative’s objectives.5. OBJECTIVES OF THE CO-OPERATIVE5.1. The principle objects of the Co-operative are to provide services to its Members and tofacilitate the development of the community of Authors, Publishers or Performers and thedevelopment of Intellectual Property and enforcement of Intellectual Property Rights, includingwithout limitation the following ancillary and related objects:5.1.1. to hold, control, administer, make use of, commercialise, exercise and/or enforceAdministered IP Rights on behalf of, or for the benefit of, Members, ascontemplated in this Constitution;5.1.2. to acquire by way of Assignment or by means of licence or other means therights to Administer the Administered IP Rights including, without limitation, toauthorise:5.1.2.1. the reproduction of copyright works in any manner or form;5.1.2.2. the performance of copyright works in public;5.1.2.3. the broadcasting of the copyright works;5.1.2.4. the causing of the copyright works to be transmitted in a DiffusionService; and5.1.2.5. the licensing of Recorded Performances;5.1.3. to develop, maintain, collaborate in appropriate tools and facilities to store, in ausable manner, the information related to the Administered IP Rights;

205.1.4. to make available information regarding copyright works and Needletime Rightsas well as information regarding Authors, Publishers, Proprietors and Performers(and their Permitted Successors) of their Works of Music and Performances,respectively, and Administered IP Rights to relevant authorities and bodies forprotection and Administration;5.1.5. to make available, authorise, license or grant permission for the use orcommercial exploitation of any Administered IP Rights and to collect and receiveand give effectual discharges of all royalties, fees and other monies payable inconnection the Administered IP Rights;5.1.6. without limitation to the generality of the right to Administer Administered IPRights, to in its own name or on behalf of any or all Members:5.1.6.1. enforce the Administered IP Rights and any agreements orarrangements in respect of the Administration of the IntellectualProperty by any legal means necessary or desirable;5.1.6.2. to take remedial action in respect of any infringement of any of theAdministered IP Rights or breach of agreement including, withoutlimitation, to recover damages or apply for a restraint or any otherremedy; and5.1.6.3. to institute any necessary or desirable proceedings or action ordispute resolution process (including referral to court or arbitration) inrelation to the Administration of the Administered IP Rights orcarrying out of any other objects and to release or compromise anysuch proceedings, actions or process or dispute;5.1.7. to process, compute or apportion the fees and royalties received or collectedafter deduction of expenses, deductions necessary for the continued operation ofthe Co-operative and other deductions that are permitted and/or approved ascontemplated in this Constitution;5.1.8. to provide support for the social well-being of Members and the encouragementof the national arts and other social and cultural objectives in the PrincipalTerritory as determined by the Board, provided that the amount to be allocatedby the Board for these objectives in any financial year may not exceed 8.5%

21(eight point five percent) of the gross Licence Revenue received in the financialyear preceding the allocation;5.1.9. to receive by way of transfer, cession or Assignment, and to use, hire, obtain,take over or otherwise acquire and to improve, protect, manage, develop, makeuse of, commercialise, enfranchise, let, deliver, turn to account, deal in, transferaway or otherwise dispose of, and to exercise and enforce on behalf of anyPerson including the Members of the Co-operative or anyone else, any and allIntellectual Property and including any and all rights, obligations, powers, dutiesand remedies arising under the IP Related Legislation and/or under any law;5.1.10. to incorporate or acquire Subsidiaries;5.1.11. to exercise any powers or carry out any actions provided for in this Constitutionor the Co-operatives Act or which are necessary or desirable (in the view of theBoard) to conduct its business and implement the provisions of this Constitutionor any related matters;5.1.12. to adapt its operating model in line with changing legislation, direct or indirectcompetition, and any changes in the business environment now known orunknown for the preservation of its ability to fulfil its objects and mandate ascontained in this Constitution;5.1.13. to contract with Affiliates, Section 14 Associates and Contracting Participants toAdminister their (or their members’) Intellectual Property and/or take Assignmentof their Intellectual Property or any related rights with clauses 5.1.1 to 5.1.9applying equally adapted as is appropriate (mutatis mutandis);5.1.14. hold, control, administer, make use of, commercialise and/or enforce anyIntellectual Property licensed to, owned or held by or vested in the Co-operative;5.1.15. to, subject to the Co-operatives Act, make and from time to time alter or vary anyrules for regulating the governance of the Co-operative, the Administration of theAdministered IP Rights, the calculation and payment of payments to Members,Affiliates, Section 14 Associates and Contracting Participants, the attribution ofLicence Revenue of Administered IP Rights and social and cultural activities andbenefits including, without limitation, the matters specified in clause 8(Governance Rules);

225.1.16. to carry on or acquire any business which may seem to the Directors capable ofbeing conveniently carried on in connection with the above objects through anyentity, Person, joint venture or partnership;5.1.17. to invest the assets of the Co-operative, including without limitation to:5.1.17.1. invest and deal with the monies of the Co-operative in such manneras may from time to time be determined by the Directors and to applythe proceeds of such investments in any manner consistent with thisConstitution; and5.1.17.2. establish any company, take or otherwise acquire and hold shares inany other company, or carrying on any business that, in the view ofthe Board, is anticipated or capable of being conducted so as directlyor indirectly to benefit this Co-operative, the Members or further anyof its objects;5.1.18. to establish any trust, including without limitation, to Administer all or part of theAdministered IP Rights of Members and other Persons and to donate or transferproperty (in the widest sense) of the Co-operative to such trust;5.1.19. to amalgamate with other co-operatives, to divide into two or more co-operatives,and to convert to a company;5.1.20. to purchase or acquire in any way stock-in-trade, plant, machinery, land,buildings, agencies, shares, debentures and every other kind or description ofmovable and immovable property;5.1.21. to open and operate banking accounts and to overdraw such accounts, to borrowor raise or secure the payment of money in such a manner as the Directors shallthink fit and in particular by pledge, mortgage, hypothecation charged upon all orany of the Co-operative's property, both present and future, movable and/orimmovable, and to purchase, redeem or pay off any such securities and providefinancial assistance to any Subsidiary;5.1.22. to remunerate and incentivise any Person for services rendered or to berendered;

235.1.23. to sell or dispose of the undertaking of the Co-operative or any part thereof forsuch consideration as the Directors may think fit, and in particular for shares,debentures or securities of any other company;5.1.24. to own immovable property, to register security over immovable property, tolease its immovable property to any Person, to lease immovable property fromany Person;5.1.25. to attend to the payment and/or administration of any Taxes on behalf of anyMember, Affiliate, Section 14 Associate or Contracting Participant;5.1.26. to appoint any agent or agents for the collection and recovery of any moniesreceivable by the Co-operative in the exercise of its powers or otherwise for thepurpose of the exercise of any of such powers;5.1.27. to do all or any of the above things in any part of the Principal Territory orelsewhere outside the Principal Territory and as principals, agents, contractors,trustees, or otherwise, and by or through trustees, agents or otherwise, andeither alone or in conjunction with others;5.1.28. to enter into contracts outside the Republic and to execute any contracts, deedsand document in any foreign country;5.1.29. to procure the Co-operative to be registered or recognised in any foreign countryor place; and5.1.30. to pursue any other objects and do all such other things as are in the opinion ofthe Directors incidental or conducive to the attainment of the above objects, orany of them.5.2. Each of the above objectives shall be self-standing and shall not be limited by any of the otherobjectives.6. POWERS AND CAPACITY OF THE CO-OPERATIVE6.1. The Co-operative has all the powers and capacity of a natural person for the purpose ofpursuing its objectives (as set out in clause 5 (Objectives of the Co-operative)).6.2. Notwithstanding the omission from this Constitution of any provision to that effect, the Cooperativemay do anything which the Co-operatives Act empowers a co-operative to do if soauthorised by its Constitution.

247. AMENDMENTS TO THE CONSTITUTION7.1. Subject to clause 7.2, all amendments of the Constitution must be approved by SpecialResolution and shall be effected in accordance with section 18 of the Co-operatives Act.7.2. The Board is empowered to correct errors substantiated as such from objective evidence orwhich are self evident errors (including, but without limitation ejusdem generis, spelling,punctuation, reference, grammar or similar defects) in the Constitution without approval bySpecial Resolution of Members. The Board shall publish a copy of any such correctioneffected by the Board on the Co-operative’s website.8. GOVERNANCE RULES8.1. Subject to the Co-operatives Act and clauses 8.2, 8.3 and 29.12 of this Constitution, theBoard may make, amend or repeal rules (“Governance Rules”) regulating the governance ofthe Co-operative, the Administration of the Administered IP Rights, the calculation andpayment of payments to Members, Affiliates, Section 14 Associates and ContractingParticipants, the attribution of Licence Revenue to Administered IP Rights and social andcultural activities and benefits. Such Governance Rules can, without limitation, include rules inrespect of:8.1.1. the qualifications for classes of Membership and the categorisation of Members;8.1.2. the mode in which the Works of Music and/or Performances of Members are tobe communicated or declared by them to the Co-operative;8.1.3. the mode in which, the periods or period for which, and the conditions underwhich, the Members are to authorise the Co-operative to exercise and enforcethe rights and remedies aforesaid of the Members in respect of such Works ofMusic and/or Performances as aforesaid;8.1.4. the Administration of the Administered IP Rights and the attribution of LicenceRevenue to Administered IP Rights, shares therein and valuation thereof;8.1.5. the mode and proportions in which, and the times at which, the Net LicenceRevenue apportioned amongst and paid to the Members interested thereinrespectively as Royalty Payments;8.1.6. Permitted Royalty Deductions;

258.1.7. the determination, calculation, apportionment, and mode and times of payment,of the Grant of Rights Payments;8.1.8. the determination, calculation, apportionment, and mode and times of payment,of any Operating Surplus Payment;8.1.9. the provision, through trusts or associations or otherwise for social and culturalobjectives, including without limitation by way of the provision, through trusts orassociations or otherwise, of gratuities, donations, pensions or other benefits forMembers, ex-Members or employees of the Co-operative, ContractingParticipants and Section 14 Associates or their wives, husbands, widows,widowers, families or dependants;8.1.10. the administration and management of the property or business of the Cooperativeand any matters incidental thereto;8.1.11. the administration of the IP Rights of Contracting Participants, as contemplated inclause 36.1;8.1.12. the regulation of the Co-operative’s contractual arrangements with ContractingParticipants and Affiliates; and8.1.13. any other ancillary matters.8.2. The first Governance Rules shall be the Governance Rules approved by Ordinary Resolutionof the Members contemporaneously with the adoption of this Constitution.8.3. Subject to clauses 8.2, 8.4 and 8.5, Governance Rules or any alterations of such GovernanceRules, shall take effect immediately upon their adoption by the Board, provided that suchGovernance Rules (or alternations thereto) shall cease to have effect at the end of the nextAnnual General Meeting following their adoption, unless they are approved by OrdinaryResolution at such Annual General Meeting. If such Ordinary Resolution is not adopted, thisshall not have any effect upon the validly of any actions or decisions made in accordance withsuch Governance Rules (or alternations thereto) prior to the end of that Annual GeneralMeeting.8.4. Notwithstanding clause 8.3, Governance Rules (or any alterations of such Governance Rules)falling within clauses 8.1.8 and 8.5 shall have immediate effect and are not required to beapproved by the Members.

268.5. Notwithstanding clause 8.3, the Board is empowered to correct errors substantiated as suchfrom objective evidence or which are self evident errors (including, but without limitationejusdem generis, spelling, punctuation, reference, grammar or similar defects) in theGovernance Rules without approval by Ordinary Resolution of Members.8.6. The Board shall publish a copy of any Governance Rules, or of any correction effected by theBoard, on its website, unless, in making the Governance Rules in question, the Boarddetermines that another method of publication shall be used.8.7. The Governance Rules principally relating to the Membership of the Co-operative essentiallybeing those contemplated in clauses 8.1.1 to 8.1.3 are referred to as the “MembershipRules”.8.8. The Governance Rules principally relating to the determination and attribution of LicenceRevenue, Permitted Royalty Deductions and the determination and payment of RoyaltyPayments, Grant of Rights Payments and Operating Surplus Payments essentially beingthose contemplated in clauses 8.1.4 to 8.1.8 are referred to as the “Payment Rules”.8.9. Membership Rules and Payment Rules shall be deemed to be incorporated into and form partof the contract between the Co-operative and the Member in respect of the Administration ofthe Member’s Administered IP Rights.9. MEMBERS AND QUALIFICATION FOR AND DETERMINATION OF MEMBERSHIP9.1. The number of Members shall, subject to the Co-operatives Act and this Constitution, beunlimited.9.2. All Persons registered as members of the company on the Conversion Date shall, with effectfrom the Conversion Date, remain Members of the Co-operative.9.3. In addition to the basic categories of Candidate Member, Associate Member and FullMember, Membership is also categorised in respect of those Members that are Authors,Author’s Heirs, Performers (Needletime Rights Members), Performer’s Heirs, Publishers andProprietors, and some of the rights and obligations of Membership are also determined withreference to these categories and the corresponding Administered IP Rights or the nature ofthe Administered IP Rights. It is noted that these categories are not exclusive and a Membercan fall into more than one of these categories, for example, a Member can be both an Authorand a Publisher.

27Application for Membership9.4. Subject to clauses 9.2 and 9.14, in order for a Person to be considered for qualification forMembership, the Person vested with IP Rights (prior to any Assignment thereof to the Cooperative)(“Applicant”) must apply to the Board for Membership. Such application must be inWriting in the form prescribed by the Board from time to time, and the Applicant shall only beeligible for consideration for election to Membership:9.4.1. if such Applicant is an Author, Publisher, Performer, Proprietor or a PermittedSuccessor;9.4.2. if such Applicant has signed an Administration of IP Rights Agreement with theCo-operative conforming with the requirements set out in clause 29(Administration of IP Rights) on terms acceptable to the Board and deliveredsame to the Board (together with the application form referred to above), in termsof which such Applicant agrees to appoint the Co-operative to Administer hisAdministered IP Rights (or in the case of a Permitted Successor agreed that theCo-operative can continue to Administer the Administered IP Rights that thePredecessor appointed the Co-operative to Administer); and9.4.3. once the Administered IP Rights forming the subject of the Administration of IPRights Agreement signed by the Applicant (as contemplated in clause 9.4.2) hasstarted earning Licence Revenue.9.5. An Applicant shall not be entitled to any payments or benefits from SAMRO in respect of theApplicant’s interests in the IP Rights that are the subject of the executed Administration of IPRights Agreement unless and until the Applicant has been elected to Membership.9.6. The Board may, in its sole and absolute discretion, elect an Applicant meeting therequirements set out in clause 9.4 to Membership, in which event the Board shall cause aWritten communication to be made to the Applicant (in such form as the Board may determinefrom time to time) informing the Applicant of such election and advising as to the class ofMembership to which the Applicant will be admitted. Upon the relevant entry being made inthe Members’ Register, the Applicant shall become a Member. The Board in making suchelection can elect an Applicant to Candidate Membership, Associate Membership or FullMembership, if the Applicant meets the requirements applicable for such Membership. TheBoard shall not be required to give reasons for any decision not to elect an Applicant toMembership.

289.7. The Board may issue to such new Member a Member’s Certificate.Rights, privileges and obligations of Membership9.8. Members shall have the rights and privileges, and be subject to the obligations, as:9.8.1. set out in this Constitution and the Governance Rules; and9.8.2. the Board may determine from time to time.9.9. Only a Full Member meeting the required qualifications shall be eligible for appointment as aDirector in accordance with clause 19 (Election of Directors and Casual Vacancies), if he iscompetent for such appointment (as contemplated in clause 19.8).Election to Associate and Full Membership9.10. Subject to clause 9.14, a Candidate Member shall be eligible (without further application) tobe elected by way of Board resolution for conversion of his Membership into AssociateMembership (or directly to Full Membership, if the Candidate Member qualifies) if, in theBoard’s view (in its’ absolute discretion), the Candidate Member qualifies for such a change inMembership, in accordance with the qualifications set out in the Membership Rules, and:9.10.1. upon the effective date of such electing Board resolution, the Candidate Membershall become an Associate Member (or Full Member, if applicable); and9.10.2. the Co-operative may issue the Member with a Member’s Certificate evidencingthe Associate Membership (or Full Membership, if applicable) against surrenderof the Member’s Certificate reflecting Candidate Membership (if same was issuedto the Member).9.11. If the Board has not elected to convert a Candidate Member to an Associate Member or FullMember (as contemplated in clause 9.10) within 2 (two) years (or an extended period, ascontemplated in clause 9.12) after the Candidate Member (or in the case of a PermittedSuccessor, its Predecessor) became a Candidate Member, the Membership of a CandidateMember shall automatically terminate, the provisions of clauses 10.20 to 10.22 shall applyand the former Candidate Member shall have no further rights against the Co-operative. Forthe sake of clarity, the calculation of the relevant period shall take into account Membershipprior to the Conversion Date.

299.12. The Board may, from time to time, elect by way of a resolution to extend the maximumduration of a Candidate Member’s Membership in the Co-operative contemplated inclause 9.11 beyond the initial 2 (two) years or beyond any prior extension (i.e. multipleextensions are permitted).9.13. Subject to clause 9.14, an Associate Member shall be eligible (without further application) tobe elected by way of Board resolution for conversion of his Membership into Full Membershipif, in the Board’s view (in its absolute discretion), the Associate Member qualifies for such achange in Membership, in accordance with the qualifications set out in the Membership Rules,and:9.13.1. upon the effective date of such electing Board resolution, the Associate Membershall become a Full Member; and9.13.2. the Co-operative may issue the Member with a Member’s Certificate evidencingthe Full Membership against surrender of the Member’s Certificate reflectingAssociate Membership (if same was issued to it).9.14. The processes for election to membership (as set out in clause 9.4) and election to a differentclass of Membership (as set out in clauses 9.10 and 9.13) are in addition to the applicationmechanism provided for in clause 11.4.7, read with the Membership Rules.10. TERMINATION OF MEMBERSHIP10.1. Membership shall terminate on the following events:10.1.1. termination due to a Candidate Member not being elected to AssociateMembership or Full Membership within the time period referred to in clause 9.11read with clause 9.12;10.1.2. termination by notice by either the Member or the Co-operative as contemplatedin clauses 10.2 to 10.5;10.1.3. termination pursuant to termination of Administration Rights or lapse of theMember’s Administered IP Rights as contemplated in clauses 10.6 and 10.7;10.1.4. termination subsequent to the death of a Member that is a natural person,subject to the possible transfer of the Deceased Member’s Interest to an Heir ascontemplated in clauses 10.8 to 10.15; and

3010.1.5. termination subsequent to the insolvency or winding-up of a Member ascontemplated in clauses 10.16 to 10.19.Member’s termination by notice10.2. Subject to clauses 10.8 and 10.16, any Member may terminate his Membership by givingWritten notice to the Co-operative not less than 3 (three) calendar months’ prior to 30 April ofany year and, if such notice is duly received by the Co-operative, the Member’s Membershipand participation in the Co-operative shall, subject to clause 10.3, cease with effect from 30April of the following year (i.e. if notice is given on 31 January 2020, Membership will ceaseon 30 April 2021) and the provisions of clause 10.20 shall apply.10.3. The Board may, in its absolute discretion, resolve, following receipt of the notice referred to inclause 10.2, that the termination of the Membership shall:10.3.1. only take effect from 30 June (instead of 30 April) of the following year; or10.3.2. take effect earlier than 30 April of the following year,provided that the Board shall as soon as is practical supply the Member with Written noticeand reasons for such resolution.Co-operative’s termination by notice10.4. The Board may at any time terminate the Membership of any Member by giving such Memberno less than 14 (fourteen) days’ prior Written notice, signed by any officer or manager of theCo-operative, and the Member’s Membership shall cease on the date stipulated in suchnotice, subject to clause 10.5.10.5. If, before the expiration of the 14 (fourteen) day notice period referred to in clause 10.4, theMember receiving such notice delivers a Written demand to the Board demanding that theBoard’s decision to terminate his Membership be approved by an Ordinary Resolution of theMembers in an extraordinary General Meeting, his Membership shall not terminate unless anduntil an extraordinary General Meeting approves such termination of his Membership byOrdinary Resolution. If, at such extraordinary General Meeting, termination of his Membershipis approved, the Member shall cease to be a Member with effect from the date of suchapproval.

31Termination pursuant to termination of Administration Rights or lapse of Member’s AdministeredIP Rights10.6. If at any time the Co-operative ceases to have the right to Administer any of a Member’sAdministered IP Rights, for any reason whatsoever (including as a result of the cancellation ortermination of the Administration of IP Rights Agreement with the relevant Member), then,unless the Board determines otherwise within 10 (ten) Business Days of such cessation of theCo-operative’s Administration Rights, the Member’s Membership and participation in the Cooperativeshall terminate on the lapse of the abovementioned 10 (ten) Business Day period(and the termination of such Membership shall be deemed to be effective from the date of thecessation of the Co-operative’s Administration Rights in respect of such Member).10.7. The Membership of any Member shall ipso facto cease upon the expiration of the subsistenceof the last of the Member’s Administered IP Rights (e.g. the expiry of the copyright therein) inrespect of which the Member is entitled to receive Royalty Payments. On such cessation, theMember shall cease to have any rights in the Co-operative (including without limitation anyclaim to the assets of the Co-operative) and the Membership of the Member shall immediately(ipso facto) be terminated.Termination pursuant to death10.8. On the death of a Member, the deceased Member’s Membership shall terminate (subject tothe provisions below) and may not be transferred or ceded, but the Heir(s) of a deceasedMember may be elected to Membership and the interests of such deceased Member in thedeceased Member’s Administered IP Rights and the Administration of IP Rights Agreement(the “Deceased Member’s Interest”) may be transmitted or transferred to the Heir(s) in termsof clause 10.13 read with clauses 10.9 to 10.15, however the Co-operative shall, in so far asis lawful, retain all IP Rights vested in the Co-operative and continue to Administer thedeceased Member’s Administered IP Rights until the earlier of:10.8.1. any permitted transfer of the Deceased Member’s Interest to an Heir(s) in termsof clause 10.13 prior to the lapse of the Transitionary Period in clause 10.8.2,after which the Co-operative will continue to Administer the deceased Member’sAdministered IP Rights for the benefit of such Heir(s) for the duration of therelevant Heir’s(s’) Membership and the provisions of this clause 10 shall apply ontermination of the relevant Heir’s(s’) Membership; and10.8.2. the 31 st (thirty first) day of December in the 7 th (seventh) year immediatelyfollowing the year in which the Member died (“Transitionary Period”) and during

32this period clause 10.2 shall not apply and the estate of the Member can onlyterminate these arrangements or the Administration of IP Rights Agreement withthe written agreement of the Co-operative.10.9. From the date of death of any Member, until the earlier of the date on which a DeceasedMember’s Interest is transferred to the Heir(s) (as contemplated in clause 10.8.1, read withclause 10.13), and the end of the Transitionary Period, any Royalty Payments or Grant ofRights Payments to which the Member would, if living, have been entitled in relation to theMember’s Administered IP Rights, shall be made to the executor or other personalrepresentative of the Member’s deceased estate as contemplated in clause 12, or to anylawful Heir(s) of such Member in the event of the estate having been wound-up.10.10. Upon the transfer of the Deceased Member’s Interest to any Heir(s) (as contemplated inclause 10.8.1, read with clause 10.13), any future Royalty Payments to which the deceasedMember would, if living, have been entitled in accordance with the Payment Rules, in respectof any period subsequent to such transfer, shall be made to such Heir(s), subject to theprovisions of clause 10.13.10.11. If all of the Deceased Member’s Interest has not been transferred to an Heir at the expiry ofthe Transitionary Period:10.11.1. the Administration of IP Rights Agreement shall terminate and the Co-operative’sright to Administer the deceased Member’s Administered IP Rights shall cease inrespect of the whole or any portion of the Deceased Member’s Interest that hasnot been transferred;10.11.2. if any Administered IP Rights of the deceased Member are vested in the Cooperativeat the relevant time, such Administered IP Rights in respect of anyDeceased Member’s Interest that has not been transferred to an Heir shall revertto the deceased Member’s estate, or to any lawful Heir of such Member in theevent that the estate has been wound-up and, to the extent necessary, the Cooperativehereby agrees to Assign such IP Rights to the estate of the deceasedMember or relevant Heir (provided that the Board may require verification of theinstructions from the executor or another personal representative of the estate orother comparable person before doing so), with effect from the date following theexpiry of the Transitionary Period; and

3310.11.3. the Co-operative shall not be liable for any claims whatsoever, arising from theuse, commercialisation nor any failure to use or commercialise the AdministeredIP Rights and no further payments shall be made.10.12. A Deceased Member’s Interest may only be transferred to one or more Heirs if such Heirs:10.12.1. have applied for and been elected to Membership by the Board (in its discretionbut it shall not unreasonably decline to do so); and10.12.2. have entered into an Administration of IP Rights Agreement (on such terms asthe Board may determine) with the Co-operative in respect of the Administrationof the Deceased Member’s Interest, and the Board may require that the executoror another personal representative of the estate of the deceased Member is aparty to such agreement or consents to such agreement.10.13. In regard to the transfer of the Deceased Member’s Interest, the following provisions shallapply:10.13.1. unless the Board determines otherwise, the deceased Member’s Administered IPRights vested in or held by the Co-operative shall be retained by the Cooperativeand shall not be assigned to its deceased estate or to the Heir,however, the Heir shall be acknowledged as the Member interested in suchAdministered IP Rights in respect of the inherited whole or portion (as the casemay be) of the deceased Member’s Interest (subject to clause 10.13.3);10.13.2. for the purpose of determining the Royalty Payments and Grant of RightsPayments relating to the transferred Deceased Member’s Interest only the Heirshall be regarded as a Member of the same class and category of Membershipas the deceased Member with the duration of the Membership of the Heircalculated from the date on which the deceased Member became a Member(subsequent Heirs looking back to the first deceased Member in this regard), butshall be categorised as an Heir and not qualify as a Publisher or Author for anyother purpose (e.g. the sole Heir of a deceased Author will have the deceasedAuthor’s share of the Net Licence Revenue allocated to the Heir for the purposesof determining the Royalty Payment due to the Heir, but will not qualify as anAuthor in respect of the Deceased Member’s Interest for the purpose ofcomplying with the minimum number of Directors that must be Authors);

3410.13.3. where the deceased Member has more than one Heir, each Heir shall beacknowledged as the Person interested in the deceased Member’s AdministeredIP Rights, in accordance with each Heir’s share in the Deceased Member’sInterest and unless the Governance Rules provide otherwise:10.13.3.1. the provisions of clause 10.13.2 shall apply in respect of each suchHeir;10.13.3.2. where reference is made to the attribution of Licence Revenue to aMember’s Administered IP Rights and determination of the relatedRoyalty Payment, such attribution and determination shall first bemade with reference to the deceased Member’s Administered IPRights as if he were still alive, and then allocated to each Heir prorata to the Heir’s particular share in the Deceased Member’s Interest;10.13.3.3. the Grant of Rights Payment to each Heir shall be determined inaccordance with the applicable Payment Rules; and10.13.3.4. Operating Surplus Payment, with reference to the patronageassociated with the deceased Member’s Administered IP Rights,shall be allocated to each Heir pro rata to the Heir’s particular sharein the Deceased Member’s Interest; and10.13.4. the Board may impose any other conditions or terms as it may reasonablyrequire.10.14. Where an Heir is an existing Member of the Co-operative or subsequently has otherAdministered IP other than the subject of a Deceased Members Interest:10.14.1. the attribution of Licence Revenue and the determination of the RoyaltyPayments, Grant of Rights Payments or Operating Surplus Payments due to theMember shall be allocated and determined distinctly in respect of the Heir’sshare of the Deceased Member’s Interest in accordance with clause 10.13 andthe rest of the Member’s Administered IP Rights, as if the payments were beingdetermined with reference to 2 (two) separate Members;10.14.2. the Membership status of such Heir shall not be effected by the acquisition of theHeir’s share in the Deceased Member’s Interest and the Member shall not adoptthe Membership status of the Deceased Member; and

3510.14.3. not be subject to the election contemplated in clause 10.12.1.10.15. The provisions of clauses 10.8 to 10.14 shall apply mutatis mutandis to the Heirs of any Heir.Termination on business rescue, administration, insolvency or sequestration10.16. Subject to clause 10.19, in the case of a Member being a juristic person being liquidated orbeing placed under administration or resolving or being ordered to begin Business Rescueproceedings, the Member’s Membership shall terminate; however, the Co-operative shall, inso far as is lawful, retain all IP Rights vested in the Co-operative and continue to Administerthe Member’s Administered IP Rights, subject to clause 10.17:10.16.1. for a period ending on the 31 st (thirty first) day of December in the 7 th (seventh)year following the year in which the liquidation, administration or BusinessRescue proceedings commenced (“Run-out Period”) and during this periodclause 10.2 shall not apply and the Member (or its liquidator, Business RescuePractitioner or administrator of the estate of the Member) can only terminatethese arrangements or the Administration of IP Rights Agreement with the writtenagreement of the Co-operative; and10.16.2. any Royalty Payments, and Grant of Rights Payments or Operating SurplusPayments to which such juristic person Member would (were it not for thecommencement of the liquidation, administration or Business Rescueproceedings) have been entitled in accordance with the Payment Rules inrespect of the Run-out Period, shall be made to the liquidator, administrator orBusiness Rescue Practitioner (as the case may be) or in accordance with thedirections of the liquidator, administrator or Business Rescue Practitioner (as thecase may be).10.17. If, during the Run-out Period, the former Member comes out of Business Rescue or itsadministration is terminated without the Member being liquidated and the Member retains itsinterest in the Member’s Administered IP Rights, then the Board may resolve that the formerMember’s Membership shall revive and revert to normal.10.18. Unless clause 10.17 is applicable, upon the lapse of the Run-out Period:10.18.1. the Administration of IP Rights Agreement shall terminate and the Co-operative’sright to Administer the Member’s Administered IP Rights shall cease;

3610.18.2. if any IP Rights of the juristic Member are vested in the Co-operative at therelevant time, the Co-operative shall Assign such IP Rights in accordance withthe directions of the liquidator, administrator or Business Rescue Practitioner (asthe case may be); and10.18.3. the Co-operative shall not be liable for any claims whatsoever, arising from theuse or commercialisation nor any failure to use or commercialise theAdministered IP Rights and no further Royalty Payments, Grant of RightsPayments or Operating Surplus Payments shall be made to the Member.10.19. In the event of a Member being a company or corporation that is liquidated or deregistered byway of voluntary liquidation for the purpose of reconstitution or an amalgamation(“Liquidating Member”), such Liquidating Member may, prior to such liquidation, apply to theBoard for approval of the shareholder(s) or members of such company or corporation or anewly constituted company to apply for Membership and take transfer of the LiquidatingMember’s interest in the Administered IP Rights and to assume all of the LiquidatingMember’s obligations and rights under the Administration of IP Rights Agreement (in terms ofa new Administration of IP Rights Agreement to be entered into between the Co-operative andthe acquirers and, the Liquidating Member (as may be required by the Board), or on suchother terms as may be agreed to by the Board in Writing). If the Board so agrees, then theacquirers will step into the position of the Liquidating Member with reference to the acquiredinterests in the Administered IP Rights and it shall be a condition of such transfer that theacquirer becomes a Member. If the Board does not agree to the voluntary liquidation ortransfer of the Member’s interests in the Administered IP Rights and the Member proceedswith such liquidation, then the provisions of clause 10.16 shall apply, adapted appropriately(mutatis mutandis).Effect of Termination of Membership10.20. Except where expressly provided otherwise, on the effective date of the termination of aMember’s participation as a Member in the Co-operative pursuant to clauses 10.11, 10.16 or10.18:10.20.1. the Member shall from that date immediately (ipso facto) cease to have anyrights, privileges and obligations in respect of the Co-operative and, in particular,but without prejudice to the generality of the foregoing, the Member concernedshall cease to have any claim upon the assets of the Co-operative, shall not beentitled to vote at General Meetings and shall not be entitled to participate in any

37further payments by the Co-operative, provided that the former Member shall notbe relieved of the former Member’s obligations to the Co-operative arising inrespect of the period prior to such termination;10.20.2. any amounts owed by the Member to the Co-operative shall become immediatelydue and payable, and the Co-operative may elect to set-off any amounts soowed by the Member against any amounts owed by the Co-operative to theMember;10.20.3. the Administration of IP Rights Agreement shall terminate; and10.20.4. if any IP Rights of the Member are vested in the Co-operative at the relevanttime, such IP Rights shall revert to such Member and to the extent necessary theCo-operative shall Assign such IP Rights to the Member, with effect from thedate of termination of the Member’s Membership.10.21. If any proceedings have been instituted by or against the Co-operative in respect of aMember's Administered IP Rights, either in the name of the Co-operative or of the Member,and such Member ceases to be a Member prior to the conclusion of the proceedings, the Cooperativeshall retain any Administered IP Rights forming the subject of such proceedingswhich were vested in the Co-operative by such Member until such proceedings are finallydisposed of.10.22. The Member shall at the request of the Co-operative do all such things and execute all suchdocuments necessary or desirable to give effect to the provisions of this clause 10, and theMember hereby grants the Co-operative a power of attorney to, on behalf of the Member (inrem suam), do such things and execute such documents necessary, or in the reasonable viewof the Board desirable, to give effect to this clause 10.11. PROHIBITION ON TRANSFER OF MEMBERSHIP11.1. Except as provided for in this Constitution, Membership in the Co-operative, and any rights inrelation to any Administration Rights, shall not be transferred, ceded, transmitted (includingtransmission by law), disposed of, pledged, sold or encumbered in any manner (which for thepurposes of this clause 11 shall be collectively referred to as “transferred” and “transfer”,“transferee” and “transferor” shall have a corresponding meaning).11.2. Without limitation to the above, no Member shall be entitled or have the power or right totransfer, cede, delegate or otherwise dispose of its Membership or any rights or obligationscomprising such Membership or under this Constitution to any other Person, or to alienate or

38exercise the Member’s Administered IP Rights, interests in the Member’s Administered IPRights or any rights or obligation or interests of the Member in relation to the Co-operative inconnection with the Administered IP Rights, except in accordance with, and to the Personsspecified in, clauses 10 (Termination of Membership) and 11.4.11.3. The restrictions in clauses 11.1 and 11.2 shall be deemed to be an original incidence ofMembership and limiting the rights relating to Membership in the Co-operative. Any purportedtransfer counter to these restrictions shall be void.11.4. The Board may authorise the assignment (in so far as is possible in law) of the whole or a partof an existing Member’s interest in any Administered IP Rights (which includes (withoutlimitation) the reversionary right to the Administered IP Rights, and the right to receive RoyaltyPayments, Grant of Rights Payments, Operating Surplus Payments) to another existingMember only (subject to clause 11.5). In this regard:11.4.1. any such permitted assignment of a Member’s interest in any Administered IPRights may only be made with the Board’s prior Written authorisation of theassignment from the transferor to the particular accepted transferee;11.4.2. the Board shall have full and unrestricted discretion to refuse any suchapplication for transfer without providing reasons for such refusal;11.4.3. every application for assignment shall be made to the Board in Writing in suchform as the Board may prescribe and, on such application being accepted by theBoard, it shall cause a Written communication to be made to the applicantMember, advising such applicant of the Board’s approval, in such form as theBoard may prescribe, signed by a Director and countersigned by a dulyauthorised officer of the Co-operative;11.4.4. an assignment of a Member’s interest in any Administered IP Rights shall berecorded in an appropriate addendum to each of the respective MembersAdministration of IP Rights Agreements, and shall be executed by the partiesrecording the assignment on such terms as the Board may reasonably require;11.4.5. the subject matter Administered IP Rights vested in or controlled by the Cooperativeshall at all times be retained by the Co-operative, however thetransferee Member shall be acknowledged as the Person interested in suchAdministered IP Rights in respect of the acquired interest;

3911.4.6. when considering any application for the assignment of a Member’s interest inany Administered IP Rights, the Board (or its delegee) shall be entitled tostipulate (notwithstanding any general Governance Rules not expressly dealingwith such assignments) when the assignment will be effective and how theassigned interests in the Administered IP Rights shall be determined and whenand how they will be recognised in regard to determining the transferee’s rightsand, in this regard the Board (of the delegee) may have regard to, amongst otherthings, the relevant Payment Cycles, the Co-operative’s information systems andany related administration issues; and11.4.7. to the extent permitted in the Governance Rules, if a qualifying (in terms of theMembership Rules) transferee Member is a Candidate Member, such transfereeMember may apply to the Board (in accordance with the process contemplated inthe Membership Rules) for election to Associate Membership pursuant to theassignment of the interests in the assigned Administered IP Rights from atransferor Member of a higher class of Membership, provided that for purposes ofsuch election the requirement relating to the duration of Candidate Membership(as contemplated in the Membership Rules) shall not apply. The provisions ofthis clause do not affect the requirements and process for election to FullMembership as set out in this Constitution and the Membership Rules.11.5. A Member shall only be entitled to be either a Candidate Member, or an Associate Member ora Full Member at any time (i.e. one Member cannot hold Membership in more than one classof Membership), subject to 10.13.11.6. Subject to the Co-operatives Act, the Board may charge a reasonable fee on the registrationor receipt of any transfer and/or of any letters of administration, probate, certificate of death ormarriage, power of attorney or other notice or instrument affecting the title to or the right toassign the interest in any Administered IP Rights.11.7. The Co-operative shall not be bound to allow the exercise of any act or matter by an agent fora Member unless a duly certified copy of such agent’s authority is produced and filed with theCo-operative.11.8. If the Co-operative keeps a register of Member’s Administered IP Rights, it shall update suchregister to reflect any change in a Member’s Administered IP Rights.

4012. REPRESENTATIONSubject to the restrictions on termination and transfer of Membership under clauses 10 (Terminationof Membership) and 11 (Prohibition on Transfer of Membership) (which shall in so far as is lawful alsorestrict a transmission by law):12.1. the parent or guardian or curator of any Member who is a minor;12.2. the trustee of an insolvent former Member;12.3. the liquidator of a former Member which is a juristic person or body corporate;12.4. the tutor or curator of a Member under disability; or12.5. the executor or administrator or other personal representative of the estate of a deceasedMember,shall, be entitled to apply to represent the Member (or in the case of a personal representative of adeceased Member’s estate apply for Membership in such capacity) upon production of such evidenceas may be required by the Directors and the conclusion of a Administration of IP Rights Agreement onterms satisfactory to the Board, have the rights and obligations to perform the represented Member’s(including a deceased) obligations and in such capacity exercise the rights and to receive thepayments due to the represented Member, save where expressly provided to the contrary.13. FINANCIAL YEARThe financial year end of the Co-operative is 30 June.14. ACCOUNTING RECORDS AND FINANCIAL STATEMENTS14.1. The Co-operative shall maintain the necessary accounting records which shall be accessiblefrom its Registered Office. The accounting records shall be retained for a period of 5 (five)years after the end of the financial year to which they relate.14.2. The Co-operative shall prepare its financial statements in accordance with generally acceptedaccounting practices, and shall have its annual financial statements audited.14.3. Subject to section 48(1) of the Co-operatives Act (which section currently permits the Board tocirculate draft financial statements to Members prior to the Annual General Meeting), the Cooperativemay not issue, publish or circulate copies of the financial statements unless thefinancial statements are:

4114.3.1. approved by the Annual General Meeting (in accordance with clause 15.2) andsigned by the chairperson (in accordance with clause 15.2.1); and14.3.2. accompanied by a report of the Auditor.14.4. A Director or employee who becomes aware of any error or misstatement in a financialstatement that the Auditor or former Auditor has reported on, must notify the Auditor withoutdelay.14.5. If the Auditor or former Auditor is notified in accordance with clause 14.4, or in any othermanner becomes aware of a material error or misstatement in a financial statement on whichthey have reported, such Auditor must inform the Board accordingly, and the Board must:14.5.1. prepare and issue revised financial statements; or14.5.2. inform the Members and the Registrar of the error or misstatement.14.6. The following records shall be kept at the Registered Office of the Co-operative, whichrecords may be examined by Members during the normal business hours of the Co-operative(as set out on the website of the Co-operative from time to time) and Members may makecopies of records after payment of the fee as determined by the Board, subject to clause 14.7:14.6.1. this Constitution;14.6.2. amendments to the Constitution;14.6.3. any Governance Rules;14.6.4. minutes of General Meetings (complying with section 31 of the Co-operativesAct) in a minute book;14.6.5. minutes of meetings of the Board (complying with section 35 of the Co-operativesAct) in a minute book;14.6.6. a list of the Members, setting out in respect of each Member:14.6.6.1. his name and address;14.6.6.2. the date on which he became a Member;14.6.6.3. the date on which his Membership was terminated (if applicable); and

4214.6.6.4. the amount of any Membership fees paid and the number andamount of Member loans (if applicable);14.6.7. a register of Directors, setting out in respect of each Director and each formerDirector:14.6.7.1. his name, address and identity number;14.6.7.2. the date on which he became or ceased to be a Director; and14.6.7.3. the name and address of any other co-operative, company or closecorporation where he was a member or director;14.6.8. a register of Directors’ interests in contracts and undertakings (as contemplatedin section 37 of the Co-operatives Act and clause 25 (Disclosure of Interests ofDirectors and Managers)); and14.6.9. adequate accounting records, including records reflecting the transactionsbetween each Member and the Co-operative for the purpose of calculating theOperating Surplus Payment, as contemplated in clause 14.8.14.7. Subject to the Promotion of Access to Information Act (2 of 2000), the Board may, for areasonable period of time, refuse information relating to any commercial transaction of the Cooperativeif there are reasonable grounds to believe that the disclosure may be to thedisadvantage of the Co-operative.14.8. In addition to clause 14.6, the Members shall have the right of access to information in respectof the Administration of their Administered IP Rights and the calculation of Licence Revenueattributed to their Administered IP Rights and all related deductions.14.9. Apart from the Members to the extent that they are entitled to information in terms of the CooperativesAct, in so far as is lawful, no other Person shall be entitled to inspect any of thedocuments of the Co-operative unless expressly authorised by the Directors.15. AUDIT COMMITTEE AND AUDITOR15.1. The Board must ensure that an audit of the affairs of the Co-operative is conducted annuallyin respect of each financial year, in order to:

4315.1.1. ensure that financial statements are drawn up in conformity with generallyaccepted accounting practices;15.1.2. verify that the Co-operative has maintained adequate records in accordance withthe requirements of the Constitution and the Co-operatives Act;15.1.3. report generally as to whether the assets and facilities of the Co-operative arebeing properly managed and the operations of the Co-operative are beingconducted in accordance with co-operative principles as set out in section 3 ofthe Co-operatives Act; and15.1.4. report on any other matter the auditors are required to report on by thisConstitution.15.2. At each Annual General Meeting, the Co-operative shall consider approval of the Auditor’sreport and the financial statements of the Co-operative, as follows:15.2.1. the chairperson of the Board (or the person acting as chairperson at the meetingwhere the auditor’s report and financial statements are approved), shall sign theAuditor’s report and financial statements to confirm the approval;15.2.2. within 15 (fifteen) days of the approval of the Auditor’s report and financialstatements, the Board shall submit a copy of the Auditor’s report and financialstatements to the Registrar;15.2.3. for at least 21 (twenty one) days after the Auditor’s report and financialstatements are approved, the Auditor’s report and financial statements shall bemade available for inspection at the Registered Office;15.2.4. if, for any reason, the Annual General Meeting does not approve the Auditor’sreport and financial statements, the Board shall notify the Registrar within 15(fifteen) days of the reasons for the non-approval and the action that the Cooperativeproposes to take in order to address the situation.15.3. The Board may appoint an Audit Committee and determine its members, powers andfunctions. The Board may combine such Audit Committee with a risk committee, or any othercommittee of the Co-operative.

4415.4. The Members of the Co-operative shall appoint an Auditor at its Annual General Meeting, tohold office until the close of the next Annual General Meeting, provided that if no Auditor isappointed:15.4.1. the incumbent Auditor continues in office until a successor is appointed; or15.4.2. if clause 15.4.1 does not apply, the Registrar may approve the Person nominatedby the Board to audit the books of the Co-operative for 1 (one) financial year, inwhich case the fees payable to such auditor must be approved by the Registrar.15.5. If an Audit Committee has been appointed, such Audit Committee (failing which, the Board)shall nominate an Auditor for the Co-operative at the Annual General Meeting, however, theMembers of the Co-operative are not required to appoint the Auditor nominated by the AuditCommittee.15.6. A retiring Auditor may be automatically re-appointed at an Annual General Meeting withoutany resolution being passed, unless:15.6.1. the retiring Auditor is no longer qualified for appointment; or15.6.2. the retiring Auditor is no longer willing to accept the appointment, and has sonotified the Co-operative; or15.6.3. the retiring Auditor was required to cease serving as Auditor in terms of the CooperativesAct or this Constitution; or15.6.4. the Audit Committee objects to the re-appointment; or15.6.5. the Co-operative has notice of an intended resolution to appoint some otherPerson or Persons in place of the retiring Auditor.15.7. A Person is disqualified from being the Auditor of the Co-operative:15.7.1. if that Person has a personal or material interest in the Co-operative or in any ofits affiliates or in any of its subsidiaries or in the business of any of its directors orsenior employees; or15.7.2. in any other circumstances that are considered to constitute a conflict of interestin terms of accounting practice.

4515.8. A Person to be appointed as the Auditor of the Co-operative in accordance with clause 15.4shall be:15.8.1. an auditor registered as such in terms of the Auditing Profession Act; and15.8.2. acceptable to the Audit Committee as being independent from the Co-operative.15.9. The same individual may not serve as the Auditor of the Co-operative for more than 5 (five)consecutive financial years.15.10. The Auditor has the right to:15.10.1. request the Members, Directors, employees, agents or mandatories of the Cooperativeto provide it with any information, explanations, and access to anydocuments of the Co-operative (or any of its subsidiaries) that are, in the opinionof the Auditor, necessary for the purposes of the audit, and such Persons areobliged to comply with the Auditor’s request;15.10.2. request the Directors to obtain, from any present or former Directors, employees,agents or mandatories of the Co-operative, the information and explanations thatsuch Persons are reasonably able to provide and that are, in the Auditor’sopinion, necessary for the purpose of the audit, and the Directors are obliged tocomply with the Auditor’s request;15.10.3. receive notice of any General Meeting at which a report of the Auditor is to bediscussed and to:15.10.3.1. attend such General Meeting, at the expense of the Co-operative;and15.10.3.2. address such General Meeting on matters relating to the Auditor’sduties.15.11. The Auditor or a former Auditor may be required by a Director or Member to attend a GeneralMeeting (at the expense of the Co-operative) and answer questions relating to the Auditor’sduties:15.11.1. provided that the Auditor or former Auditor is given Written notice of 10 (ten) daysof such meeting;

4615.11.2. and such Director or Member must also send a copy of such Written notice to theCo-operative at the same time.15.12. The Auditor ceases to hold office when such Auditor dies, resigns (in accordanceclause 15.13), is removed (in accordance with clause 15.14) or is struck off the roll of auditors.15.13. The Auditor may resign from office by written notice to the Co-operative, provided that suchresignation is effective on the later of:15.13.1. the date of which the Written resignation is received by the Co-operative; and15.13.2. the date specified in the resignation.15.14. The Members may by Ordinary Resolution remove an Auditor from office.15.15. A vacancy created by the removal or resignation of an Auditor must:15.15.1. be filled at the meeting at which the Auditor is removed; or15.15.2. if not filled at the meeting, be filled within 30 (thirty) days of the creation of avacancy, by the Board, subject to the Registrar’s approval.15.16. An Auditor appointed by the Board to fill a vacancy (as contemplated in clause 15.15) holdsoffice for the unexpired term of his predecessor.16. GENERAL MEETINGS16.1. All Members shall be entitled to attend and vote at all General Meetings.16.2. The Co-operative shall convene an Annual General Meeting once in every calendar year, butno more than 6 (six) months after the end of the preceding financial year, which must, at aminimum, provide for the following business to be transacted:16.2.1. appointment of an Auditor (as contemplated in clause 15.4);16.2.2. approval of a report of the Board on the affairs of the Co-operative for theprevious financial year;16.2.3. approval of the financial statements and the Auditor’s report (if applicable) for theprevious financial year;16.2.4. election of Directors; and

4716.2.5. decide the future business of the Co-operative.16.3. The Co-operative must hold a General Meeting:16.3.1. at any time that the Board is required by the Co-operatives Act or thisConstitution to refer a matter to Members entitled to vote for decision;16.3.2. if requested by the Members (as contemplated in clause 16.5); and16.3.3. whenever required to fill a vacancy on the Board.16.4. Each resolution shall be expressed with sufficient clarity and specificity and accompanied bysufficient information/explanatory material to enable a Person who is entitled to vote on theresolution to determine whether to participate in the General Meeting, if applicable, and toseek to influence the outcome of the vote on the resolution. Once a resolution has beenapproved, it may not be challenged or impugned on the ground that it did not comply with theaforegoing.16.5. The Board or, if the Co-operative has no Directors, any single Member entitled to vote, may,whenever it thinks fit, convene a General Meeting. A General Meeting must be convened ifone or more Written and signed demands for such a General Meeting is/are delivered to theCo-operative, and:16.5.1. each such demand describes the specific purpose for which the General Meetingis proposed; and16.5.2. in aggregate, demands for substantially the same purpose are made and signed,at the earliest time specified in any of those demands, by at least 10% (tenpercent) of the total number of Members who are entitled to exercise VotingRights in relation to the matter proposed to be considered at the GeneralMeeting.16.6. Every General Meeting shall be held where the Board determines from time to time. NoPerson may attend a General Meeting by means of Electronic Communication. A Membermust be Present in order to be included in the quorum and to be heard and vote at theGeneral Meeting.16.7. Subject to clause 16.8, a General Meeting shall be called by at least 15 (fifteen) BusinessDays' notice delivered by the Co-operative to all Members entitled to vote at the GeneralMeeting or otherwise entitled to receive notice.

4816.8. The Co-operative may call a General Meeting with less notice than required by clause 16.7,but such a General Meeting may proceed only if 90% (ninety percent) of all Persons that areentitled to exercise Voting Rights in respect of any item on the meeting agenda:16.8.1. are Present at the General Meeting; and16.8.2. vote to waive the required minimum notice of the General Meeting.16.9. Subject to clause 16.8, a Member entitled to vote, who is Present at a General Meeting:16.9.1. is regarded as having received or waived notice of the General Meeting if at leastthe required minimum notice was given;16.9.2. has a right to:16.9.2.1. allege a Material defect in the form of notice for a particular item onthe agenda for the General Meeting; and16.9.2.2. participate in the determination whether to waive the requirements fornotice, if less than the required minimum notice was given, or to ratifya defective notice; and16.9.3. except to the extent set out in clause 16.9.2 is regarded to have waived any rightbased on an actual or alleged Material defect in the notice of the GeneralMeeting.16.10. A notice of a General Meeting must be in writing, in plain language and must include:16.10.1. the date, time and place for the General Meeting, and the Record Date for theGeneral Meeting;16.10.2. the general purpose of the General Meeting, and any specific purposecontemplated in clause 16.2, if applicable;16.10.3. a copy of any proposed resolution of which the Co-operative has received notice,and which is to be considered at the General Meeting (including the proposedamendment in the event of an amendment to the Constitution as contemplated inclause 7 (Amendments to the Constitution)) and a notice of the percentage ofVoting Rights that will be required for that resolution to be adopted;16.10.4. in the case of an Annual General Meeting:

4916.10.4.1. the financial statements to be presented; or16.10.4.2. a summarised form thereof, including directions for obtaining a copyof the financial statements to be presented; and16.10.4.3. directions for obtaining a copy of the complete annual financialstatements for the preceding financial year;16.10.5. a statement that participants in a General Meeting are required to furnishsatisfactory identification in order to reasonably satisfy the chairperson of theGeneral Meeting as to their identity;16.10.6. a reasonable prominent summary of the provisions of clauses 16.30, 16.31,16.32, 16.33 and 16.34; and16.10.7. a form of proxy to be completed if the Member elects to appoint a proxy (ascontemplated in clause 16.30), and such form of proxy must include adequateblank space to enable the Member to:16.10.7.1. write in the name of the proxy, and an alternative proxy; and16.10.7.2. indicate whether the proxy is to vote in favour of, or against anyresolution put to the General Meeting, or is to abstain from voting.16.11. A General Meeting may proceed notwithstanding a material defect in the giving of the notice,subject to clause 16.12, only if every Person who is entitled to exercise Voting Rights inrespect of each item on the agenda of the General Meeting is Present and votes to approvethe ratification of the defective notice.16.12. If a Material defect in the form or manner of giving notice of a General Meeting relates only toone or more particular matters on the agenda for the General Meeting:16.12.1. any such matter may be severed from the agenda, and the notice remains validwith respect to any remaining matters on the agenda; and16.12.2. the General Meeting may proceed to consider a severed matter, if the defectivenotice in respect of that matter has been ratified.16.13. An immaterial defect in the form or manner of delivering notice of a General Meeting, or anaccidental or inadvertent failure in the delivery of the notice to any particular Member to whomit was addressed, does not invalidate any action taken at the General Meeting.

5016.14. The quorum for commencement of the General Meeting shall be 100 (one hundred) Members,which must include at least 3 (three) Full Members.16.15. If within 30 (thirty) minutes (or any extension thereof in terms of clause 16.16) from the timeappointed for the General Meeting to commence, a quorum has not been achieved forcommencement of the General Meeting, the General Meeting shall be postponed, withoutmotion, vote or further notice, subject to clause 16.19, for 1 (one) week to the same time onthe same day in the next week or, if that day is a public holiday, to the next succeeding daywhich is not a public holiday. If at such adjourned General Meeting a quorum is not achievedwithin 30 (thirty) minutes from the time appointed for the General Meeting then, the Person/sentitled to vote Present shall be deemed to be the requisite quorum.16.16. The person intended to preside at a General Meeting that cannot begin due to the operationof clause 16.14, may, in his reasonable discretion, extend the 30 (thirty) minute limit referredto in clause 16.15, for a reasonable period.16.17. A General Meeting may be adjourned from time to time without further notice on a motionsupported by Persons entitled to exercise, in aggregate, a majority of the Voting Rights heldby all of the Persons who are present at the General Meeting at the time. Such adjournmentmay be either to a fixed time and place or until further notice (in which latter case a furthernotice shall be delivered to Members) as determined by the General Meeting. No businessshall be transacted at the resumption of any adjourned General Meeting, other than thebusiness unfinished at the General Meeting from which the adjournment took place.16.18. A General Meeting may not be adjourned beyond the earlier of:16.18.1. the date that is 120 (one hundred and twenty) Business Days after the RecordDate; or16.18.2. the date that is 60 (sixty) Business Days after the date on which the adjournmentoccurred.16.19. Save where the adjournment or postponement is until further notice in terms of clause 16.15or clause 16.16, no further notice is required to be delivered by the Co-operative of a GeneralMeeting that is postponed or adjourned as contemplated in clause 16.15 or clause 16.16, ifthe location or time for the General Meeting:16.19.1. is the same as the location or time of the postponed or adjourned GeneralMeeting; or

5116.19.2. in the case of an adjourned General Meeting, was announced at the time ofadjournment.16.20. After a quorum has been established for a General Meeting, the General Meeting maycontinue, for as long as at least 1 (one) Person with Voting Rights entitled to be exercised atthe General Meeting, is Present.16.21. The chairperson of the Board (as contemplated in clause 24.7) shall preside as chairperson atevery General Meeting. If there is no such chairperson, or if at any General Meeting he is notpresent within 15 (fifteen) minutes after the time appointed for holding the General Meeting oris unwilling to act as chairperson, the vice-chairperson shall chair the meeting and if the vicechairpersonis also not present or is unwilling to act as chairperson, the Persons entitled tovote which are Present shall elect a Director present at the General Meeting, or if no Directorbe present at the General Meeting, or if all the Directors present decline to take the chair, thePersons entitled to vote shall elect one of their number which is present to be chairperson ofthe General Meeting.16.22. At any General Meeting a resolution put to the vote shall be decided on a show of hands,unless before or on the declaration of the result of the show of hands:16.22.1. a poll shall be demanded by:16.22.1.1. not less than 5 (five) Persons having the right to vote on that matter;or16.22.1.2. a Person(s) entitled to exercise not less than 1/10 th (one tenth) of thetotal Voting Rights entitled to vote on that matter;16.22.2. the chairperson elects to vote by poll,and, unless a poll is so demanded or elected, a declaration by the chairperson that aresolution has, on a show of hands been carried, or carried unanimously, or by a particularmajority, or lost, and an entry to that effect in the minute book of the Co-operative, shall beconclusive evidence of the fact, without proof of the number or proportion of the votesrecorded in favour of, or against, such resolution. No objection shall be raised as to theadmissibility of any vote except at the General Meeting or adjourned General Meeting atwhich the vote objected to is or may be given or tendered and every vote not disallowed atsuch General Meeting shall be valid for all purposes. Any such objection shall be referred tothe chairperson of the General Meeting, whose decision shall be final and conclusive, in sofar as is lawful.

5216.23. If a poll is duly demanded or elected it shall be taken in such manner as the chairpersondirects, and the result of the poll shall be deemed to be the resolution of the General Meetingat which the poll was demanded or elected. Scrutineers may be appointed by the chairpersonto declare the result of the poll, and if appointed their decision, which shall be given by thechairperson of the General Meeting, shall be deemed to be the resolution of the GeneralMeeting at which the poll is demanded. The demand for a poll shall not prevent thecontinuation of a General Meeting for the transaction of any business other than the questionupon which the poll has been demanded. The demand for a poll may be withdrawn.16.24. In the case of an equality of votes, whether on a show of hands or on a poll, the chairpersonof the General Meeting at which the show of hands takes place, or at which the poll isdemanded, shall be entitled to a second or casting vote.16.25. Any Person entitled to Membership or to represent a Member in terms of clause 12(Representation) may vote at any General Meeting in respect thereof in the same manner as ifhe were the Member, provided that (except where the Directors have previously accepted hisright to vote) 48 (forty eight) hours at least before the time of holding the General Meeting atwhich he proposes to vote, he shall have satisfied the Directors that he is entitled to exercisethe right referred to in clause 12 (Representation).16.26. Every resolution of Members is either an Ordinary Resolution or a Special Resolution. AnOrdinary Resolution, save to the extent expressly provided in respect of an particular mattercontemplated in this Constitution, shall require to be adopted with the support of more than50% (fifty percent) of the Voting Rights exercised on the resolution. A Special Resolution,save to the extent expressly provided in respect of an particular matter contemplated in thisConstitution, shall require to be adopted with the support of at least 75% (seventy fivepercent) of the Voting Rights exercised on the resolution.16.27. On a show of hands:16.27.1. a Member entitled to vote that is Present at the General Meeting shall have only1 (one) vote; and16.27.2. a proxy shall, irrespective of the number of the Members entitled to vote which herepresents, have 1 (one) vote.16.28. On a poll:16.28.1. subject to clause 16.28.2:

5316.28.1.1. a Member entitled to vote that is Present at the General Meetingshall have only 1 (one) vote; and16.28.1.2. a proxy shall have 1 (one) vote for each of the Members entitled tovote which he represents;16.28.2. notwithstanding the provisions of clause 16.28.1, if at any time in future the CooperativesAct is amended and the requirement that each member of a PrimaryCo-operative may only have 1 (one) vote removed, clause 16.28.1 shall not applyand the voting shall be determined as follows:16.28.2.1. Members shall each have votes equal to the greater of:16.28.2.1.1. 1 (one) vote; and16.28.2.1.2. the figure in South African Rand (rounded down tothe nearest whole Rand) of the aggregate TerritoryPerforming Royalty Payments to the Member, duringthe completed Payment Cycle immediatelypreceding the General Meeting at which the votingtakes place, provided that the maximum number ofvotes exercisable by any one Member shall notexceed 2% (two percent) of the total Voting Rights ofall Members having the right to attend and vote at aGeneral Meeting;16.28.2.2. a proxy shall exercise the vote(s) of each Member for which it hasbeen appointed as proxy (as determined in clause 16.28.2.1 inrespect of each Member) separately from the vote(s) of each otherMember for which it acts as proxy; and16.28.2.3. any calculation of number of votes of a Member by a show of handsor the poll votes of the Members by an Auditor or a professionalscrutineer shall be conclusive proof of the votes of the relevantMembers, unless the contrary is proved.16.29. If more than one Person is registered in respect of a single Membership to the extentpermitted by the Board (e.g. in respect of trustees of a trust), the vote of the senior whotenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes

54of the other registered persons; and for this purpose seniority shall be determined by the orderin which the names stand in the Members’ Register.16.30. A Member may elect to appoint any individual (including an individual who is not a Member ofthe Co-operative) as a proxy to attend and vote at a General Meeting on that Member’s behalf(and may appoint an alternative proxy), by way of completing and signing the form of proxyattached to the notice of the General Meeting (as contemplated in clause 16.10.7) anddelivering same to the Co-operative or any Person which it has identified in the notice ofmeeting as being the Person to whom proxies may be delivered on behalf of the Co-operative,within 48 (forty eight) hours prior to the time appointed for commencement of the GeneralMeeting, provided that no person may act as a proxy for more than 20% (twenty percent) ofthe Members entitled to vote at that General Meeting.16.31. The appointment of a proxy (as contemplated in clause 16.30):16.31.1. remains valid until the termination of the General Meeting (or the termination ofany subsequent meeting constituted as a result of the adjournment orpostponement of that General Meeting, as contemplated in clause 16.15 orclause 16.16), unless it is revoked by way of making a later inconsistentappointment of a proxy, or cancelling it in Writing and delivering a copy of therevocation instrument to the proxy and to the Co-operative (or to any Personwhich it has identified in the notice of meeting as being the Person to whomproxies may be delivered on behalf of the Co-operative), in which case thecancellation of the proxy’s authority shall be effective as from the time on whichsuch later form of proxy or revocation instrument was delivered; and16.31.2. is suspended at any time and to the extent that the Member entitled to votechooses to act directly and in person in the exercise of any rights as a Memberentitled to vote.16.32. A vote given in accordance with the terms of an instrument of proxy shall be validnotwithstanding the death or mental disorder of the principal or revocation of the proxy or ofthe authority under which the proxy was executed, provided that no intimation in writing ofsuch death, insanity or revocation as aforesaid shall have been received by the Co-operativeat its Registered Office before the commencement of the General Meeting (or commencementof any subsequent meeting constituted as a result of the adjournment or postponement of thatGeneral Meeting, as contemplated in clause 16.15 or clause 16.16).

5516.33. A proxy may delegate his authority to act on behalf of the Member to another person, unlessthe form of proxy provides otherwise.16.34. If a form of proxy is received duly signed but with no indication as to how the person namedtherein should vote on any issue, the proxy may vote or abstain from voting as he sees fit,unless the form of proxy indicates otherwise.17. RECORD DATE17.1. If the Board determines the Record Date for a General Meeting or other event or action, itmay not be earlier than the date on which the Record Date is determined by the Board normore than 10 (ten) Business Days before the date on which the event or action, for which theRecord Date is being set, is scheduled to occur.17.2. If, at any time, the Board fails to determine a Record Date, the Record Date for the relevantmatter is:17.2.1. in the case of a General Meeting, the latest date by which the Co-operative isrequired to deliver notice of the General Meeting to Members entitled to vote; or17.2.2. the date of the action or event, in any other case.18. STATUTORY RECORDS18.1. The chairperson of a General Meeting must:18.1.1. cause minutes of General Meetings to be kept in 1 (one) of the official languagesof South Africa; and18.1.2. keep the minutes at the Registered Office of the Co-operative (as contemplatedin clause 14.6.4).18.2. Minutes in respect of any General Meeting must be:18.2.1. provided to Members on request;18.2.2. presented for approval at the next General Meeting.18.3. The minutes for any General Meeting which have been signed by the chairperson, or aresolution adopted in terms of this Constitution is, in the absence of evidence to the contrary,proof of the outcome of the vote or the resolution.

5619. ELECTION OF DIRECTORS AND CASUAL VACANCIES19.1. Subject to clause 19.11, the minimum number of Directors shall be 4 (four) and the maximum13 (thirteen).19.2. Subject to clause 2.2, the Directors of the Co-operative at the Conversion Date shall continueto be Directors, until removed in accordance with the provisions of this Constitution on thebasis that their term of office shall be regarded as having commenced on the date of theirelection to office prior to the Conversion Date.19.3. Each of the Directors shall be elected, in accordance with clause 19.7, to serve for amaximum period of 4 (four) years subject to rotation in accordance with clause 19.4 andcessation of office in accordance with clause 20 (Cessation of Office as Director), and may bereappointed for a second or further term of office, provided that:19.3.1. no person who is not a Full Member shall be appointed to act as a Director,provided that in the case of a juristic person being a Full Member, there may beappointed as a Director any person being either a director, partner, officer ormanager in the permanent and exclusive employment of such juristic person,notwithstanding that such person is not himself a Member and is not eligible forelection;19.3.2. not less than one-half of the number of Directors in office shall be Authors(including the representative of a juristic person that is an Author but excludingan Author’s Heir(s)) and not less than one-third shall be Publishers (including therepresentative of a juristic person that is a Publisher) as determined at the time ofappointment of the Director concerned and where a Director or nominee forDirectorship (or the juristic person which the nominee/Director represents) is bothan Author or a Publisher, then reference shall be had to the Territory PerformingRights Royalty Payments paid to the nominee/Director (or the juristic person thenominee/Director represents) in the immediately prior completed Payment Cycleand the nominee/Director shall (for the purposes of this clause) be deemed to be:19.3.2.1. an Author, if at least 50% (fifty percent) of such Territory PerformingRights Royalty Payments were derived from interests in Works ofMusic in respect of which the nominee/Director (or the juristic personthe nominee/Director represents) is an Author; and19.3.2.2. a Publisher, in any other case; and

5719.3.3. the Board may appoint Directors as contemplated in (and subject to)clause 19.10.19.4. Subject to clause 19.3, at the Annual General Meeting held each year, as from theConversion Date, 25% (twenty five percent) of the Directors (rounded to the nearest wholenumber), shall retire from office. The Directors so to retire at each Annual General Meetingshall be:19.4.1. firstly, those Directors who will exceed the maximum 4 (four) year term of office ifthey remain in office for a period of 6 (six) months after the date of the nextAnnual General Meeting and those Directors appointed in accordance withclause 19.10 and subject to retirement at the Annual General Meeting; and19.4.2. thereafter, those who have been longest in office since their last election and asbetween Directors of equal seniority, the Directors to retire shall, in the absenceof agreement, be selected from among them by lot.19.5. A Director retiring by rotation at an Annual General Meeting shall act as a Director throughoutthe Annual General Meeting at which he retires and shall be eligible for re-election. The lengthof time a Director has been in office shall be computed from the date of his last election,subject to clause 19.2. Retiring Directors shall be eligible for re-election. Only persons whichmeet the requirements of the Constitution, the Co-operatives Act and any other applicablestatue, regulation or guideline and which are:19.5.1. Directors retiring at the Annual General Meeting;19.5.2. recommended by the Directors (or any nomination committee); or19.5.3. nominated in accordance with clause 19.6,shall be eligible for election to the office of Director at any Annual General Meeting.19.6. A Member which is duly qualified to be Present and vote at the Annual General Meeting, maynominate a person for election to replace a retiring Director at an Annual General Meeting, bysubmitting Written notice of such nomination to the Board or any nomination committeeestablished by the Board (in such form, and including such information, as may prescribe bythe Board from time to time) within 2 (two) months of the financial year end of the Cooperative,together with the nominee’s written acceptance of the nomination. Any suchnomination shall be submitted to the nomination committee established by the Board, which

58shall consider whether the nominee meets the requirements of the Constitution, the CooperativesAct and any other applicable statue, regulation or guideline.19.7. In any election of Directors, the Chairperson shall determine the sequence of the elections inorder to ensure that the spread as set out in clause 19.3 is achieved and the election is to beconducted as follows:19.7.1. a series of votes of those entitled to exercise votes regarding such election, eachof which is on the candidacy of a single individual to fill a single vacancy, with theseries of votes continuing until all vacancies on the Board at that time have beenfilled; and19.7.2. in each vote to fill a vacancy:19.7.2.1. each Voting Right entitled to be exercised may be exercised once;and19.7.2.2. the vacancy is filled only if a majority of the Voting Rights exercisedsupport the candidate.19.8. No person shall be elected as a Director if he is not competent to act as such and any suchelection shall be a nullity. A person is not competent to act as a Director if such person:19.8.1. is of unsound mind;19.8.2. is an unrehabilitated insolvent;19.8.3. has been convicted (whether in South Africa or elsewhere) of theft, fraud,forgery, perjury or any offence involving dishonesty in connection with theformation or management of a co-operative or other corporate entity;19.8.4. is regarded as ineligible or disqualified to be a director of a company in terms ofthe Companies Act;19.8.5. has been or is placed on probation under conditions that are inconsistent withcontinuing to be a Director;19.8.6. files a petition for the surrender of his estate or to place it under administration orapplies for debt review under the National Credit Act (34 of 2005);

5919.8.7. assigns his estate for the benefit of his creditors, or files a petition for theliquidation of his affairs, or compounds generally with his creditors;19.8.8. has been removed from office in accordance with clause 20.1.6; or19.8.9. acts as a director of an entity which competes with the Co-operative to a materialdegree in administering and/or licensing IP Rights similar to the IP RightsAdministered by the Co-operative in the Principal Territory.19.9. No election of a Director shall take effect until he has delivered to the Co-operative a Writtenconsent to serve. A person who is not competent to act as Director (as contemplated in clause19.8) must not consent to be elected as a Director, nor act as a Director.19.10. Any casual vacancy occurring on the Board may be filled by the Board, but so that the totalnumber of the Directors shall not at any time exceed the maximum number fixed, but theindividual so appointed shall cease to hold office at the termination of the first GeneralMeeting to be held after the appointment of such individual as a Director, unless he is electedat such General Meeting.19.11. The continuing Director(s) may act notwithstanding any vacancy in their body, but, if and solong as their number is reduced below the number fixed by clause 19.1, the continuingDirector(s) may act only for the purpose of summoning a General Meeting for the election ofDirectors as contemplated in clause 19.3 (read with clause 19.7) and to manage the Cooperativepending such General Meeting. If there is no Director able and willing to act, thenany Member entitled to exercise Voting Rights in the election of a Director may convene aGeneral Meeting for the purpose of electing Directors.20. CESSATION OF OFFICE AS DIRECTOR20.1. A Director shall cease to hold office as such:20.1.1. immediately after he becomes incompetent as contemplated in clause 19.8;20.1.2. when his term of office contemplated in clause 19.3 expires;20.1.3. when he retires as contemplated in clause 20.2;20.1.4. when he dies;

6020.1.5. 1 (one) month, or earlier if permission has been granted by the Board, after hehas given notice in Writing of his intention to resign (subject to the Co-operativesAct);20.1.6. immediately, if the other Directors adopt a resolution for the Director’s removalfrom office (for any reason whatsoever) and it is passed with the support of amajority of 75% (seventy five percent) of all the Directors other than the Directorbeing removed from office;20.1.7. if the Director ceases to be a Full Member, or, in the case of a Director appointedas the nominee of a juristic person, if such juristic person ceases to be a FullMember;20.1.8. if the Director (without special leave of absence from the Board) absents himselffrom 3 (three) successive meetings of the Board, or from 3 (three) successivemeetings of any committee to which he has been appointed to;20.1.9. has been removed from office by Ordinary Resolution of the Members inaccordance with clause 20.3 below; or20.1.10. if he is otherwise removed in accordance with any provisions of this Constitutionor the Co-operatives Act.20.2. A Director shall retire at the end of the first Annual General Meeting after the Director reachesthe retirement age as determined by the Board from time to time.20.3. The Members may, by adopting an Ordinary Resolution, remove a particular Director at aGeneral Meeting that has been requisitioned by the Members (in accordance withclause 16.5) for the particular purpose of proposing such Ordinary Resolution, provided that:20.3.1. before requisitioning the General Meeting, the relevant Members must firstprovide their reasons for the requested removal of the particular Director to theBoard and give the Board a reasonable opportunity to consider the reasons andrespond to them or to take such action as the Board regards appropriate; then20.3.2. if, after receiving the Board’s response, the relevant Members are not satisfiedwith the Board’s response, before requisitioning the General Meeting, therelevant Members must give the Director concerned notice of their intention to

61requisition the General Meeting, together with the reasons and provide theDirector concerned with a reasonable opportunity to respond; and20.3.3. the Director concerned must be provided with an opportunity to provide aresponse or statement to be included in the notice of the requisitioned GeneralMeeting and a reasonable opportunity to make a presentation, in person orthrough a representative, to the Members at the General Meeting.20.4. A retiring Director (as contemplated in clause 20.2), or a Director whose term of office expires(as contemplated in clause 19.3 or clause 20.1 (excluding clauses 20.1.2 and 20.1.4)), shallact as a Director throughout the Annual General Meeting at which he retires, or at which histerm of office expires.21. REMUNERATION OF DIRECTORS AND MEMBERS OF BOARD COMMITTEES21.1. The Directors or members of Board committees shall be entitled to such remuneration for theirservices as Directors or members of Board committees as may have been determined fromtime to time by Ordinary Resolution within the previous 2 (two) years. The recommendation ofthe Co-operative’s remuneration committee (if any) shall be put to the Members before themoving of such Ordinary Resolution.21.2. In addition, the Directors shall be entitled to all reasonable expenses properly and necessarilyincurred by them in and about the business of the Co-operative, and in particular for travelling(including expenses incurred in respect of accommodation) to and from meetings of theDirectors, Board committees and Members, as is determined by the Board (or anyremuneration committee to which such power may be delegated), which may be either inaddition to or in substitution for any other remuneration.21.3. A Director or member of a Board committee may hold office or be employed in any othercapacity in the Co-operative (other than as a director or committee member) or as a Director,office holder, or employee of a company controlled by the Co-operative and in that event, hisappointment and remuneration in respect of such other office or employment must, in additionto any other approvals required in terms of the Co-operatives Act, be determined by theBoard in compliance with clause 25 (Disclosure of Interests of Directors and Managers) (orany remuneration committee to which such power may be delegated), provided that anyremuneration for the holding of such office or such employment shall not form part of theDirector’s remuneration for his services as Director (even if the Director concerned does notreceive any other remuneration for his services as Director), unless the payment of suchremuneration is also approved by the Members in accordance with clause 21.1.

6221.4. Unless otherwise determined by the Board (which determination may only be prospective),any Director or member of a Board committee shall not have to account to the Co-operativefor any approved profits by virtue of holding such office or employment.21.5. A Director or manager of the Co-operative may not accept any commission, remuneration orreward from any Person for, or in connection with, any transaction to which the Co-operativeis a party, unless such commission, remuneration or reward is paid or given in the course ofthe usual business or profession of such Director or manager and the Director or managerhas disclosed his interest to the Board.22. GENERAL POWERS AND DUTIES OF DIRECTORS22.1. The business and operations of the Co-operative shall be conducted and managed by theBoard, who may exercise all such powers of the Co-operative as are not, by the CooperativesAct or by this Constitution, required to be exercised by the Co-operative in GeneralMeeting, subject nevertheless to the provisions of the Co-operatives Act and this Constitution.22.2. The Board may:22.2.1. establish and maintain any non-contributory or contributory pension,superannuation, provident and benefit funds for the benefit of; and22.2.2. give pensions, gratuities and allowances to and make payments for or towardsthe insurance of,any persons who are employees or office bearers or ex-employees or ex-office bearers(including Directors or ex-Directors) of the Co-operative, or of any entity which is or was inany way allied to or associated with it, and the husbands, wives, widowers, widows, familiesand dependants of such persons.22.3. Subject to the requirements of the Co-operatives Act, the Board may from time to time:22.3.1. appoint any person as employee to the office of managing Director (provided thatsuch person meets the requirements for appointment as Director, ascontemplated in clauses 19.3 and 19.8) or chief executive officer (who need notbe a Director) or executive chairperson of the Co-operative (complying withclause 21.3, where applicable) for such period, at such remuneration (whether byway of salary or commission or participation in profits or partly in one way andpartly in another) and on such terms as it may deem fit (provided that any

63appointment of a Director to such position may be for a period exceeding themaximum period of the appointment of the Director concerned set out inclause 19.3) and generally on such terms as they may think fit, and (subject toany contract entered into between the Board and such managing Director orchief executive officer) may from time to time remove him and appoint someother person as managing Director or chief executive officer in his place; and itmay be made a term of his appointment that he be paid a pension, gratuity orother benefit on his retirement from office. Such managing Director shallimmediately cease to hold office of managing Director if he is removed from theoffice of Director or his employment by the Co-operative is terminated for anyreason whatsoever (including cancellation);22.3.2. entrust to and confer upon a managing Director or chief executive officer orexecutive chairperson for the time being such of the powers vested in the Boardas they may think fit, and may confer such powers for such time and to beexercised for such objects and upon such terms and with such restrictions asthey may think expedient; and they may confer such powers either collaterally orto the exclusion of, and in substitution for, all or any of the powers of theDirectors, and may from time to time revoke or vary all or any of such powers. Amanaging Director or chief executive officer or executive chairperson appointedpursuant to the provisions hereof shall not be regarded as an agent or delegateof the Directors and after powers have been conferred upon him by the Board interms hereof he shall be deemed to derive such powers directly from this clause;22.3.3. appoint any 1 (one) or more persons (who need not be a Director or a Member)as employee to the office of management of the Co-operative or as seniormanager (if such person has experience in business management, either gainedfrom working for the Co-operative or another company, or has special knowledgeand/or experience in the application of the IP Related Legislation and/or theadministration of copyright) for such period, at such remuneration (whether byway of salary or commission or participation in profits or partly in one way andpartly in another) and on such terms as it may deem fit, and (subject to anycontract entered into between the Board and such person) may from time to timeremove him and appoint some other person to the management of the Cooperativein his place; and it may be made a term of his appointment that he bepaid a pension, gratuity or other benefit on his retirement from office; and

6422.3.4. by power of attorney appoint any company, corporation, person, or body ofpersons, whether nominated directly or indirectly by the Board, to be the attorneyor attorneys of the Co-operative for such purposes and with such powers,authorities and discretions (not exceeding those vested in or exercisable by theBoard under this Constitution), and for such period, and subject to suchconditions, as it may think fit. Any such powers of attorney may contain suchprovisions for the protection and convenience of persons dealing with any suchattorney as the Board may think fit, and may also authorise any such attorney todelegate all or any of the powers, authorities and discretions vested in him.22.4. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments, andall receipts for monies paid to the Co-operative, shall be signed, drawn, accepted, endorsed,or otherwise executed, as the case may be, in such manner as the Board shall from time totime by resolution determine.22.5. In so far as is permissible under the Co-operatives Act, the Directors shall have the power todelegate to any Person(s) (as long as they are not incompetent as contemplated inclause 19.8) any of their authority, powers and discretions and to give to any such Person(s)the power of sub-delegation. The aforementioned delegation does not prevent the Board fromperforming the delegated functions.22.6. The Board may authorise the payment of donations by the Co-operative to any pension fundestablished by the Co-operative and to such religious, charitable, public or other bodies,clubs, funds or associations or Persons as may seem to them advisable or desirable in theinterests of the Co-operative.23. BOARD COMMITTEES23.1. The Board may appoint any number of Board committees and, in so far as is permissibleunder the Co-operatives Act, delegate to such committees any authority, powers anddiscretions of the Board, and to give to such committees the power of sub-delegation. Theaforementioned delegation does not prevent the Board from performing the delegatedfunctions.23.2. The members of any such committees may include persons who are not Directors, but whoshall not be able to vote.23.3. No person shall be appointed as a member of a Board committee, if he is not competent (ascontemplated in clause 19.8) and any such appointment shall be a nullity. A person who is not

65competent (as contemplated in clause 19.8) must not consent to be appointed as a memberof a Board committee, nor act as a member of a Board committee.23.4. A member of a Board committee shall cease to hold office as such immediately after hebecomes incompetent (as contemplated in clause 19.8) or is removed by resolution of theBoard.23.5. Committees of the Board may consult with or receive advice from any Person.23.6. Subject to the Co-operatives Act and the mandate given by the Board, meetings and otherproceedings of a committee of the Board consisting of more than 1 (one) committee membershall be governed by the provisions of this Constitution regulating the meetings andproceedings of Directors, and in compliance with the Co-operatives Act.23.7. Without limitation and subject to the above provisions in respect of Board committees, theBoard may establish a separate Board committee to attend to such matters relating to oraffecting Needletime Rights and the Administration of such Needletime Rights as they regardappropriate and to appoint trustees of the Needletime Trust as members of such committee.24. PROCEEDINGS OF DIRECTORS24.1. The chairperson or the Board:24.1.1. may, at any time, summon a meeting of the Directors; and24.1.2. must call a meeting of the Directors if required to do so by at least 2 (two)Directors.24.2. The Directors may determine what period of notice shall be given of meetings of Directors andmay determine the means of giving such notice, which may include telephone, telefax orElectronic Communication. It shall be necessary to give notice of a meeting of Directors to allDirectors, even to those absent from South Africa for the time being.24.3. If all of the Directors:24.3.1. acknowledge actual receipt of the notice;24.3.2. are present at a meeting of the Directors; or24.3.3. waive notice of the meeting,

66the meeting may proceed even if the Co-operative failed to give the required notice of thatmeeting, or there was a defect in the giving of the notice.24.4. The Directors may meet together for the despatch of business, adjourn and otherwiseregulate their meetings as they think fit.24.5. Unless otherwise resolved by the Directors, all their meetings shall be held in the city or townwhere the Registered Office is for the time being situated. A meeting of Directors may beconducted by Electronic Communication and/or one or more Directors may participate in ameeting of Directors by Electronic Communication so long as the Electronic Communicationfacility employed ordinarily enables all persons participating in that meeting to communicateconcurrently with each other without an intermediary, and to participate effectively in themeeting.24.6. The quorum for a Directors’ meeting is 3 (three) Directors.24.7. The chairperson and vice-chairperson of the Co-operative, of whom at least 1 (one) shall bean Author, shall be elected by the Board of Directors from among themselves, and shall berespectively the chairperson and vice-chairperson of the Board. Unless removed by Boardresolution earlier, they shall hold their respective offices concurrently until they are required toretire in terms of clause 19.4 (provided that such retiring chairperson and vice-chairpersonshall act as chairperson and vice-chairperson throughout the Annual General Meeting atwhich they retire), unless reappointed at such Annual General Meeting. They shall be eligiblefor reappointment so long as they respectively remain qualified to act as Directors. If no suchchairperson is elected, or if at any meeting the chairperson is not present within 15 (fifteen)minutes after the time appointed for holding it, then the vice-chairperson shall chair themeeting and if the vice-chairperson is also not present, then the Directors present may electone of their number to be chairperson of the meeting. The Directors may at any time revokesuch an appointment.24.8. Each Director has 1 (one) vote on a matter before the Board and a majority of the votes caston a resolution is sufficient to approve that resolution. In the case of a tied vote, thechairperson of the meeting shall have a second or casting vote.24.9. A resolution passed by the Board, or an act performed under the authority of the Board, is notinvalid by reason only of the fact that when the resolution was passed, or the act wasauthorised:

6724.9.1. there were less Directors than the required minimum (as contemplated inclause 19.1); or24.9.2. a person was sitting on the Board who was incompetent (as contemplated inclause 19.8) to sit on the Board,if the resolution was passed, or the act was authorised, by the requisite majority of theDirectors competent to sit as Directors who were present at the time.24.10. A resolution passed by the Board, or an act performed under the authority of the Board, is notinvalid by reason only of the fact that when the resolution was passed, or the act wasauthorised, the requirements of clause 19.3.2 were not met.24.11. The Board must keep minutes of the meetings of the Board, and any of its committees, whichminutes must:24.11.1. be taken in 1 (one) of the official languages of South Africa;24.11.2. be kept at the Registered Office in accordance with clause 14.6.5;24.11.3. indicate which Directors were present at the meeting;24.11.4. include any disclosure in terms of clause 25 (Disclosures of Interests by Directorsand Managers), as contemplated in clause 25.2;24.11.5. be circulated to the Directors as soon as possible after the meeting; and24.11.6. be presented for approval at the next Board meeting.24.12. Resolutions adopted by the Board:24.12.1. must be dated and sequentially numbered; and24.12.2. are effective as of the date of the resolution, unless the resolution statesotherwise.24.13. A resolution of Directors (a “Round Robin Resolution”) shall be as valid and effective as if ithad been passed at a meeting of the Directors duly called and constituted, provided that:24.13.1. each Director has received notice of the matter to be decided upon; and

6824.13.2. such resolution is adopted by way of Written consent, given in person or byElectronic Communication, of a majority of the Directors.24.14. Such a Round Robin Resolution:24.14.1. shall be deemed to have been passed on the date upon which it was signed orexecuted by the last Director required to sign or execute it. Where it states a dateas being the date of its signature by any Director, that document shall be primafacie evidence that it was signed or executed by that Director on that date; and24.14.2. constitutes a decision of the Board and must be entered into the minute book ofthe Co-operative.24.15. Any extract from the minutes of a Board meeting, or extract from any Round RobinResolution, if signed or executed by the chairperson of the meeting, shall constituteconclusive proof of what took place in that meeting, unless the contrary is proved.24.16. A meeting of the Directors at which the quorum requirements are met shall be competent toexercise all or any of the authorities, powers and discretion, provided by or under thisConstitution or the Co-operatives Act, of the Co-operative for the time being vested in orexercisable by the Directors generally.25. DISCLOSURE OF INTERESTS OF DIRECTORS AND MANAGERS25.1. Except in relation to an interest in a contract or transaction that is available to and customarilyentered into between the Co-operative and the Members (if the contract or transaction is onterms generally available to Members), a Director or manager of the Co-operative must, inWriting, disclose to the Co-operative:25.1.1. the nature and extent of any interest that he has in a material contract ortransaction, or a proposed material contract or transaction, with the Co-operative;and25.1.2. any material change to such interest.25.2. Any disclosure must be recorded in the minutes of the meetings of the Board.25.3. A disclosure in terms of this clause, must:

6925.3.1. be made at the first Board meeting at which the proposed contract or transactionis first considered or, if the Director or manager did not have an interest in theproposed contract or transaction at the time of the Board meeting, such interestmust be made at the first meeting after the Director or manager acquired aninterest in it;25.3.2. if there is a material change in the interest of the Director or manager, be madeat the first meeting after the change;25.3.3. if the Director or manager acquires an interest in the contract or transaction afterit has been concluded, be made at the first meeting after the Director or manageracquires that interest;25.3.4. if the Director or manager had an interest in the contract or transaction beforebecoming a Director or manager, be made at the first meeting after becoming aDirector or manager;25.3.5. if the contract or the transaction is one that would in the ordinary course ofbusiness not require the approval of Directors, be made as soon as the Directoror manager becomes aware of the contract or transaction;25.3.6. must be made in Writing for submission to the Board, if the person making thedisclosure is not a Director.25.4. The Board must keep a register of Directors’ and managers’ interests in contracts orundertakings containing full particulars of every disclosure of interest made in terms of thisclause (as contemplated in clause 14.6.8).25.5. Subject to the exceptions in clause 25.6, where the Board is considering a matter in respect ofwhich a Director has made a disclosure as contemplated in clause 25.1, and the noninterestedmembers of the Board determines that a material personal financial conflict ofinterest exists for such Director in relation to the particular matter, such Director shall recusehimself from voting on such matter, but shall be counted for the purposes of determining aquorum and shall provide information to the Board and may form part of the discussion andconsideration of the matter at the request of the other Board members (to the extentpermissible by law, having regard to such Director’s conflicting duties). If the majority of thenon-conflicted Directors request that the conflicted Director recuse himself from the meeting,then the conflicted Director shall do so immediately.25.6. Notwithstanding clause 25.5, without limitation:

7025.6.1. where a conflict interest arises as a result of a Director serving on the board ofdirectors of, or being employed by, any company or entity directly or indirectlycontrolled by the Co-operative, such Director shall not solely by virtue of holdingsuch office or employment be regarded as having a conflict and shall not berequired to recuse himself or abstain from voting on any resolution put to theBoard, unless there is some other ground upon which the Director has a materialpersonal financial interest in the matter that gives rise to a conflict of interests;and25.6.2. the provisions of clause 25.5 shall not apply to any matter:25.6.2.1. in respect of which all of the Directors are conflicted, in which casethey can all participate in consideration of the matter and vote butmay decide to refer the matter to the Members in General Meetingfor determination; and25.6.2.2. that generally affects a class of persons which includes the Directordespite the fact the Director is a member of the class of persons,provided that the class is not comprised solely of Directors.25.7. Subject to the restrictions in section 37 of the Co-operatives Act:25.7.1. no Director or intending Director shall be disqualified by his office fromcontracting with the Co-operative, either with regard to such office or as vendor,purchaser or otherwise;25.7.2. shall any such duly approved contract, in which any Director shall be in any wayinterested, be or be liable to be avoided solely on the basis that it is concludedwith a Director; nor25.7.3. shall any Director so contracting or being so interested in a duly approvedcontract be liable to account to the Co-operative for any profit realised by anysuch contract or arrangement by reason of such Director holding that office or ofthe fiduciary relationship thereby established.26. INDEMNITY AND INSURANCEIn so far as is lawful and without limitation, the Co-operative may indemnify a Director, manager,officer or employee of the Co-operative for any breach of duty or any liability connected to their office

71or employment except where arising out of the intentional wrongdoing, and may take out insuranceprotecting the Directors, managers, officers or employees of the Co-operative or protecting the Cooperativeagainst any such liability.27. FINANCIAL ASSISTANCE27.1. If so determined by the Board, but subject to clause 27.2 and the Co-operatives Act, the Cooperativemay give financial assistance by means of a loan or the provision of security to anyPerson.27.2. The Co-operative may not give financial assistance in terms of clause 27.1 (whether directlyor indirectly) if there are reasonable grounds to believe that:27.2.1. the Co-operative, after giving the financial assistance, will be unable to pay itsliabilities as they become due; or27.2.2. the realisable value (as determined in accordance with clause 27.3) of the Cooperative’sassets, after giving the financial assistance, will be less than theaggregate of its liabilities and reserves.27.3. In determining the realisable value of the Co-operative’s assets (as contemplated inclause 27.2.2) the amount of any financial assistance in the form of a loan and in the form ofassets pledged or encumbered to secure a guarantee must be excluded.28. SOCIAL AND CULTURAL28.1. The Board shall determine the social and cultural projects, activities and funds of the Cooperativewhich may include, without limitation:28.1.1. the granting of gratuities, bursaries, donations, pensions, funeral policies,medical aid contributions and emoluments to any Member or ex-Member of theCo-operative, Contracting Participant or any person at any time in theemployment of the Co-operative, or engaged in any business acquired by theCo-operative, and the wives, widows, families and dependants of any suchpersons;28.1.2. contributions to any benevolent, pension, funeral or similar fund which may beestablished for the benefit of Members, Contracting Participants, ex-Members oremployees of the Co-operative or their wives, husbands, widows, widowers,families or dependants;

7228.1.3. payments by way of loan or gift or on such terms as may be thought fit for anypurpose conducive to the improvement or advancement of the composition,teaching, or performance of music, or for the encouragement or advancement ofthe national arts, or for any purposes calculated to benefit the industry in whichthe Co-operative operates or Members or ex-Members or persons employed byor having dealings with the Co-operative, or to make such payments to or for thebenefit of any society, associated company, fund, trust or institution whoseobjects shall include any such purpose;28.1.4. subscribing money or assets to, or otherwise assisting, charitable or benevolentobjects or entities;28.1.5. providing sponsorship, particularly but without limitation, in connection with anyindustry in which the Co-operative, or any of its Members operate, includingwithout limitation, by sponsoring events, functions, bursaries related to suchindustries, associated businesses entities or activities; and/or28.1.6. the establishment of any funds for these purposes.29. ADMINISTRATION OF IP RIGHTSAdministered IP Rights29.1. In order to be eligible for election to Membership after the Conversion Date, an Applicant mustconclude an Administration of IP Rights Agreement with the Co-operative (as contemplated inclause 9.4 of this Constitution), providing for a deed of assignment of the Administered IPRights to the Co-operative, unless the Board determines that an alternative right will begranted to the Co-operative as contemplated in clause 29.9.29.2. All existing members on the Conversion Date shall, unless expressly agreed otherwise inWriting, be deemed to have agreed that their Administered IP Rights, which are Administeredby the Co-operative on the Conversion Date, shall continue to be Administered by the Cooperativein accordance with the provisions of this Constitution and any existing Assignmentor contract, which existing contract shall be deemed to be an Administration of IP RightsAgreement, subject only to those existing contractual terms with the Member that cannot bealtered by way of an amendment to the Co-operative’s Constitution, if any.

7329.3. Subject to the exceptions in clauses 29.4, 29.6, 29.7, 29.8, 29.9 29.10 and 36.3, everyApplicant for Membership shall sign an Administration of IP Rights Agreement on termsacceptable to the Board (as contemplated in clause 9.4.2), which agreement shall:29.3.1. unless the Applicant is applying for Membership solely in respect of theAdministration of Needletime Rights, provide for the Administration by the Cooperativeof at least all the Worldwide Performing Rights (including any and allshares or parts in a Performing Right) in all and any Works of Music or parts ofWorks of Music, present and future, in respect of which the Applicant is theAuthor, Publisher, Proprietor or a Permitted Successor; and29.3.2. if the Applicant is a Performer (or a Performer’s successor in title) applying forMembership solely in respect of the Administration of Needletime Rights, providefor the Administration by the Co-operative of all and any Needletime Rights inrespect of Performer’s Performances, present and future, of which the Applicantis the holder,which Performing Rights and Needletime Rights:29.3.3. the Applicant has at the date of application for Membership; and29.3.4. which subsequently are acquired by, or vest in, the Applicant after submission ofthe application for Membership until either the application is declined or theMember’s Membership is terminated and the Co-operative has ceased toAdminister the Member’s IP Rights.29.4. Unless and until the Board determines otherwise, a person with only Needletime Rights andno Performing Rights can be accepted as a Member (i.e. Needletime Rights Member). AnyMember can after becoming a Member request that the Co-operative also Administer theMember’s Needletime Rights and, if the request is accepted, the Member shall enter into anagreement with the Co-operative (which can be part of or an addendum to the agreementreferred to in clause 29.3.1 but shall be deemed to be part of the Administration of IP RightsAgreement) providing for such Administration.29.5. In addition to conclusion of the Administration of IP Rights Agreement in respect of theAdministration of Performing Rights referred to in clause 29.3.1 (and subject to clause 29.9),every Applicant (or Member) may, when applying to become a Member (and/or at any timethereafter), on request by the Co-operative, enter into an agreement with the Co-operative(which can be part of or an addendum to the agreement referred to in clause 29.3.1 but shall

74be deemed to be part of the Administration of IP Rights Agreement) providing for theAdministration by the Co-operative of the Worldwide Reproduction Right in all or any Works ofMusic, present and future, owned or controlled by the Applicant or Member, and/or the wholeor any part of the Reproduction Right in any Work of Music or part of a Work of Music to theextent that any such right or part of a right is or shall during his Membership be or becomevested in or controlled by him.29.6. Notwithstanding the default requirements in regard to the territory applicable to theAdministered IP Rights, the Board may exempt an Applicant or an existing Member from thedefault territories or regions applicable to the IP Rights to be Administered by, and Assignedto, the Co-operative (e.g. on a Worldwide Basis) and instead accept a more limited territory orregion (e.g. in the Principal Territory only) in respect of all or part of the Administered IPRights.29.7. Subject to clause 29.9, in order to facilitate the Administration of the Administered IP Rights,all Applicants (and Members agreeing to the Administration of additional categories ofAdministered IP Rights as contemplated in clauses 29.4 and 29.5) shall be required to,together with the execution of the Administration of IP Rights Agreement, in so far as islawfully possible, Assign to the Co-operative the IP Rights (including, without limitation, allremedies, rights to enforce, rights to payment of royalties and licence revenue/fees) to beAdministered by the Co-operative and shall contemporaneously with the execution of theAdministration of IP Rights Agreement execute a deed of assignment on terms satisfactory tothe Board (which can be part of or annexed to the Administration of IP Rights Agreement). Inso far as it is not lawfully possible to Assign all or part of the relevant IP Rights to the Cooperative,the Applicant shall be required to, in so far as is lawfully possible, grant the Cooperativean exclusive licence to Administer the relevant IP Rights (or part thereof) on termssatisfactory to the Board. In the event that the Board subsequently comes to the view that anydeed of assignment or exclusive licence agreement is unlawful, defective, problematic orunsatisfactory for any reason whatsoever, the Board may require the relevant Member toexecute a new deed of assignment or exclusive licence agreement on the Co-operative’s thenstandard terms and conditions adapted in so far as is necessary to address the issue, and theMember shall be obliged to execute such deed of assignment or exclusive licence agreement,and the Member hereby grants the Co-operative a power of attorney to, on behalf of theMember (in rem suam), execute such deed of assignment or exclusive licence agreement.29.8. The Board shall have the power to, in its discretion, decide from time to time whether anyGrand Rights or any other IP Rights included in the Performing Rights, required to be included

75in the Administered IP Rights in terms of clause 29.3.1, must or may be excluded from theAdministered IP and may do so generally (whether for a group of Members or type of IPRights or otherwise) or for a specific case. The Board may also agree to Administer any otherIntellectual Property and related rights held by a Member.29.9. Notwithstanding clause 29.7, the Board may determine, in relation to any or all Applicants orexisting Members, that it is permissible for such Persons to not Assign all or part of their IPRights to the Co-operative, but to instead grant to the Co-operative any other right or mode ofauthority (including by appointment of the Co-operative as agent for the applicant, or thegranting of an exclusive licence over the IP Rights to the Co-operative) in relation to such IPRights (or certain of such IP Rights), which right or authority facilitates the Administration ofsuch IP Rights by the Co-operative, and which is acceptable to the Board and consistent withthe provisions of this Constitution. The Board may also agree in writing to an amendment toany Administration of IP Rights Agreement or deed of assignment from time to time.29.10. A Person who becomes a Member of the Co-operative solely in respect of Needletime Rightsis not required to be a Member of the Co-operative also in respect of any of the other categoryof Administered IP Rights (for example, Performing Rights or Reproduction Rights).29.11. Any of the IP Rights referred to in clauses 29.3.1 and 29.4 agreed to be Administered by theCo-operative, shall be included in the Member’s Administered IP Rights and unless otherwiseagreed to in Writing by the Co-operative, the Administration Rights granted in terms of theAdministration of IP Rights Agreement shall be deemed to include the exclusive right to hold,control, administer, make use of, commercialise or enforce the relevant Administered IPRights.29.12. Notwithstanding anything to the contrary, the Co-operative shall be entitled to, in so far as islawfully possible, Assign or license all or part the Administered Needletime Rights, togetherwith the Administered IP Rights, to the Needletime Trust (or another entity established orcontrolled by the Co-operative). Subject to the deed of the Needletime Trust, the trustees ofthe Needletime Trust (or the board of such other established or controlled entity) shall beentitled to formulate any rules relating to the Administration of Needletime Rights afterconsultation with the Board of the Co-operative. These rules shall take effect immediatelyupon their adoption by the trustees of the Needletime Trust (or the board of such othercontrolled entity), subject to such rules being confirmed by Ordinary Resolution of theNeedletime Rights Members at a General Meeting of the Needletime Rights Members within 1(one) year. If the rules are not confirmed by Ordinary Resolution of the Needletime Memberswithin the 1 (one) year period, they shall lapse on expiry of such period but this shall not have

76any effect upon the validly of any actions or decisions made in accordance with such rulesprior to their lapsing. All the provisions of this Constitution applicable to the convening andconducting of General Meetings, voting and the passing of resolutions by the Members (ascontemplated in clause 16 (General Meetings)) shall apply to such separate General Meetingof the Needletime Rights Members, adapted as is appropriate, except that the necessaryquorum to begin and consider the Governance Rules shall be Needletime Rights MembersPresent with Voting Rights comprising at least 10% (ten percent) of the aggregate VotingRights of all the Needletime Rights Members. Notwithstanding the aforegoing, the trustees ofthe Needletime Trust (or the board of such other established or controlled entity) isempowered to correct errors substantiated as such from objective evidence or which are selfevident errors (including, but without limitation ejusdem generis, spelling, punctuation,reference, grammar or similar defects) in such rules without approval by Ordinary Resolutionof the Needletime Rights Members.29.13. Unless otherwise approved by the Board and agreed to in Writing, any Administration of IPRights Agreement and deed of assignment executed pursuant to the provisions of thisclause 29 shall be in the form prescribed by the Co-operative and shall operate for and duringthe period of the Member’s Membership of the Co-operative and for any longer periodprovided for in clause 10 (Termination of Membership). The Co-operative may at any time, bynotice in Writing to any Member, decline to exercise the whole or any part of theAdministration Rights, and thereupon the provisions of this clause 29 shall cease to apply tosuch right, and any related rights and obligations in the Administration of IP Rights Agreementor Assignment thereof already made to the Co-operative by such Member shall be terminatedby the Co-operative and the Co-operative’s Administration Rights shall terminate and the Cooperativeshall Assign any of the excluded IP Rights vested in it as part of its AdministrationRights back to the Member, provided always that the Co-operative may at any time, and fromtime to time, by further notice in Writing to such Member, withdraw such notice in respect of allor any of the IP Rights comprised therein, whereupon the provisions of this clause 29 shallagain apply to such IP Rights and they shall be included in the Co-operative’s AdministrationRights and the Member’s Administered IP Rights.Constitution and Governance Rules Prevail29.14. Notwithstanding anything to the contrary in an Administration of IP Rights Agreement, exceptwhere divergence is expressly permitted, any Administration of IP Rights Agreement(excluding any deed of assignment itself) shall be subject to and be deemed to incorporatethe provisions of this Constitution and the Governance Rules as amended from time to time,

77and in the event of a conflict, the provisions of the Constitution and the Governance Rulesshall prevail.29.15. The Co-operative may accept and act upon the authority of any Member to exercise theAdministration Rights in the Member’s Administered IP Rights to a greater extent than asdefined or contemplated in this Constitution.29.16. Disputes between Members (including, without limitation, in respect of interests inAdministered IP Rights, the subject matter Works of Music and/or the infringement or usethereof) shall be resolved in accordance with the dispute resolution policy of the Co-operativeand subject to the Governance Rules.Restrictions29.17. Except as expressly provided for in this Constitution, no Member shall be at liberty to cede ordelegate any of its rights or obligations in respect of its Administered IP Rights, or theAdministration of its Administered IP Rights by the Co-operative, or to alienate or exercise theAdministration Rights granted to and/or vested in the Co-operative by the Member, orcontrolled by the Co-operative in connection with his Membership, or by this Constitutionrequired to be so vested or controlled, without the prior Written authorisation of the Cooperative.29.18. No Member shall, without the prior Written consent of the Co-operative, (directly, jointly orotherwise) write, compose or otherwise contribute to any Work of Music (or the creationthereof) in a manner (whether as employee, independent contractor or otherwise ) in whichany non-Member may acquire any rights or interests in respect of the Work, nor enter into anycontract or arrangement to do so, whether for valuable consideration or not, without a writtenagreement expressly reserving and assigning to such Member the Performing Right in anysuch Work of Music.29.19. The Members acknowledge the objects of the Co-operative and its Administration of theAdministered IP Rights shall not be exclusively conducted for profit and in carrying out theAdministration it shall also be entitled to pursue its non-profit objects and make use of thePermitted Royalty Deductions for this purpose.29.20. Notwithstanding anything to the contrary, the Co-operative’s obligations are limited to using itsreasonable endeavours in Administering the Administered IP Rights and carrying out itsobjects and the Co-operative does not in any way give any warranties or indemnities to its

78Members with regards to the Administration of the Administered IP Rights, and disclaims anyimplied warranties.29.21. Unless agreed otherwise in Writing in the Administration of IP Rights Agreement (includingany agreement entered into pursuant to clause 29.5), on becoming a Member, the Membergrants to Co-operative the sole power and authority to Administer the Member’s AdministeredIP Rights in any manner howsoever as may be determined by the Board, including, withoutlimitation, the right (but not obligation) to:29.21.1. grant the right or licence for the use and exercise of the Administered IP Rights,which may be in the form of granting of blanket licences in respect of all theAdministered IP Rights (including the Administered IP Rights of all Members andthe Administered IP Rights of Contracting Participants and Affiliates), and theallocating of the Licence Revenue arising therefrom between the Members,Contracting Participants and Affiliates, in accordance with the Payment Rules;29.21.2. authorise or permit or forbid the exercise of the Administered IP Rights;29.21.3. collect and receive and give effectual discharges for, royalties, fees,subscriptions and all monies in connection with the Administered IP Rights or anyrelated agreements or arrangements including by way of damages orcompensation for unauthorised use or commercialisation of any Administered IPRights by all necessary or desirable actions or other proceedings, and to recoversuch monies, and to restrain and recover damages for the infringement of theAdministered IP Rights or any other related rights of the Members or of the Cooperative;29.21.4. institute and prosecute proceedings against all Persons infringing theAdministered IP Rights and, to defend or oppose any proceedings taken againstthe Co-operative or any Member in respect of the Administered IP Rights, and tocompound, compromise, refer to court, arbitration or submit to judgment in anysuch proceedings, actions, disputes or differences, and generally to representthe Member in all matters concerning the said Administered IP Rights or theAdministration thereof;29.21.5. protect, generally, the Administered IP Rights and exercise and enforce all rightsand remedies in this regard to the Administered IP Rights;

7929.21.6. delegate authority to do any acts as aforesaid to any Affiliated Society or toappoint any agent, trustee or representative in territories overseas or elsewherewithin South Africa, for the purpose of exercising the Co-operative’sAdministration Rights in respect of the Administered IP Rights in such territories;29.21.7. in the Administration of any Administered IP Rights, without limitation, make, andfrom time to time rescind, alter or vary any arrangements and agreements withrespect to any such use and commercialisation of the Administered IP Rights andto enforce such agreements;29.21.8. obtain from the Members such powers of attorney or other authorities orinstruments as may be deemed necessary or expedient by the Board forenabling the Co-operative to exercise and enforce in its own name, or otherwise,all the Administered IP Rights;29.21.9. execute any agreements and other instruments and carry out any acts as may bedeemed necessary or expedient for the purpose of the Administration of theAdministered IP Rights;29.21.10. on behalf of Members, administer any VAT on payments required to be made byMembers and any related Taxes, and including the issue of tax invoices onbehalf of Members and to deduct such amounts from any monies due to theMembers;29.21.11. do all or any of the above things in the territory in respect of which the CooperativeAdministers the Administered IP Rights and as principals, agents,contractors, trustees, or otherwise, and by or through trustees, agents orotherwise, and either alone or in conjunction with others; and29.21.12. do all such other things as are in the opinion of the Directors incidental orconducive to the Administration of the Administered IP Rights.29.22. Except as expressly provided for in this Constitution, the Co-operative may without theMember’s consent Assign, cede and delegate its rights and obligations under theAdministration of IP Rights Agreement, or alienate or further Assign any Administration Rightsand, in so far as is lawfully possible, the Administered IP Rights Assigned to it for the purposeof Administration to a third party, except that the Co-operative shall only be entitled to do so:29.22.1. to an entity wholly-controlled by the Co-operative and formed solely for purposesof Administering the Administered IP Rights; or

8029.22.2. with the approval of the Members by way of Special Resolution (including anySpecial Resolution adopted by the members of the company prior to theConversion Date), to a trust or company established for the purpose ofAdministrating such Administered IP Rights, provided all Administration of IPRights Agreements and Administration Rights in respect of all Members of theCo-operative are Assigned to such trust or company and the rights of theMembers are not generally materially negatively affected.29.23. Notwithstanding anything to the contrary contained in the Administration of IP RightsAgreement, and the fact that the Administration Rights or any of the Administered IP Rightsmay in law be vested in the Co-operative (primarily for the purpose of facilitating theAdministering and use of such Administered IP Rights for the benefit of the Members), the Cooperativeshall in relation to the use and Administration of Members’ Administered IP RightsAdminister and receive money, proceeds and benefits from the exercise and enforcement ofsuch Administered IP Rights for the benefit of the Members pursuant to the rights of theMembers in terms of this Constitution, subject to the Permitted Royalty Deductions and feesset out in this Constitution, any Governance Rules or any agreement with the Member as thecase may be.30. ROYALTY PAYMENT EXPENSE AND GRANT OF RIGHTS PAYMENT EXPENSE30.1. Subject to clause 30.5, in consideration for the use of the Administered IP Rights andAdministration Rights granted to the Co-operative pursuant to the Administration of IP RightsAgreement, the Co-operative shall, after settling and providing for any other matterscontemplated in this Constitution, pay to the Members periodically as stipulated in thePayment Rules:30.1.1. the Royalty Payment, as determined in accordance with clause 30.2; and30.1.2. the Grant of Rights Payment, as determined in accordance with clause 30.3; and30.1.3. any Operating Surplus Payment as may be determined by the Board inaccordance with clause 31 (Operating Surplus Payment).30.2. Subject to clause 30.5, an amount equal to the Licence Revenue received by the Cooperativeduring the relevant financial year minus the Permitted Royalty Deductions, shall bepaid by the Co-operative to the Members (“Royalty Payment”), as reasonably determined bythe Board, applying the Payment Rules with reference to the Licence Revenue attributed tothe respective Member’s Administered IP Rights. The Board shall determine the attribution of

81the Licence Revenue to the respective Member’s Administered IP Rights and the proportionsin which such Royalty Payment shall be apportioned between the Members, applying thePayment Rules. Royalty Payments shall be made at such times as are determined by theBoard in accordance with the Payment Rules and the payment time table published by theBoard from time to time. The Payment Rules in respect of any category of Administered IPRights may (but shall not be obliged to) provide that any interest (after bank charges) thataccrues on Royalty Payment credits while held by the Co-operative in an interest earningbank account or money market investment pending payment of the Royalty Payment shall beincluded in the relevant Royalty Payment.30.3. The Co-operative shall make an additional payment to those Candidate Members who werepaid (or were allocated for payment) Royalty Payments in respect of their AdministeredPerforming Rights in the preceding financial year, and to all Full Members and AssociateMembers (regardless of whether or not Royalty Payments were paid (or were allocated forpayment) to them in respect of their Administered Performing Rights), in an amountreasonably determined to by the Board equal to any net Non Licence Revenue (if any) after (i)settling or providing for any expenses or liabilities not included in Permitted RoyaltyDeductions deducted from the Licence Revenue and (ii) providing for any other amount theBoard reasonably regards as required or desirable for the operations or objectives of the Cooperativeor for the prudent management of the Co-operative having regard to the cash flowrequirements, expected expenditure, anticipated operations and investments or any othermatters the Board reasonably regards as relevant applying any relevant Payment Rules(“Grant of Rights Payment”).30.4. In determining the Royalty Payment due to the Members, the Co-operative shall deduct fromthe Licence Revenue of the Co-operative, such amounts as are determined by the Board tobe required to settle or provide for the following matters (“Permitted Royalty Deductions”) inaccordance with the Payment Rules in force at the relevant time:30.4.1. the payment of, or provision for, the expenses and liabilities (including all Taxesdue or payable) incurred by the Co-operative in connection with theAdministration of Administered IP Rights or otherwise in carrying out thepurposes and operations of the Co-operative (which liabilities are not limited tothose expenses and liabilities incurred in respect of any particular Member’sAdministered IP Rights);30.4.2. payments or provision for any contributions or payments for any social or culturalpurposes as may be reasonably determined by the Board, provided that such

82social and cultural deductions may not exceed the maximum percentage of theLicence Revenue as stipulated by the guidelines of CISAC (failing which, itssuccessor body) from time to time; and30.4.3. in addition to the Statutory Reserve Fund, set aside out of the revenue of the Cooperativesuch sums as it thinks proper as a reserve to meet contingencies,and/or for future payment and/or for such other purposes as the Board shall in itsdiscretion think reasonable, and may invest such reserves as it may think fit, andfrom time to time deal with or vary such investments and dispose of all or anypart thereof, and may divide the reserve fund into such special funds as it thinksfit, and employ the reserve fund or any part thereof for any reasonable purpose.30.5. The Licence Revenue generated by Needletime Rights and the Royalty Payments payable toNeedletime Rights Members and any deductions shall be regulated by the provisions of theNeedletime Trust, the Performers’ Protection Act and related regulations and shall:30.5.1. not be payable by the Co-operative, but shall instead be paid to such NeedletimeMembers by the Needletime Trust (or any other entity as contemplated inclause 29.12); and30.5.2. not apportioned between the Needletime Rights Members by the Board, but suchapportionment shall instead be determined by the trustees of the NeedletimeTrust (or the board of such other entity as contemplated in clause 29.12).31. OPERATING SURPLUS PAYMENT31.1. The Operating Surplus of the Co-operative in respect of each financial year, shall bedetermined by the Board in accordance with the Co-operatives Act and:31.1.1. at least the required portion transferred to a reserve fund as contemplated inclause 33.1; and31.1.2. the balance (or any portion thereof) may, if the Board so determines, be allocatedand credited or paid to Members in accordance with the Co-operatives Act inproportion to the value of the transactions conducted by a Member with the Cooperative,as determined or attributed by the Board applying any applicablePayment Rules (if any) (“Operating Surplus Payment”) (plus any applicableVAT), the Administration of IP Rights Agreement being regarded as an ongoingtransaction with the Co-operative.

8332. GENERAL PROVISIONS REGARDING PAYMENTS TO MEMBERS32.1. For the purposes of this clause 32, “Payments” shall include any Royalty Payment, Grant ofRights Payment and Operating Surplus Payment.32.2. The Board may decide to make interim payments to Members based on anticipatedestimates, pending determination of the Payments to each of the Members.32.3. Unless the Board determines otherwise, all unclaimed Payments shall not bear interestagainst the Co-operative. If the Board does determine that any unclaimed Payments shallbear interest, it shall determine the rate of interest from time to time. The Board may insteaddetermine that any interest actually accruing on any funds held in respect of unclaimedPayments shall accrue for the benefit of the relevant Member. All unclaimed Payments maybe invested or otherwise be made use of by the Directors for the benefit of the Co-operativeuntil claimed, provided that Payments remaining unclaimed for a period of not less than3 (three) years from the date on which it became payable may be forfeited by resolution of theDirectors for the benefit of the Co-operative. If the Co-operative is wound-up or deregistered,any such monies that were due to Members in respect of which the 3 (three) year period hasnot yet lapsed, shall be paid into the Guardian’s Fund.32.4. The Co-operative shall be entitled at any time to delegate its obligations in respect of anyunclaimed Payments to any one of the Co-operative’s bankers from time to time.32.5. The Directors may resolve that any Payments made to all or any Members whose registeredaddresses are outside South Africa or who have given Written instructions requestingpayment at addresses outside South Africa, shall (subject to any Exchange ControlRegulations in force at that time) be paid in such other currency or currencies as may bestipulated by the Directors. The Directors may also stipulate the date (hereinafter referred toas “the Currency Conversion Date”) upon which, and a provisional rate of exchange atwhich, the currency of South Africa shall be converted into such other currency or currencies,provided that the currency conversion shall be within a period of 30 (thirty) days prior to thedate of payment. If, in the opinion of the Directors, there is no material difference between therate(s) of exchange ruling on the Currency Conversion Date and the provisional rate(s) ofexchange stipulated by the Directors, then the currency of South Africa shall be converted atsuch provisional rate(s). If, in the opinion of the Directors, there is a material difference, thenthe currency of South Africa shall be converted into such other currency or currencies at therate(s) of exchange ruling on the Currency Conversion Date, or at a rate or rates of exchangewhich, in the opinion of the Directors, is/are not materially different. Any subsequent rise or fallof rate(s) of exchange determined as above shall be disregarded.

8432.6. The Co-operative may cease, subject to the provisions of this Constitution, to:32.6.1. send any cheque, warrant or order by post to the Member’s address as reflectedin the Members’ Register, for any Payment which is normally paid in that mannerif, in respect of at least 3 (three) consecutive Payments payable to such Member,the cheque, warrant, or order has been returned undelivered or remainsuncashed, but shall recommence sending cheques, warrants or orders; or32.6.2. make Payment by means of an electronic transfer of funds, for any Paymentwhich is normally paid in that manner into an account nominated by a Member if,in respect of at least 3 (three) consecutive Payments payable to such Member,such electronic transfer could not be processed, but without any error on the sideof the Co-operative, but shall recommence making payment by means ofelectronic transfer,in respect of the Payments payable to such Member if the Member (or Person entitled torepresent a Member as contemplated in clause 12 (Representation)) claims the arrears of thePayments and reaffirms such payment details and/or informs or instructs the Co-operative topay future Payments in some other way.33. RESERVE FUNDS33.1. The Board must establish the Statutory Reserve Fund as required by section 46 of the CooperativesAct and must deposit at least 5% (five percent) of the Operating Surplus during afinancial year into the Statutory Reserve Fund as a reserve. The Board may determine todeposit a greater proportion of the Operating Surplus into the Statutory Reserve Fund.33.2. The Statutory Reserve Fund established in accordance with clause 33.1 may:33.2.1. employ the assets constituting such fund or funds in the business of the Cooperative;33.2.2. be invested or dealt with in such a manner as the Board may determine, and anyinterest or other income, profit or gain arising as a result of such investment, shallnot form part of the reserve or of the Operating Surplus and may be dealt with inany manner determined by the Board; and33.2.3. be applied for any purpose that the Board may determine, including for:33.2.3.1. the setting-off of expenses and losses of the Co-operative;

8533.2.3.2. provision for or payment of the Permitted Royalty Deductions; and33.2.3.3. any social or educational purpose.33.3. The reserve funds of the Co-operative in existence when it was a company immediately priorits conversion to a Co-operative shall continue as reserve funds but shall not form part of theStatutory Reserve Fund or be subject to any restrictions applicable to such Statutory ReserveFund. In addition, the Directors may at any time set aside such sum as they think proper as anaddition to such pre-conversion reserve funds or as an additional reserve fund. The Directorsmay divide any reserve fund into such special funds as they think fit and consolidate suchspecial accounts (or any part thereof) into one or more accounts, with full power to employ theassets constituting such fund or funds in the business of the Co-operative, or may invest thesame upon such investments as they may elect, without being liable for any depreciation of orloss in consequence of such investments whether the same be usual or authorisedinvestments for trust funds or not. The reserve fund may be used for any purpose determinedby the Board (including for payments to Members and for any social or educational purpose).34. MEMBERS’ FUNDS34.1. Subject to the Co-operatives Act and the Governance Rules, the Board may, at any time,establish 1 (one) or more funds of Members on such terms as the Board may determine, andmay dissolve such funds at any time (in which case any amount standing to the credit of aMember in such fund must be paid to such Member). The Board may without limitationdetermine that:34.1.1. any interest or growth in such funds shall accrue for the benefit of the Members;and/or34.1.2. such funds shall attract interest at a rate determined by the Board from time totime.35. MEMBERS’ DUTIES AND SUSPENSION OF MEMBERSHIP35.1. Every Member shall refrain from doing anything likely to limit or prejudice the success orinterests of the Co-operative, and shall co-operate with the Co-operative and its Directors,managers, officers and employees and with his fellow-Members in enforcing the observanceof this Constitution and the Governance Rules and in furthering the interests of the Cooperative,and shall render to the Co-operative, its Directors, managers, officers andemployees and his fellow-Members all reasonable assistance in this regard.

8635.2. The Board may resolve to suspend (for such period, and on such terms, as the Board mayreasonably determine) the Membership of any Member which fails to comply with theConstitution and the Governance Rules. The power to suspend Membership is in addition to,and without limitation to, any other remedies available to the Board and the Co-operative forsuch non-compliance.36. THIRD PARTY AGREEMENTS36.1. The Board may contract with any Person in relation to the Administration of such Person’s IPRights by the Co-operative only on a contractual basis, without such Person (“ContractingParticipant”) becoming a Member of the Co-operative and may adopt Governance Rulesregulating such Administration as contemplated in clause 8 (Governance Rules) and/orestablish standard terms and conditions that may be applied to such arrangements.36.2. The Board may further contract with any Affiliate on such terms as the Board may agree to inits sole and absolute discretion.36.3. Subject to any applicable Contracting Participant Administration Rules, the agreementcontemplated in clause 36.1 may contain any such terms as the Board may agree to in itssole and absolute discretion. The Co-operative may grant blanket licences in respect of someor all of the Administered IP Rights (including the Administered IP Rights of all Members andthe Administered IP Rights of Contracting Participants and Affiliates) and, subject to therelevant agreements, the Board shall attribute the revenue arising therefrom and relatedexpenses between the Members, Contracting Participants and Affiliates, in accordance withthe Payment Rules.36.4. A Person who is a member of an Affiliated Society in respect of such Person’s PerformingRights that has not agreed to the Administration by the Co-operative of its Performing Rights,shall be allowed to be a Member of the Co-operative by virtue of:36.4.1. agreeing to the Co-operative Administering its Reproduction Right; and36.4.2. agreeing to enter into an Administration of IP Rights Agreement providing for theAdministration by the Co-operative of such rights.36.5. The Co-operative may exercise and enforce the Administered IP Rights in respect ofmembers or shareholders of any Affiliated Society, pursuant to the terms of any contracts nowexisting or which may hereafter be concluded between the Co-operative and such AffiliatedSociety.

8736.6. The Co-operative may accept and act upon the authority of an Affiliated Society to exerciseany IP Rights they or their Members have in any manner whatsoever.36.7. The Board may determine to appoint any Contracting Participant or Affiliate as an “associatemember” as contemplated in section 14(2)(e) of the Co-operatives Act.37. LOSS OF DOCUMENTSThe Co-operative shall not be responsible for the loss in transmission of any cheque, warrant,certificate or (without any limitation ejusdem generis) any other document (whether material orimmaterial) sent through the post, Electronic Communication, or any other manner, to the registeredaddress of any Member or to any other address requested by the Member (including a permittednominee in terms of the Governance Rules).38. NOTICES38.1. The Co-operative may give notices, documents, records or statements or notices ofavailability of the aforegoing by personal delivery to the Member, or by sending them prepaidthrough the post or by transmitting them by telegram, telex, fax or any other method. The Cooperativemust give notice of any General Meeting to each Person entitled to vote at suchGeneral Meeting who has elected to receive such notice, other than proxies.38.2. Any Member who/which has furnished an Electronic Address to the Co-operative, by doing soauthorises the Co-operative to use Electronic Communication to give notices, documents,records or statements or notices of availability of the aforegoing to him.38.3. Any notice, document, record or statement or notice of availability of the aforegoing sent bythe Co-operative shall, where applicable to a method of delivery set out in 0, be deemed tohave been delivered on the date and time determined in accordance with 0. If a notice,document, record or statement or notice of availability is sent by non-registered post, it shallbe deemed to have been delivered on the 7 th (seventh) day after the letter, envelope orwrapper containing the same is posted and, in proving such service, it shall be sufficient toprove that the letter, envelope or wrapper containing the notice was properly addressed andposted. All references in this Constitution to “deliver” / “delivered” shall include reference todeemed delivery as aforesaid. The Co-operative shall not be bound to enter any Person in theMembers’ Register as a Member until that Person gives the Co-operative an address for entryin the Members’ Register.

8838.4. Notwithstanding the date on which a Person becomes a Member, such Person shall be boundby all notices, documents, records or statements or notices of availability published by the Cooperativeprior to such date.38.5. As regards the signature of an Electronic Communication by a Member, it shall be in suchform as the Directors may specify to demonstrate that the Electronic Communication isgenuine, or failing any such specification by the Directors, it shall be constituted by theMember indicating in the Electronic Communication that it is the Member’s intention to use theElectronic Communication as the medium to indicate the Member’s approval of theinformation in, or the Member’s signature of the document in or attached to, the ElectronicCommunication which contains the name of the Member sending it in the body of theElectronic Communication.39. WINDING-UP39.1. The Co-operative may be wound-up voluntarily by Special Resolution of the Members.39.2. In the event of and upon the winding-up or deregistration (collectively referred to as “windingup”)of the Co-operative, whether voluntary or otherwise:39.2.1. all Administration of IP Rights Agreements shall immediately terminate and theAdministration Rights granted to the Co-operative shall lapse;39.2.2. any IP Rights vested in the Co-operative shall revert to the Member (or hisrepresentative) on whose behalf such rights are held (and the Co-operative shallAssign such IP Rights back to the respective Members with effect from the dateof the winding-up of the Co-operative); and39.2.3. the residual assets of the Co-operative (including accumulated profits) shall, in sofar as they are available for such distribution after settling all creditors, bedistributed to the Members at the date of such winding-up in the proportion to theaggregate Operating Surplus Payments (or, if no Operating Surplus Paymentswere made, then the aggregate Royalty Payments) received by each suchMember over the period of 5 (five) financial years immediately prior to suchwinding-up.

Schedule 1- Methods of deliveryPerson to whomthe document isto be deliveredMethod of deliveryDate and Time of Deemed deliveryAny PersonBy faxing the notice or a certified copy ofthe document to the Person, if the Personhas a fax number;On the date and at the time recorded bythe fax receiver, unless there isconclusive evidence that it wasdelivered on a different date or at adifferent time.By sending the notice or a copy of thedocument by electronic mail, if the Personhas an Electronic Address;On the date and at the time recorded bythe computer used by the Co-operative.By sending the notice or a certified copy ofthe document by registered post to thePerson's last known address;On the 7th (seventh) day following theday on which the notice or documentwas posted as recorded by a post office.By any other means authorised by the HighCourt; orIn accordance with the order of the HighCourt.By any other method allowed for thatPerson in terms of the following rows of thisTable.As provided for that method of delivery.Any naturalPersonBy handing the notice or a certified copy ofthe document to the Person, or to anyrepresentative authorised in writing toaccept service on behalf of the Person;On the date and at the time recorded ona receipt for the delivery.By leaving the notice or a certified copy ofthe document at the Person's place ofresidence or business with any otherPerson who is apparently at least 16(sixteen) years old and in charge of thepremises at the time;On the date and at the time recorded ona receipt for the delivery.

2Person to whomthe document isto be deliveredMethod of deliveryDate and Time of Deemed deliveryBy leaving the notice or a certified copy ofthe document at the Person's place ofemployment with any Person who isapparently at least 16 (sixteen) years oldand apparently in authority.On the date and at the time recorded ona receipt for the delivery.A company orsimilar bodycorporateBy handing the notice or a certified copy ofthe document to a responsible employee ofthe company or body corporate at itsregistered office or its principal place ofbusiness within South Africa;On the date and at the time recorded ona receipt for the delivery.If there is no employee willing to acceptservice, by affixing the notice or a certifiedcopy of the document to the main door ofthe office or place of business.On the date and at the time sworn to byaffidavit of the Person who affixed thedocument, unless there is conclusiveevidence that the document was affixedon a different date or at a different time.A partnership, firmor associationBy handing the notice or a certified copy ofthe document to a Person who isapparently in charge of the premises andapparently at least 16 (sixteen) years ofage, at the place of business of thepartnership, firm or association;On the date and at the time recorded ona receipt for the delivery.If the partnership, firm or association has noplace of business, by handing the notice ora certified copy of the document to apartner, the owner of the firm, or thechairman or secretary of the managing orother controlling body of the association, asthe case may be.On the date and at the time recorded ona receipt for the delivery.

Annexure BSummary of Reasons for Proposed Conversion to a Co-operative and Related Explanation1. Rational1.1. SAMRO is a ‘pre-existing’ company that was incorporated as a limited by guarantee companyunder the Companies Act of 1926. The current Companies Act came into effect on1 May 2011 and only recognises two types of companies, namely ‘profit companies’ and ‘nonprofitcompanies’ and no longer permits the continuation of limited by guarantee companies.1.2. There is some room to debate SAMRO’s current categorisation and uncertainties as to theavenues open to SAMRO, but the Companies Act provides pre-existing companies with anopportunity to harmonise their constitutions (being the current memorandum and articles ofassociation) with the Companies Act prior to 1 May 2013. In this regard, the Board hasconsidered adapting to the Companies Act by converting to a profit company with shares.However, after wrestling with the issues, the Board proposes that SAMRO rather try andconvert to a co-operative regulated by the Co-operatives Act and has proposed for adoption aconstitution for the co-operative. The reasons why the Board favours a co-operative have a lotto do with the challenges associated with adapting to a non-profit or profit company and theseare dealt with below.1.3. Ultimately, the Board favours pursuing a conversion to a co-operative because, even thoughthere are some associated uncertainties and negatives, it is of the view that a co-operative islikely to be better suited to the manner in which SAMRO conducts its business, and thearrangements between SAMRO and its members. Unfortunately, none of the models is aperfect fit and converting to a co-operative would require some adaptation and creates someuncertainties. It is cautioned that if the resolution to convert to a co-operative is adopted, theconstitution will have to be submitted to the Registar of Co-operatives for approval and it isuncertain as to what the Registrar of Co-operatives’ views will be and whether it will acceptthe conversion and proposed constitution.1.4. Supplementing this explanation for reference are:1.4.1. extracts of the key transitionary provisions and some extracts of further relevantprovisions of the Companies Act set out in Annexure C; and1.4.2. extracts of the Co-operatives Act providing for a conversion of a company to aco-operative set out in Annexure D.

21.5. It is noted that the proposed conversion of SAMRO to a co-operative is complex and thisexplanatory information should not be read on its own or in substitution for the considerationof the detailed terms of any proposed constitution and the related legislation, including theCompanies Act and the Co-operatives Act.2. Non-profit company challenges2.1. Non-profit companies are subject to the restrictions in Schedule 1 to the Companies Act (anextract of which is annexed hereto as Annexure C). The overriding requirement is that eachof its objectives must be either a public benefit object, or an object relating to cultural or socialactivities or communal or group interests.2.2. Currently SAMRO has profit as well as social and cultural objectives. Most importantly for themembers is the licensing of intellectual property and the collection of licence revenue and thepayment of royalties. In contrast, the principal purpose of a non-profit company is to pursue anon-profit object relating to a public, social or cultural group interest. There is a concern thatthe main objective of a non-profit company should not be to conduct a commercial enterpriseand distribute profits or income to its members.2.3. Further, a non-profit company is not permitted to, directly or indirectly, pay any portion of itsincome or transfer any of its assets to its incorporators, members, directors or personsappointing directors, except in certain restricted instances. While there is some room todebate the scope of the exceptions, there is a real concern that some of the currentdistributions and benefits provided by SAMRO to its members, including in particular, thepayment of the “non-royalty revenue” which members currently receive, may not be permittedif SAMRO becomes a non-profit company.2.4. Accordingly, while not impossible, it would be challenging to adapt SAMRO to a non-profitcompany and there is a concern that it will have to adopt new objects and the restrictions onpayments and transfers to members will limit SAMRO’s ability to continue providing some ofthe current payments and/or benefits to its members.3. Profit company challenges3.1. By way of overview, profit companies are generally not aimed at an association withmembership that can be terminated on notice and where the membership rights aredetermined with reference to patronage over time. They are principally aimed at investorsproviding capital (by subscribing for shares) in exchange for dividends and voting rights.

3While it may be possible to adapt SAMRO to a profit company, there are a number ofchallenging issues.3.2. Firstly, a profit company has to have issued shares which SAMRO currently does not have. Aconversion from the current membership (without share capital) will entail complex questionsrelating to the splitting of the rights constituting the shares from the rights relating to theadministered intellectual property. It needs to be clear whether a payment to a member will bea dividend or a contractual payment to a member as a creditor, because the governance,accounting and tax treatment differs. This is a difficult exercise.3.3. Secondly, any dividends declared by a profit company would be subject to dividendswithholding tax and the company would not be able to claim the distribution as a taxdeductable expense.3.4. Thirdly, offers of shares to the public are regulated. Private companies are prohibited fromoffering shares to the public. A public company can do so, but the offer must be accompaniedby a registered prospectus. In this context the public includes a section of the public. Thereare concerns that wide general offers or open invitations to authors or publishers to apply formembership may constitute an offer to the public. This will require the expensive and onerousprocess of preparing and registering a prospectus to be submitted to prospective members.3.5. Fourthly, the board of directors of a profit company is required to ensure adequateconsideration for the issue of any shares in a profit company. This requires a new member topay a subscription fee for a share in the company. This raises questions as to what isadequate consideration for the shares to be issued to future members, which could present abarrier to entry. It could also pose difficult issues regarding the valuation of shares andintellectual property rights.3.6. Fifthly, each class of shares has to have identical rights, which can vary in response to anyobjectively ascertainable facts. This can make it challenging to provide for the current rights ofthe three different classes of members that vary with reference to their different intellectualproperty, categorisation (e.g. as authors, publishers, proprietors and heirs and various subcategories),patronage and administration arrangements, without creating a multiplicity ofclasses of shares. Creating a multiplicity of classes of shares becomes complex andcumbersome to administer.3.7. Other issues include:

43.7.1. Having to deal with the issuing and cancellation of shares on the admission andtermination of membership which is likely to be administratively burdensome.3.7.2. Payments to members would be subject to compliance with section 46 of theCompanies Act, which requires inter alia that the Board apply the solvency andliquidity test as set out in the Companies Act.3.7.3. Appraisal rights are triggered in certain circumstances entitling objectingshareholders to require the company to repurchase their shares. These rights donot readily accord with the nature of the relationship between SAMRO and itsmembers to date and could raise complex questions as to the valuation of shareshaving regard to, amongst other things, the link to the administered intellectualproperty and the rights SAMRO and members have to terminate membership.3.8. Due to the difficulties presented with adapting SAMRO’s constitution and practices to eitherthat of a profit or a non-profit company under the Companies Act, the Board has consideredvarious other entity structures which may be better suited to SAMRO’s current businessmodel. The Board concluded that a co-operative appears to be more closely aligned withSAMRO’s current practice and arrangements with its members than that of a company(whether profit or non-profit) in terms of the Companies Act.4. Co-operative4.1. Essentially, a co-operative is an autonomous association of persons united voluntarily to meettheir common economic and social needs and aspirations through a jointly owned anddemocratically controlled enterprise, organised and operated on co-operative principles. Thisresonates closely with what SAMRO currently is. A co-operative has separate juristicpersonality and the proposed constitution provides for limited liability of the members.4.2. The co-operative model appears to be better suited to SAMRO’s current activities as it can beused to regulate intellectual property rights and provide services to members.4.3. In terms of the Co-operatives Act, a company that wishes to convert to a co-operative mustpass a resolution at a general meeting authorising the conversion. The company must thensubmit an application for conversion, in the prescribed form, to the Registrar of Co-operatives.The process is further discussed in paragraph 6 below.4.4. The advantage of SAMRO converting to a co-operative is that co-operatives are by theirnature designed to run for the benefit of and providing services to their members and

5facilitating the distribution of revenue linked to patronage. The governance of co-operatives isaimed at a close relationship between membership and patronage which generally correlateswith SAMRO’s relationship with its members and the payment of net royalties. The cooperativemodel accordingly permits membership to be regulated in a manner similar toSAMRO’s current arrangements with its members.4.5. In contrast to a non-profit company, a co-operative can have as it principal objective thepursuit of profits and provide benefits to its members.4.6. In contrast to a profit company, a co-operative can have membership without shares and therights of members of a co-operative are defined with reference to patronage. This avoidsmany of the challenges of trying to adapt to a profit company, including the following:4.6.1. A co-operative is not required to have shares, which would enable SAMRO tocontinue regulating membership substantially in accordance with its currentarrangements.4.6.2. There would be no restriction on offering membership to a wide range ofqualifying composers, publishers, performers or proprietors even where theyconstitute a section of the public.4.6.3. There is no requirement that subscription or other consideration (e.g. a joining ormembership fee) must be given for admission to membership (in addition to thequalifying requirement that members will be required to grant SAMRO rights toadminister the relevant intellectual property - generally by way of assignment oftheir performing rights).4.6.4. There is no express requirement that members of a particular class must haveidentical rights and the right are determined with reference to patronage, whichfacilitates adaption to the different types of administered intellectual property andthe categories of membership.4.6.5. There is no need to create a clear split between the rights constituting the sharesand the rights and obligations relating to the administration of intellectualproperty.4.7. Nevertheless, conversion to a co-operative will require some adaptation and there are somechallenges and potential disadvantages to the co-operative model that have been identified,including the following:

64.7.1. There is a risk that the Registrar of Co-operatives does not approve theconversion or the proposed constitution.4.7.2. In terms of the Co-operatives Act, members can only have one vote each andthis prevents the current weighted voting with reference to royalty payments(which will be an advantage to some and a disadvantage to others). It is,however, noted that there is a proposed amendment bill which currentlycontemplates permitting weighted voting in respect of certain co-operatives and itwould appear that SAMRO would qualify. For this reason, the proposedconstitution provides for such weighted voting, if and in the event that, it becomespermissible.4.7.3. The Co-operatives Act requires 5% (five percent) of the financial operatingsurplus to be retained as an indivisible reserve each year and the use must beregulated by the constitution. (It is noted that SAMRO’s current reserves will notfall into this statutory reserve). However, it is anticipated that the financialoperating surplus will not be large in light of it being determined after royaltypayments to members and in this regard see the explanation in paragraph 5below.4.7.4. Any financial operating surplus distributed to members must be allocated inproportion to the value of the transactions concluded with the co-operative, whichlimits flexibility in regard to such surpluses (which would be determined after allexpenses).4.7.5. As noted above, a bill amending the Co-operatives Act has been published forcomment. This creates uncertainty, as it is not clear when this bill will be adoptedinto law, or whether the bill will be passed in its current form or amended prior toits adoption.4.7.6. It is not familiar terrain for SAMRO and its members so there may be somelearning along the way.4.8. If SAMRO becomes a co-operative, its existing Memorandum of Incorporation will no longerbe appropriate and, in terms of sections 14 and 66 of the Co-operatives Act, it will be requiredto adopt a constitution complying with the Co-operatives Act. Accordingly, it is necessary toadopt a resolution to replace the current Memorandum of Incorporation of SAMRO with a newconstitution. The conversion will change members’ rights. If approved, members’ rights will be

7regulated by the new constitution (and rules) read together with the Co-operatives Act. Theproposed constitution updates the current Memorandum of Incorporation and adapts it to theCo-operatives Act. However, in preparing the constitution reference was made to the currentMemorandum of Incorporation and efforts were made to retain some of its essence. Most ofthe differences are unlikely to be viewed as material, for example, the constitution providesthat general meetings must be called on 15 business days’ notice (as opposed to the current21 calendar days) in order to correlate with default notice period under the Companies Act.Most importantly, it is intended that members will have substantially similar rights to royaltypayments. Some of the identified material key changes are set out below:4.8.1. Each member will only have one vote until it becomes legal to have weightedvoting.4.8.2. The Co-operatives Act requires 5% (five percent) of the financial operatingsurplus to be retained as an indivisible reserve each year.4.8.3. ‘Non-Royalty Payments’ are replaced by ‘Grant of Rights Payments’ which areanticipated to be substantially similar.4.8.4. Financial operating surplus distributed to members must be allocated inproportion to the value of the transactions concluded with the co-operative(however see explanation in paragraph 5).4.8.5. Provision has been made for the possible transfer of interests in the administeredintellectual property between members.4.8.6. On the winding-up of SAMRO, residual assets shall be distributed to members inthe proportion to the aggregate ‘operating surplus payments’ received by eachmember over the period of 5 (five) financial years immediately prior to suchwinding-up.However, the Board of SAMRO regards the advantages of a co-operative model as justifyingthese changes.5. Financial operating surplusFinancial operating surplus is calculated as the net profit after taxation for the group as reflected inthe statement of comprehensive income in accordance with the group’s accounting policies asreflected in the group’s annual financial statements.

86. Process of conversion to a co-operative6.1. In terms of section 66 of the Co-operatives Act, a company that wishes to convert to a cooperativemust pass a resolution at a general meeting authorising the conversion of thatcompany into a co-operative of a particular kind and form. The general meeting must alsoadopt a resolution approving the proposed co-operative constitution.6.2. Once the resolution authorising the conversion has been passed, the company must submitan application for conversion, in the prescribed form, to the Registrar of Co-operatives.6.3. The Registrar of Co-operatives must consider the application and must approve suchapplication if he/she is satisfied that the conversion of the company into a co-operative, andthe new constitution, are not inconsistent with the Co-operatives Act.6.4. If the Registrar of Co-operatives approves the application, he/she must ensure that:6.4.1. the name and other particulars of the company are entered in the register of cooperatives;and6.4.2. the new constitution is registered and that a certificate reflecting the incorporationas a co-operative be issued.6.5. The conversion becomes effective as of the date on which the co-operative is entered on theregister of co-operatives. Section 68 of the Co-operatives Act provides that the effects of theconversion from a company to a co-operative are as follows:6.5.1. the company ceases to exist and is converted into a co-operative;6.5.2. the persons who at the date of conversion of the company were members of thecompany accordingly become members of the co-operative;6.5.3. all assets, rights, liabilities and obligations of the company vest in the cooperative;and6.5.4. subject to the Co-operatives Act, the constitution binds the co-operative and eachmember to the same extent as if it had been signed by each member.

Annexure CEXTRACTS OF PROVISIONS OF THE COMPANIES ACT, 2008SCHEDULE 1Provisions concerning non-profit companiesObjects and policies1. (1) The Memorandum of Incorporation of a non-profit company must—(a)set out at least one object of the company, and each such object must be either—(i)a public benefit object; or(ii)an object relating to one or more cultural or social activities, or communal orgroup interests; and(b) be consistent with the principles set out in sub-items (2) to (9).(2) A non-profit company—(a)must apply all of its assets and income, however derived, to advance its statedobjects, as set out in its Memorandum of Incorporation; and(b)subject to paragraph (a), may—(i)acquire and hold securities issued by a profit company; or(ii)directly or indirectly, alone or with any other person, carry on any business,trade or undertaking consistent with or ancillary to its stated objects.(3) A non-profit company must not, directly or indirectly, pay any portion of its income or transferany of its assets, regardless how the income or asset was derived, to any person who is orwas an incorporator of the company, or who is a member or director, or person appointing adirector, of the company, except—(a)as reasonable—(i)remuneration for goods delivered or services rendered to, or at the directionof, the company; or

2(ii)payment of, or reimbursement for, expenses incurred to advance a statedobject of the company;(b)as a payment of an amount due and payable by the company in terms of a bona fideagreement between the company and that person or another;(c)as a payment in respect of any rights of that person, to the extent that such rights areadministered by the company in order to advance a stated object of the company; or(d)in respect of any legal obligation binding on the company.(4) Despite any provision in any law or agreement to the contrary, upon the winding-up ordissolution of a non-profit company—(a)no past or present member or director of that company, or person appointing adirector of that company, is entitled to any part of the net value of the company afterits obligations and liabilities have been satisfied; and(b)the entire net value of the company must be distributed to one or more non-profitcompanies, registered external non-profit companies carrying on activities within theRepublic, voluntary associations or non-profit trusts—(i)having objects similar to its main object; and(ii)as determined—(aa)in terms of the company’s Memorandum of Incorporation;(bb)by its members, if any, or its directors, at or immediately before thetime of its dissolution; or(cc)by the court, if the Memorandum of Incorporation, or the members ordirectors fail to make such a determination.(5) The Commission may apply to the court, on behalf of a non-profit company, for adetermination contemplated in sub-item (4)(b)(ii)(cc) if the non-profit company has—(a)no remaining members or directors; and(b)failed to—

3(i)make a determination contemplated in sub-item (4)(b)(ii)(bb); or(ii)apply to the court for such a determination.(6) Incorporation as a non-profit company in terms of this Act, or registration as an external nonprofitcompany in terms of this Act, and compliance by either with the provisions of this Actdoes not necessarily qualify that non-profit company, or external non-profit company, for anyparticular status, category, classification or treatment in terms of the Income Tax Act, 1962(Act No. 58 of 1962), or any other legislation, except to the extent that any such legislationprovides otherwise.(7) Each voting member of a non-profit company has at least one vote.(8) The vote of each member of a non-profit company is of equal value to the vote of each othervoting member on any matter to be determined by vote of the members, except to the extentthat the company’s Memorandum of Incorporation provides otherwise.(9) If a non-profit company has members, the requirement in section 24(4) to maintain asecurities register must be read as requiring the company to maintain a membership register.

4SCHEDULE 5Transitional ArrangementsMemorandum of Incorporation and Rules4. (1) Every pre-existing company-...(d)limited by guarantee, other than in terms of section 21 of the previous Act-(i)may file a notice within 20 business days after the general effective date electingto become a profit company, as from the general effective date, and to change itsname in so far as required to comply with section 11(3); or(ii)if it fails to file a notice in terms of subparagraph (i), is deemed to have amendedits Memorandum of Incorporation as of the general effective date to expresslystate that it is a non-profit company, and have changed its name in so far asrequired to comply with section 11(3).

Annexure DEXTRACT OF RELEVANT PROVISIONS OF THE CO-OPERATIVES ACT, 2005CHAPTER 1DEFINITIONS, PURPOSE AND APPLICATION OF ACTCompliance with co-operative principles3. (1) For the purposes of this Act, a co-operative complies with co-operative principles if:(a)membership of that co-operative is open to persons who can use the services of that cooperativeand who are able to accept the responsibilities of membership;(b)in the case of a primary co-operative, each member has only one vote;(c)to the extent feasible, members provide the capital required by that co-operative;(d)the return paid on member capital is limited to the maximum percentage fixed in accordance withthe constitution of that co-operative;(e)at least five per cent of the surplus is set aside as a reserve in a reserve fund and is not divisibleamongst its members.(f)it provides education and training to its members and employees.(2) Despite subsection 1(a), the constitution of a co-operative may restrict the persons eligible formembership if the restriction:(a)reasonably relates to the business of a co-operative set out in its constitution and to thecommercial ability of a co-operative to provide services to prospective members; and(b)does not constitute unfair discrimination.(3) The constitution of a secondary or tertiary co-operative may provide that the members have more thanone vote: Provided that in the case of a secondary co-operative no member shall have more thanfifteen per cent of the vote of all the members of the co-operative.

2CHAPTER 2REGISTRATION, CONSTITUTION, POWERS OF CO-OPERATIVE AND REGISTERED OFFICE ANDRECORD KEEPING BY A CO-OPERATIVEProvisions for all co-operatives14. (1) The constitution of a co-operative must include:(a)the name of the co-operative;(b)whether it is a primary co-operative, a secondary co-operative, or a tertiary co-operative;(c)the main objectives of the co-operative;(d)a description of the business of the co-operative, including any restrictions on the business ofthe co-operative;(e)a provision stipulating that each member has one vote in all meetings of the co-operativeexcept in the case of secondary or tertiary co-operatives;(f)the minimum period of notice of general meetings;(g)the place where the registered office of the co-operative is located;(h)the minimum and maximum number of directors;(i)the term of office of directors, which may not be more than four years, and whether a directormay be re-appointed for a second or further term of office;(j)the powers and restrictions on the directors of the co-operative to manage the business of theco-operative;(k) the requirements for membership of the co-operative, subject to section 3(2);(l)the requirements for withdrawal of membership of a co-operative, including the necessaryperiod for the notice of withdrawal and repayment of shares, and any provisions relating to theliability of a member for a specified period after the date of withdrawal, subject to section 23;(m)a provision relating to the manner in which a portion of the surplus that is transferred as areserve to a reserve fund in accordance with section 3(e), may be utilised;

3(n)provision for the distribution of the assets of the co-operative on its dissolution;(o)the financial year of the co-operative;(p)procedures for the application of membership to the co-operative that should be in accordancewith co-operative principles;(q)a provision for the rights and obligations of members;(r)a provision for the transfer of membership, member loan and membership share;(s)the conditions and processes for the termination of membership;(t)the conditions and processes for the suspension of membership;(u)the structure for decision making whereby members can participate in decision-makingprocesses in a democratic and participatory manner;(v)provisions for annual general meetings and special general meetings, including the manner inwhich such meetings are convened, the necessary periods of notice, the election of achairperson and provisions for the proposal of resolutions that should ensure democraticdecision making;(w)a provision for the period of notice for general meetings and must state the conditions andprocesses to be followed when requesting a general meeting;(x)a provision for the tabling and adoption of resolutions;(y)the determination of quorums for general meetings and must ensure that the quorum providesfor adequate member control and decision making;(aa)a provision relating to the manner in which voting may be conducted;(bb)the conditions under which a resolution in lieu of a meeting may be held and passed;(cc)the conditions and processes for requesting a general meeting;(dd)a provision for the appointment of directors, on condition that only members may beappointed as directors;(ee)the conditions for vacation of office by directors and the filling of any vacancies in amanner that ensures democratic accountability to the members;

4(ff)the conditions and processes for the appointment of the chairperson, vice-chairpersonand acting chairperson; and(gg)the conditions under which a board of directors may delegate functions to a director orcommittee or manager;(hh)a provision relating to the manner in which a portion of the surplus that is nottransferred to the reserve fund, may be utilised.(2) The constitution of a co-operative may include:(a)the further objectives of the co-operative;(b)the amount of business allowed with non-members, subject to the provisions of this Act;(c)in the case of a co-operative having members in more than one region, the holding of regionalgeneral meetings and a conference of delegates;(d)a provision for a member to appoint a proxy to attend and vote at a general meeting on thatmember’s behalf, or for postal votes: Provided that no person may act as a proxy for more than20 per cent of the members entitled to vote at a meeting, or for such lesser percentage ofmembers stipulated in the constitution of the co-operative;(e)provision for people who want to provide support to the co-operative without themselvesbecoming members to be appointed as associate members;(f)a provision relating to the manner in which the supervisory committee may be constituted;(g)the conditions under which the board of directors may delegate functions to a director,committee or manager;(h)provisions regulating the appointment of a general manager or executive manager by the boardof directors;(i)provision to make rules consistent with the constitution and this Act concerning the holding ofmeetings or any other matter of procedure; and(j)provision for the settlement of disputes between members of the co-operative, or between amember of the co-operative and the co-operative itself.

5CHAPTER 8AMALGAMATION, DIVISION, CONVERSION AND TRANSFERApplication to convert company into co-operative66. (1) A company that intends to conduct its affairs according to co-operative principles and that passed aresolution at a general meeting that authorises the conversion of that company into a co-operative ofa particular kind and form, may apply to the registrar on the prescribed form to be converted.(2) An application referred to in subsection (1) must be accompanied by:(a)a sworn statement by a person who acted as the chairperson of the general meeting referred toin subsection (1):(i)that the meeting has passed a resolution authorising the conversion of the company intoa co-operative for the required kind and form;(ii)that the meeting was specially convened to consider the resolution; and(iii)that the chairperson has satisfied himself or herself that proper notice of the meeting wasgiven to the members of the company;(b)a copy of the resolution and an explanation of the reasons for the proposed conversion;(c)proof of the company’s registration under any law as a company;(d)two certified copies of the company’s memorandum and articles of association;(e)two copies of either a proposed new constitution in terms of this Act or a proposed amendmentof the memorandum and articles of association of the company bringing the memorandum andarticles into line with the provisions of this Act;(f)a certified copy of the company’s latest audited annual financial statements;(g)a schedule containing the full names and addresses of the members of the company, thenumber of shares and class of shares held by each one of them in the company, and, ifapplication is made to convert the company into a co-operative, also the occupations of themembers;(h)a schedule containing the full names and addresses of the directors of the company;

6(i)a schedule stating the particulars and extent of the company’s interest in any other company;and(j)the prescribed application fees.(3) A company may instead of a document referred to in subsection (2)(e) give the registrar anundertaking in writing that if it is converted into a co-operative it will, within one year of its conversion,replace its memorandum and articles of association with a constitution in terms of this Act or willotherwise amend its memorandum and articles of association so as to bring them into line with theprovisions of this Act.Consideration of application67. (1) An application referred to in section 66 must be submitted to the registrar together with any such otherdocuments as he or she may require.(2) The registrar must consider the application submitted to him or her in terms of subsection (1), and ifhe or she is satisfied that the provisions of this Act have been complied with in respect of theapplication and that:(a)the conversion of the company into a co-operative;(b)the incorporation of the proposed co-operative; and(c)the company’s memorandum and articles of association, with due regard to the proposedamendment, or the proposed new constitution, if such proposed amendment or newconstitution accompanied the application are not inconsistent with this Act, he or she mustapprove the application, or if he or she is not so satisfied, he or she may conditionally approveor reject the application.(3) If the registrar approves or conditionally approves an application, the registrar must ensure that:(a)the name and other particulars of the company are entered in the register of co-operatives; and(b)the memorandum and articles of association or new constitution, as the case may be, areregistered conditionally or unconditionally, and a certificate is issued in duplicate that thecompany has been incorporated as a co-operative in terms of this Act and that thememorandum and articles of association or new constitution, as the case may be, have beensubmitted in the manner contemplated in this Act.

7(4) One copy of the certificate and of the memorandum and articles of association or new constitution, asthe case may be, must be sent to the applicant and the other copy must be retained within the officeof the registrar.Effects of incorporation of company as co-operative68. As from the date on which the entry is made in terms of section 67(3)(a) in the register of co-operatives:(g)the company is converted into a co-operative;(h)the company ceases to exist;(i)if a new constitution was not substituted, the memorandum and articles of association of thecompany are considered to be the constitution of a co-operative;(j)the persons who at the date of conversion of the company were members of the companyaccordingly become members of the co-operative;(k)all assets, rights, liabilities and obligations of the company vest in the co-operative; and(l)the constitution or the memorandum and articles of association, as the case may be, bind the cooperativeand each member to the same extent as if it had been signed by each member, subjectto this Act.Registrar to give notice of conversion to Registrar of Companies70. The registrar must give notice of any conversion of a company into a co-operative in terms of this Act andof any default referred to in section 69(2) to the Registrar of Companies mentioned in section 7 of theCompanies Act, 1973 (Act No. 61 of 1973).

Annexure ESALIENT FEATURES OF THE PROPOSED SAMRO CO-OPERATIVE LIMITED CONSTITUTION1. Introduction1.1. It is proposed that the constitution annexed to this notice as Annexure A (“ProposedConstitution”) be adopted as part of the conversion of SAMRO from a company to a cooperativein terms of the Co-operatives Act. The Proposed Constitution has been preparedwith reference to SAMRO’s current Memorandum of Incorporation (being its currentMemorandum and Articles of Association) (“Current Constitution”) but has been adapted tothe co-operative model and revised and updated. As of the conversion the current membersof SAMRO as a company will become the members of SAMRO as a co-operative.1.2. The terms defined in the Proposed Constitution shall have the same defined meaning whenused in these salient features. This salient features document only highlights certain aspectsof the Proposed Constitution in a summarised form and is not intended to be a comprehensiveor complete reiteration of all the terms of the Proposed Constitution and is provided forinformation purposes only and should not be regarded as a substitute for reading theProposed Constitution, which should be read in its entirety for a full appreciation thereof. Thisdocument does not constitute legal or tax advice and if members are in doubt, they shouldconsult their tax adviser, attorney or other professional advisor.1.3. It is noted that subsequent to consultations with members changes were made to the priordraft constitution provided to members and, accordingly, the Proposed Constitution differsfrom such prior draft constitution. Accordingly, the salient terms thereof set out below differfrom the prior salient terms provided to members.2. Form of Co-operative [3]The Proposed Constitution is that of a business undertaking formed as a Primary Co-operative withseparate juristic personality and limited liability in terms of the provisions of the Co-operatives Act. APerson is not, solely by reason of being a Member or a Director of the Co-operative, liable for anyliabilities or obligations of the Co-operative.3. Objectives [5]3.1. The principle objects of the Co-operative are to provide services to its Members and tofacilitate the development of the community of its Members and the development of

1Intellectual Property and the enforcement of Intellectual Property Rights including, withoutlimitation, various ancillary and related objects.3.2. The ancillary objects essentially include, amongst others:3.2.1. to hold, control, administer, make use of, commercialise, exercise and/or enforceAdministered IP Rights on behalf of, or for the benefit of, Members, by way ofcontract or otherwise, both inside and outside South Africa;3.2.2. to acquire by way of Assignment or by means of licence or other means therights to Administer the Administered IP Rights;3.2.3. to contract with Affiliates, Contracting Participants, Section 14 Associates andother Persons other than Members in respect of the Administration of IP Rightsof such ‘non-Members’ and/or take Assignment of their Intellectual Property orany related rights;3.2.4. to make available, authorise, licence or grant permission for the use orcommercial exploitation of any Administered IP Rights and to collect and receiveand give effectual discharges for all royalties, fees and other monies payable inconnection the Administered IP Rights;3.2.5. to provide support for the social wellbeing of Members and the national arts andother social and cultural objectives in the Principal Territory, provided that theamount to be allocated by the Board for these objectives in any financial yearmay not exceed 8.5% of the gross Licence Revenue received in the financialyear preceding the allocation; and3.2.6. to do all such other things as are in the opinion of the Directors incidental orconducive to the attainment of the objects.3.3. There are a number of other objects intended to ensure that the Co-operative has the capacityand power to directly or indirectly to pursue its business and carry out its functions and theflexibility to change and adapt to circumstances.4. Powers and Capacity of the Co-operative [6]The Co-operative has all the powers and capacity of a natural person to pursue its objectives.

25. Amendments to the Constitution [7]Subject to the exception of correcting errors, the Proposed Constitution may only be amended bySpecial Resolution.6. Governance Rules [8]The Board may make, amend or repeal Governance Rules regulating inter alia the governance of theCo-operative, the Administration of the Administered IP Rights, the calculation and payment of allpayments, the attribution of Licence Revenue to Administered IP Rights and social and culturalactivities and benefits. Governance Rules or any alterations thereto require approval by OrdinaryResolution, with the exception of rules regarding the determination, calculation, apportionment andmode and times of payment, of the Operating Surplus Payments, which do not require Member’sapproval and shall have immediate effect. The exception is substantially similar to that contemplatedin article 52 of the Current Constitution.7. Membership [9 - 12]Qualification and Application for Membership7.1. All existing members will qualify and be Members of the Co-operative.7.2. In order for a Person to be considered for qualification for Membership, the Person vestedwith IP Rights (prior to Assignment thereof to the Co-operative) must apply in writing to theBoard for Membership. The Applicant must be an Author, Publisher, Performer or Proprietor(or a Permitted Successor) in order to be eligible for consideration. Secondly, the Applicantmust have signed an Administration of IP Rights Agreement with the Co-operative conformingwith the requirements set out in the Proposed Constitution in terms of which such Applicantagrees to appoint the Co-operative to Administer its Administered IP Rights. Finally, theAdministered IP Rights forming the subject of the Administration of IP Rights Agreement musthave started earning Licence Revenue.Rights, privileges and obligations of Membership7.3. Members shall have the rights, privileges, and be subject to such obligations as set out in theProposed Constitution and the Governance Rules, and as the Board may determine from timeto time. In addition, a Full Member who meets the required qualifications shall be eligible forappointment as a Director.

3Election to Associate and Full Membership7.4. Members shall be eligible to be elected by the Board for conversion of their Membership intoAssociate Membership or Full Membership if, in the Board’s view, the Member qualifies forsuch a change in Membership, in accordance with the qualifications set out in theMembership Rules.7.5. If the Board has not elected to convert a Candidate Member to an Associate Member or FullMember within 2 (two) years after the Candidate Member (or in the case of a PermittedSuccessor, its Predecessor) became a Candidate Member, the Membership of a CandidateMember shall automatically terminate. The Board may by way of a resolution extend themaximum duration of a Candidate Member’s Membership in the Co-operative beyond theinitial 2 (two) years, and multiple extensions are permitted.7.6. A Person who is a Member solely in relation to the Administration of Needletime Rightscannot qualify for promotion to Associate Membership or Full Membership.Termination7.7. Membership shall terminate on the following events:7.7.1. if a Candidate Member is not elected to Associate Membership or FullMembership within the required time period;7.7.2. by notice by either the Member or the Co-operative;7.7.3. the termination of the Co-operative’s Administration Rights (including as a resultof the cancellation or termination of the Administration of IP Rights Agreementwith the relevant Member) or the lapse of Member’s Administered IP Rights;7.7.4. the death of a Member that is a natural person, subject to the possible transfer ofMembership to an Heir; and7.7.5. the insolvency or winding-up of a Member.7.8. Any Member may terminate their Membership by giving Written notice to the Co-operative notless than 3 (three) calendar months’ prior to 30 April of any year and, if such notice is dulyreceived by the Co-operative, the Member’s Membership and participation in the Co-operativeshall cease with effect from 30 April of the following year. The Board may, in its absolute

4discretion resolve that such termination of the Membership shall take effect on an earlier orlater date.7.9. Where the Board terminates the Membership of any Member, the Member has a right todemand that the Board’s decision to terminate its Membership be approved by an OrdinaryResolution of the Members.7.10. On the death of a Member, the deceased Member’s Membership shall terminate and may notbe transferred or ceded, but the Heir(s) of a deceased Member may be elected toMembership and the Deceased Member’s Interest may be transmitted or transferred to theHeir(s). The Co-operative shall, in so far as is lawful, retain all IP Rights vested in the Cooperativeand continue to Administer the deceased Member’s Administered IP Rights until theearlier of the transfer of the Deceased Member’s Interest to an Heir(s) or, the 31 st (thirty first)day of December in the 7 th (seventh) year immediately following the year in which the Memberdied (“Transitionary Period”). From the date of death of any Member, until the earlier of thedate on which a Deceased Member’s Interest is transferred to the Heir(s) and the end of theTransitionary Period, any Payments to which the Member would, if living, have been entitledshall be made to the executor or other personal representative of the Member’s deceasedestate, or to any lawful Heir(s) of such Member in the event that the estate has been woundup.If the Deceased Member’s Interest is not transferred to an Heir by the end of theTransitionary Period, the Administration of IP Rights Agreement shall terminate, resulting inany Administered IP Rights, in respect of any Deceased Member’s Interest that has not beentransferred to an Heir, vested in the Co-operative reverting to the deceased Member’s estate,or to any lawful Heir of such Member in the event that the estate has been wound-up.7.11. If a Member, being a juristic person, is liquidated, placed under administration or resolves or isordered to begin Business Rescue proceedings, the Member’s Membership shall terminate,subject to the Co-operative retaining all IP Rights vested in the Co-operative and continuing toAdminister the Member’s Administered IP Rights for a period ending on the 31 st (thirty first)day of December in the 7 th (seventh) year following the year in which the liquidation,administration or Business Rescue proceedings commenced (“Run-out Period”). AnyPayments to which such juristic person would have been entitled in accordance with thePayment Rules in respect of the Run-out Period, shall be made to the liquidator, administratoror Business Rescue Practitioner. If, during the Run-out Period, the former Member comes outof Business Rescue or its administration is terminated without the Member being liquidated,then the Board may resolve that the former Member’s Membership shall revive and revert tonormal.

57.12. On the effective date of the termination of a Member’s participation as a Member in the Cooperative,the Administration of IP Rights Agreement shall terminate and any IP Rights of theMember vested in the Co-operative must be assigned to the Member or in accordance withthe directions of the liquidator, administrator or Business Rescue Practitioner, as the casemay be. Further, on the termination of a Member’s Membership, the Co-operative shall not beliable for any claims whatsoever, arising from the use or commercialisation nor any failure touse or commercialise the Administered IP Rights and no further Royalty Payments, Grant ofRights Payments or Operating Surplus Payments shall be made to the Member.8. Prohibition on transfer of Membership [11]8.1. The transfer of Membership and interests in Administered IP Rights is prohibited. However, aMember’s interests in the Member’s Administered IP Rights and in the Administration of IPRights Agreement, may be transferred to Heirs or to another Member, subject to certainrequirements and in accordance with the Proposed Constitution. The Membership Rules setout the manner in which the Membership status of the acquiring Member is determined.8.2. The prohibition on the transfer of Membership shall be deemed to be an original incidence ofMembership and limiting the rights relating to Membership in the Co-operative and anypurported transfer counter to the restrictions shall be void9. Financial Statements and Audit [14 & 15]The Co-operative shall prepare its financial statements in accordance with generally acceptedaccounting practices, and shall have its annual financial statements audited. The Board must ensurethat the affairs of the Co-operative are audited annually.10. General Meetings [16]10.1. A General Meeting shall be called by at least 15 (fifteen) Business Days' notice.10.2. A Member must be Present in person or by proxy in order to be included in the quorum and tobe heard and vote at the General Meeting, and as such, attendance by means of ElectronicCommunication is prohibited. The quorum for commencement of the General Meeting shall be100 (one hundred) Members, which must include at least 3 (three) Full Members.10.3. Every resolution of Members is either an Ordinary Resolution (requiring the support of morethan 50% (fifty percent) of the Voting Rights exercised thereon) or a Special Resolution(requiring the support of at least 75% (seventy five percent) of the Voting Rights exercisedthereon).

611. Voting rights [16]11.1. All Members are entitled to vote at all General Meetings and may appoint a proxy to attend ameeting and vote on their behalf.11.2. If a vote is taken on a show of hands, each Member entitled to vote that is Present shall haveonly 1 (one) vote, and a proxy shall have only 1 (one) vote, irrespective of the number of theMembers which he/she represents.11.3. Conversely, if a vote is taken on a poll, each Member entitled to vote that is Present at theGeneral Meeting shall have only 1 (one) vote, and a proxy shall have 1 (one) vote for each ofthe Members which he/she represents. This is an important change as the Co-operatives Actonly permits 1 (one) vote per member.11.4. However, if at any time in future the Co-operatives Act is amended and the requirement thateach member of a Primary Co-operative may only have 1 (one) vote is removed, the aboveshall not apply and each Member entitled to vote who is Present shall on a poll have thenumber of votes equal to the greater of 1 (one) vote, and the figure in South African Rand(rounded down to the nearest whole Rand) of the aggregate Territory Performing RoyaltyPayments to the Member during the completed Payment Cycle immediately preceding theGeneral Meeting at which the voting takes place, provided that the maximum number of votesexercisable by any one Member shall not exceed 2% (two percent) of the total Voting Rightsof all Members having the right to attend and vote at a General Meeting.12. Directors [19 – 25]12.1. Subject to the Co-operatives Act and the Proposed Constitution, the business and operationsof the Co-operative shall be conducted and managed by the Board, who may exercise allsuch powers of the Co-operative in pursuing its objectives as are not required to be exercisedby the Co-operative in a General Meeting. The minimum number of Directors shall be 4 (four)and the maximum 13 (thirteen). Only Full Members who are competent may serve asDirectors. Not less than one-half of the number of Directors in office shall be Authors(including the representative of a juristic person that is an Author but excluding an Author’sHeir) and not less than one-third shall be Publishers (including the representative of a juristicperson that is a Publisher).12.2. Directors serve for a maximum period of 4 (four) years subject to rotation, whereby25% (twenty five percent) of the Directors (rounded to the nearest whole number), shall retirefrom office at each Annual General Meeting. Each retiring Director shall be eligible for re-

7election. The Board shall have the power, however, to fill any casual vacancies which mayarise, subject to confirmation at the next General Meeting.12.3. The Directors or members of Board committees shall be entitled to such remuneration for theirservices as may have been determined from time to time by Ordinary Resolution within theprevious 2 (two) years, as well as all reasonable expenses properly and necessarily incurredby them in and about the business of the Co-operative.12.4. Round robin (written) resolutions of the Board are permitted.12.5. Provision is made for disclosure by a Director of an interest he/she has in a materialcontract/transaction with the Co-operative, which disclosure must be recorded in the minutes.Subject to certain exceptions, a Director disclosing an interest shall recuse himself/herselffrom voting on the matter.13. Administration of IP Rights [29]13.1. Subject to the exceptions below, in order to qualify as a Member after the Conversion Date, aPerson must conclude an Administration of IP Rights Agreement with the Co-operative,providing for the Administration by the Co-operative of at least that Member’s WorldwidePerforming Right in its Works of Music (unless the Applicant is applying solely in respect ofthe Administration of Needletime Rights).13.2. The Board may determine:13.2.1. that a Member may be excused from including any Grand Rights in theAdministered IP Rights; and13.2.2. that a Member may only include Administered IP Rights in respect of a reducedterritory, for example, the Principal Territory only.13.3. In addition to the Administration of IP Rights Agreement, Members may enter into anagreement providing for the Administration by the Co-operative of their WorldwideReproduction Rights and Needletime Rights in South Africa. The Co-operative shall beentitled to, in so far as is possible, Assign or license the Administered Needletime Rights,together with the Administered IP Rights, to the Needletime Trust or another entity controlledby the Co-operative. A Person may become a Member of the Co-operative solely in respect ofNeedletime Rights, in which instance that Member will not be required to include theirPerforming Rights or be a Member of the Co-operative also in respect of any of the othercategory of Administered IP Rights.

813.4. In so far as it is lawfully possible, Members will be required to Assign all of the relevantAdministered IP Rights to the Co-operative, failing which, the Applicant will be required togrant the Co-operative an exclusive licence to Administer the relevant IP Rights, provided thatthe Board may determine in relation to any or all Applicants or existing Members, that it ispermissible for such Persons to not Assign all or part of their IP Rights to be Administered bythe Co-operative, but to instead grant to the Co-operative any other right or mode of authorityin relation to such IP Rights (or certain of such IP Rights), which right or authority facilitatesthe Administration of such IP Rights by the Co-operative, and which is acceptable to theBoard.13.5. Unless agreed otherwise to the extent expressly permitted, the Administration of IP RightsAgreement shall incorporate the provisions of the Proposed Constitution and the GovernanceRules.13.6. No Member shall be at liberty to cede or delegate any of its rights or obligations in respect ofits Administered IP Rights, or the Administration of its Administered IP Rights by the Cooperative,or to alienate or exercise the Administration Rights granted to and/or vested in theCo-operative by the Member, or controlled by the Co-operative in connection with itsMembership, or by this Proposed Constitution required to be so vested or controlled, withoutthe authorisation of the Co-operative.13.7. The Co-operative may, subject to certain exceptions, Assign, cede and delegate its rights andobligations under the Administration of IP Rights Agreement, or alienate or further Assign anyAdministration Rights and the Administered IP Rights Assigned to it for the purpose ofAdministration to (a) a third party entity wholly-controlled by the Co-operative and formedsolely for purposes of Administering the Administered IP Rights, without the Member’sconsent, or (b) with the approval of the Members by way of Special Resolution, to a trust orcompany established for the purpose of Administering such Administered IP Rights, providedall the rights of the Members are not generally materially negatively affected.14. Payments to Members [30 & 31]14.1. Subject to the Proposed Constitution, the Co-operative shall make Royalty Payments, Grantof Rights Payments and Operating Surplus Payments to Members periodically as set out inthe Payment Rules (and discussed further below).

9Royalty Payments and Grant of Rights Payments14.2. Subject to the Proposed Constitution, Members are entitled to receive a Royalty Paymentwhich is an amount equal to the Licence Revenue received by the Co-operative during therelevant financial year less the Permitted Royalty Deductions, as reasonably determined bythe Board, applying the Payment Rules with reference to the Licence Revenue attributed tothe respective Member’s Administered IP Rights. Royalty Payments shall be made at suchtimes as are determined by the Board in accordance with the Payment Rules and thepayment timetable published by the Board from time to time.14.3. The Co-operative shall make an additional Grant of Rights Payment to those CandidateMembers who were paid (or were allocated for payment) Royalty Payments in respect of theirAdministered Performing Rights in the preceding financial year, and to all Full Members andAssociate Members (regardless of whether or not Royalty Payments were paid (or wereallocated for payment) to them in respect of their Administered Performing Rights, in anamount reasonably determined to by the Board equal to any net Non Licence Revenue (ifany) after settling or providing for any expenses or liabilities not included in the PermittedRoyalty Deductions deducted from the Licence Revenue and providing for any other amountthe Board reasonably regards as required or desirable for the operations or objectives of theCo-operative or for the prudent management of the Co-operative having regard to, inter alia,any relevant Payment Rules.14.4. The Co-operative shall be entitled to deduct Permitted Royalty Deductions from the LicenceRevenue of the Co-operative, being such amounts as are determined by the Board to berequired to settle or provide for, inter alia, expenses and cultural and social objectives inaccordance with the Payment Rules (provided that deductions in respect of such social andcultural objectives may not exceed the maximum percentage of the Licence Revenue asstipulated by the guidelines of CISAC (failing which, its successor body) from time to time).14.5. The Licence Revenue generated by Needletime Rights, any deductions and the RoyaltyPayments payable to Needletime Rights Members shall be regulated by, inter alia, theprovisions of the Needletime Trust Deed.Operating Surplus Payments14.6. The Operating Surplus of the Co-operative in respect of each financial year shall bedetermined by the Board and, the balance which is not transferred to the Statutory ReserveFund, shall be allocated and credited or paid to Members, as an Operating Surplus Payment.Such payments shall be determined in accordance with the Co-operatives Act in proportion to

10the value of the transactions conducted by a Member with the Co-operative as determined orattributed by the Board in applying the Payment Rules, the Administration of IP RightsAgreement being regarded as an ongoing transaction with the Co-operative. The CooperativesAct requires the Operating Surplus to be regulated in this manner.15. Reserve Fund [33]15.1. The Board must establish the Statutory Reserve Fund as required by section 46 of the CooperativesAct, into which it must deposit at least 5% (five percent) of the Operating Surplusduring a financial year. The 5% (five percent) of Operating Surplus deposited into suchreserve may be applied for any purpose that the Board may determine (including for anysocial or educational purpose).15.2. The reserve funds of the Co-operative in existence when it was a company immediately priorits conversion to a Co-operative shall continue as reserve funds but shall not form part of theStatutory Reserve Fund or be subject to any restrictions applicable to such Statutory ReserveFund.15.3. In addition, the Directors may at any time set aside such sum as they think proper as anaddition to such pre-conversion reserve funds or as additional reserve funds with full power toemploy the assets constituting such fund or funds in the business of the Co-operative, or toinvest the same.16. Members’ Duties and Suspension of Membership [35]16.1. Every Member shall refrain from doing anything likely to limit or prejudice the success orinterests of the Co-operative, and shall co-operate and render all reasonable assistance infurthering the interests of the Co-operative.17. Possibility of Contracting Participants (Third Party Agreements) [36]The Proposed Constitution provides for the possibility of the Board contracting with any Person orAffiliate in relation to the Administration of such Person’s/Affiliate’s IP Rights by the Co-operative onlyon a contractual basis, without such Person (“Contracting Participant”) becoming a Member of theCo-operative and may adopt Governance Rules regulating such Administration and/or establishstandard terms and conditions that may be applied to such arrangements. Such ContractingParticipants would not be Members and therefore are not able to vote at General Meetings.

1118. Winding-up Rights [39]18.1. The Co-operative may be would up voluntarily by a Special Resolution.18.2. On winding-up or deregistration of the Co-operative, subject to Insolvency Law, allAdministration of IP Rights Agreements shall immediately terminate and IP Rights vested inthe Co-operative will revert to the Member. Residual assets of the Co-operative shall, in so faras they are available after settling all creditors, be distributed to the Members in the proportionto the aggregate Operating Surplus Payments (or, if no Operating Surplus Payments weremade, then the aggregate Royalty Payments) received by each such Member over the periodof 5 (five) financial years immediately prior to such winding-up. This is a statutory requirement.---000---

1Annexure F 1Membership RulesSOUTHERN AFRICAN MUSIC RIGHTS ORGANISATION CO-OPERATIVE LIMITEDMEMBERSHIP RULESRULE 1Except where a different definition is provided for a term in these Membership Rules, the words defined inSAMRO’s Constitution shall have the same defined meaning when used in these Membership Rules.In these Membership Rules, unless there is something in the subject or context inconsistent therewith:-(a)"Distribution" means any payment which may, pursuant to these Membership Rules, the PaymentRules or the Constitution, be made among the Members, Contracting Participants and Affiliates out ofthe monies received by SAMRO in respect of the exercise of the rights, licence or authority granted bythem to SAMRO, in respect of Royalty Payments, Grant of Rights Payments or Operating SurplusPayments (as the case may be); and "Distributed" and "Distributable" have corresponding meanings,(the term “Distribution” being used instead of ‘payment’ simply because of its common use in theindustry).(b)"Work" means a Work of Music the Performing Right in which is owned or controlled by SAMRO.(c)"Persons Interested" in a Work means and includes any Member whom the Board in its discretionfrom time to time determines to be the Composer, Author or Publisher of a Work as above defined orProprietor of the Performing Right in such Work; and any Person elected to Membership as the Heirof a deceased Member or other deceased Person whom the Board in its discretion determines tohave been the Composer, Author or Publisher of such Work or Proprietor of the Performing Right insuch Work; and any Affiliate and any Contracting Participant, to the extent that they have agreed tobe bound by these Membership Rules.(d)"Net Licence Revenue" means the Licence Revenue less Permitted Royalty Deductions and, inregard to a particular Work, it is such net amount allocated as distributable in respect of a particularWork.(e)“SAMRO” means Southern African Music Rights Organisation Co-operative Limited.

2(f)"Share" means such proportion of the Net Licence Revenue as may be allocated to a PersonInterested in a particular Work.(g)"Normal Basis of Division" means the basis laid down by the Board from time to time to regulate theapportionment of the Net Licence Revenue between two or more Persons Interested in the sameWork.(h)“VAT Act” means Value-Added Tax Act (89 of 1991), as amended or replaced from time to time;(i)"In Writing" means written or printed, or partly written and partly printed.(j)Words importing the singular number include the plural number and vice versa.(k)Words importing the masculine gender include the feminine.(l)Words importing persons include corporations.(m) "Record" has the meaning assigned to it be Sec. 1(1) of the Copyright Act, 1978 (Act No. 98 of 1978).RULE 2(a)Any Person meeting the qualification criteria set out in clause 9.4 of the Constitution and concludingthe required Administration of IP Rights Agreement is eligible for election to Membership, regardlessof whether or not such Person is a citizen of, or resident in, the Principal Territory.(b)Subject to the Constitution, the Board may elect an Applicant to Candidate Membership, AssociateMembership or Full Membership, in accordance with clause 9 of the Constitution, if the Applicantapplies to the Board in Writing in the prescribed form, and:(i)if such Applicant is an Author, Publisher, Performer, Proprietor or a Permitted Successor;(ii)if such Applicant has signed an Administration of IP Rights Agreement with the Co-operativeconforming with the requirements set out in the Constitution on terms acceptable to the Boardand delivered same to the Board (together with the application form referred to above), interms of which such Applicant agrees to appoint the Co-operative to Administer hisAdministered IP Rights (or in the case of a Permitted Successor agreed that the Co-operativecan continue to Administer the Administered IP Rights that the Predecessor appointed the Cooperativeto Administer); and

3(iii)once the Administered IP Rights forming the subject of the Administration of IP RightsAgreement signed by the Applicant (as contemplated in paragraph 2(b)(ii)) has startedearning Licence Revenue.(c)Subject to the exception in Rule 3, the qualifications for election to Associate Membership or FullMembership (as the case may be), as contemplated in clauses 9.10 and 9.13 of the Constitution, areset out in Annexure A hereto.(d)Every Member upon his election shall notify SAMRO, upon forms or in the manner prescribed bySAMRO, of all Works in which he is one of the Persons Interested as defined in Rule 1, and shallthereafter so notify to SAMRO all further Works as and when he becomes a Person Interestedtherein. Every Member shall also deposit with SAMRO, upon request by SAMRO, a print or copy ofeach such Work. SAMRO shall not be responsible for any loss or damage sustained by any Memberby reason of his failure to comply with the provisions of this Rule.(e)An Applicant or Member (as the case may be) that is registered as a “vendor” in terms of the VAT Actshall provide SAMRO with full details of its VAT registration or a copy of its VAT registration certificateand/or such other details as may be required by SAMRO:(i)in the case of an Applicant, together with the Application for Membership;(ii)as soon as possible after the Conversion Date; or(iii)upon becoming so registered at anytime subsequent to becoming a Member; and(iv)on request from SAMRO at any time.(f)If a Member’s registration as a “vendor” in terms of the VAT Act is cancelled, such Member shall notifySAMRO thereof within 30 (thirty) days of such cancellation.RULE 3(a)Notwithstanding the ordinary qualifications for Associate Membership in Annexure A, if an AssociateMember or Full Member assigns its interests in its Administered IP Rights (as contemplated inclause 11.4 of the Constitution) to a Candidate Member, then such Candidate Member shall beentitled to apply to the Board to be elected to the status of an Associate Member if:(i)the Candidate Member makes a Written application to the Board; and(ii)the Territory Performance Royalty Payments attributed to the disposing Member’sAdministered IP Rights in respect of the transferred interest during the completed Payment

4Cycle immediately before the transfer is greater than the Territory Performance RoyaltyPayments during such Payment Cycle attributed to the acquiring Candidate Member’sAdministered IP Rights prior to the transfer.(b)If an acquiring Candidate Member is elected to Associated Member in accordance with subparagraph3(a), then, for the purpose of determining any Distributions to the acquiring Member inrespect of the acquiring Member’s Administered IP Rights, the duration of that acquiring Member’sMembership shall be deemed to have commenced on the date that the disposing Member became aMember.(c)For the avoidance of doubt, a Candidate Member cannot apply in terms of sub-paragraph 3(a) to beelected to Full Membership – only to Associate Membership.(d)The Board (or its delegee) in considering an application for election of a Candidate Member to anAssociate Member in terms of this Rule 3, shall be entitled to determine when such change of statuswill be effective and may have regard to, amongst other things, the relevant Payment Cycles and theCo-operative’s information systems and any related administration issues.(e)Upon a transfer of a Member’s interest in any Administered IP Rights becoming effective asdetermined in terms of sub-paragraph 3(d):(i)the transferred interest shall be deemed to form part of the acquiring Member’s AdministeredIP Rights and the disposing Member shall cease to have any rights in relation to theAdministered IP Rights that are the subject matter of the transferred interest (to the extent ofsuch transferred interest) and any related Distributions; and(ii)on termination of the acquiring Member’s Membership, any Assignment by SAMRO to theacquiring Member in terms of clause 10 of the Constitution of the Member’s Administered IPRights vested in the Co-operative shall include the Administered IP Rights that were thesubject of the transferred interest (to the extent of such transferred interest), and the disposingMember shall not have any rights to such Administered IP Rights vested in the Co-operative.RULE 4(a)If a Member, being the Proprietor of the Performing Right in a song, desires to forbid the singingthereof at theatres and music halls except by a named artist or named artists, he shall give notice ofthe fact to SAMRO In Writing on forms provided upon application for the purpose.

5(b)If a Member, being the Proprietor of the Performing Right in any Dramatico-musical Work, desires toforbid the vocal Performance of vocal excerpts therefrom or from any cinematograph adaptationthereof, he shall give notice of the fact to SAMRO In Writing on forms provided on application for thepurpose.(c)No ban under sub-paragraphs (a) and (b) of this Rule shall constitute, in respect of any Workspecified in such ban, a reservation to a Member of any right of banning its Performance:-(i)by means of duly authorised Records, save in respect of the use of such Records forbroadcasting or (otherwise than for use as overture entr'acte or exit music) for Performancesat theatres, music halls, concert halls or in cabaret productions; or(ii)by means of apparatus for causing broadcast programmes to be Performed at premises otherthan broadcasting stations, cinemas, theatres, music halls, concert halls or in cabaretproductions.(d)SAMRO's Administration Rights shall, where appropriate, include a condition that, unless (in respectof a ban imposed pursuant to sub-paragraphs (a) or (b) of this Rule) the copyright owner has signifiedhis acquiescence in such Performance, the Administration Rights shall not extend to or authorise thePerformance of a Work that is the subject of any ban under this Rule.RULE 5Licences and receipts shall be issued by SAMRO only, and shall be on SAMRO's official forms. They shallcontain such provisions and conditions as may from time to time be deemed expedient.RULE 6(a)By virtue of the rights vested or required to be vested in SAMRO pursuant to its Constitution, SAMROshall exercise and enforce, in accordance with these Rules, and for the benefit of its Members and themembers of Affiliated Societies, all the rights and remedies in respect of the Administered IP Rightsand the subject matter Works vested in or controlled by, or required to be vested in or controlled by,SAMRO, pursuant to the said Constitution. All Licence Revenue received by SAMRO in respect ofthe exercise of the rights, licence or authority granted by the Members and the Affiliated Societiesshall, subject to the Constitution, be divided, apportioned, distributed or otherwise dealt with inaccordance with these Membership Rules read together with the Payment Rules.(b)Any Distributions in respect of Royalty Payments to Member’s are subject to the restriction that theShare of the Publisher of the Performing Right shall not exceed one half of the Net Licence Revenueallocated to the particular Work, except in the case of a Work being an arrangement of non-copyright

6music, in which case the Share of any Person Interested shall not be less than three-fourths of theShare attributable to him under the Normal Basis of Division.(c)All rights to claim sums allocated and unclaimed for five years after the sending out of SAMRO'snotice thereof to the last known address of a Member or of the Person to whom the Member hasdirected Payment thereof to be made, shall prescribe on expiry of such five year period and such sumshall be placed in a Reserve Fund. However, SAMRO shall include notice of such allocated andunclaimed amounts with the names of the relevant Members in the notice of each annual generalmeeting of SAMRO and from time to time (as determined by the Board) published a notice of suchunclaimed amounts on its website.(d)Distributions shall be made at such period or periods in each year as may be appointed by the Board(being the Payment Cycle), when made, shall be final and binding, save in respect of any valid claimsmade by the Persons Interested within a period of three years from the date of the Distributionconcerned.(e)In addition to the Distribution, VAT (calculated at the applicable rate) on the amount of suchDistribution will be paid to Members which are registered as “vendors” in terms of the VAT Act.RULE 7Nothing herein contained shall restrict the right of any Member to deal as he may think fit with his rights in anyDramatico-musical Works, except in so far as he may have vested such rights or any interest therein, or thecontrol of any such rights or interest therein, in SAMRO.RULE 8No legal proceedings shall be instituted or undertaken by any Member without the sanction of the Board inrespect of the Performing Right of any Works for the time being controlled by SAMRO.RULE 9Every Member shall refrain from doing anything likely to limit or prejudice the success of SAMRO, and shallco-operate with SAMRO and its Officers and with his fellow-Members in enforcing the observance of theseRules and in furthering the interests of SAMRO, and shall render to SAMRO, its Officers and his fellow-Members all reasonable assistance in that behalf.

7RULE 10Disputes between Members (including, without limitation, in respect of interests in Administered IP Rights, thesubject matter Works and/or infringement or use thereof) shall be resolved in accordance with the disputeresolution policy of the Co-operative (in effect at the relevant time) and the Co-operative is not obliged byvirtue of its Administration Rights (or for any other reason whatsoever) to become involved in disputesbetween Members, or to determine whether one Member is infringing upon another Member’s AdministeredIP Rights, provided that the Co-operative shall not be prohibited from becoming so involved, or determiningany infringement, in its reasonable discretion.RULE 11Any additions to, or variations or alterations of these Membership Rules shall be formulated by the Board andsubmitted to a General Meeting of SAMRO for approval, subject to clause 8 of the Constitution._________________________________________________

8ANNEXURE A: QUALIFICATIONS FOR PROMOTIONIntroduction1. In all instances the duration of Membership in regard to qualification shall take into accountMembership of the company prior to the Conversion Date and the conversion to a co-operative.Associate Membership Qualifications2. The qualifications for Associate Membership are that:2.1. the Candidate Member must have been a Member for at least 2 (two) years (subject toparagraph 4 below); and2.2. the Member’s average Royalty Payments for any 2 (two) consecutive completed PaymentCycles must be:2.2.1. in the case of Authors, at least one ten thousandth of the total Royalty Paymentsto all Members; and2.2.2. in the case of Publishers and Proprietors, one two thousandth of the total RoyaltyPayments to all Members.3. A Person that is a Member solely in respect of the Administration of Needletime Rights cannot qualify.4. In respect of election to Associate Membership in the case of an existing Member acquiring the wholeor a portion of another Member’s interest in any Administered IP Rights (as contemplated inclause 11.4 of the Constitution), the requirement in respect of the duration of Candidate Membership(set out in paragraph 2.1 above) does not apply.Full Membership Qualifications5. The criteria for a Member to be selected for consideration for promotion to Full Membership are:5.1. All Members with the Membership status of Candidate Member or Associate Member areeligible for promotion.5.2. Only Members with a category status of Author or Publisher are eligible for election to FullMembership. Subject to paragraph 5.4, Affiliated Societies and beneficiaries are not Membersand not eligible for election. A Person that is a Member solely in respect of the Administrationof Needletime Rights does not qualify.

95.3. Members who are Members solely in respect of a deceased Predecessor’s Administered IPRights (i.e. with Membership status equal to ‘Deceased’) and Terminated are not eligible forpromotion.5.4. Both Persons who are Members of the Co-operative only (i.e. “Ordinary-Elected Members”),and Persons who are Members of the Co-operative and members of an Affiliated Society, orwere at some stage, members of an Affiliated Society, (i.e. “Multiple-Elected Members”) areeligible for election to Full Membership, provided that such Persons must have been aMember of the Co-operative or such Affiliated Society for 10 (ten) or more years. If the Personwas a Member of the Co-operative only (i.e. Ordinary-Elected Member) then the first recordeddate of election to Membership of the Co-operative shall be used to determine the period ofeligibility. If the Person is a Member of the Co-operative and a member of another AffiliatedSociety, or was at any stage a member an Affiliated Society (i.e. Multiple-Elected Member),then the date that such Person became a Member of the Co-operative or a member of theAffiliated Society, whichever came first, shall be used to determine the period of eligibility.Should there have been an interruption in a Person’s membership (such as when a Personmay, after becoming a Member of the Co-operative, have terminated such Membership), thenthe first date of election into Membership after the interruption shall be used to determineeligibility.6. The factors chosen, the rationale and the points weightings are reflected in the table below:Factor Rationale PointsNumber of years ofMembershipNumber of Works ofMusicPercentage of Works ofMusic which aredocumentedTime value of Works ofMusico Points have been allocated to this criterion to satisfy it. 30oooThe number of Works of Music which a Member has writtenpoints to the Member’s contribution to South African music, aswell as to his loyalty to the Co-operative.Percentage documentation points to a Member’s diligence inensuring that all his Works of Music are notified. Naturally, thebetter the percentage of documentation, the less costly for theCo-operative to maintain his Works of Music and the less theburden on other Members as well.Number of Works of Music on its own does not necessarilypoint to good contribution e.g. a Member with 300 jingles hasnot made the same contribution as a Member with 300 fullWorks of Music. Bringing the time value of these Works ofMusic into the equation, levels the playing field.Financial good standing o Values to be populated into this field are No Loan, Good orPoor:Ø No Loan – if the Advance Balance on the Administrationsystem is zeroØ Good – every non-paid-up advance, that a member has,which is greater than 12 months old, has a minimum of25% repaid or the member has no loans older than 12552510

10months oldØ Poor - Any non-paid-up advance – if a loan is older than 12months, then 25% should have been recovered, if olderthan 24 months, then 75% should have been recovered, ifolder than 36 months, then it should have been repaid infull, else considered poor.Average earnings o All royalty credits for all distribution types are includedo This factor takes account of royalties paid in the last 10distributions – excluding current distributions in progress.o Level of Royalties Payments also points to the level ofcontribution, but the points value for this element has beenrestricted, as contributions may be made by individuals whoseWorks of Music are not popular yet may be of significantcultural value, so their Royalty Payments may be small.Awards won o This factor was introduced to reflect the prominence or prestigeawarded to a Member within the sphere of creative orperforming Works of Music. Credit is given for any contributionto a Work of Music that is the subject of any award around theworld.Percentage of foreignearningsoThe factor was introduced to reflect the contribution to thedevelopment and exposure of South African Music abroad.Naturally, the higher the foreign earnings percentage, thegreater the level of exposure to South African music.Total points 100510107. Two factors not included in the calculation for Publishers are:7.1. loans, which are not provided to Publishers, and7.2. awards.8. Thus, for Publishers only, the remaining 8 (eight) factors are taken into account in determining thePublishers to be promoted. Furthermore, the following factors are adjusted in respect of Publishers inorder to make them more appropriate, namely:8.1. number of Works of Music;8.2. time value of Works of Music; and8.3. average earnings.9. These factors are multiplied by 10 and thus the qualifying criteria have been amended for Publishersto take account of these changes. Scoring of the factors is done in accordance with the following tablefor Members:

11FactorMaxpointsPoints allocatedLength of membership 30 > 40 yrs > 30 yrs > 20 yrs > 15 yrs > 10 yrsPoints allocated 30 25 20 15 10Number of Works of Music 5 >200 >150 >100 >70 >40Points allocated 5 4 3 2 1% documented 5 >80% >70% >60% >50% >40%Points allocated 5 4 3 2 1Time value of Works of Music 25 >600m >500m >350m >150m >50mPoints allocated 25 20 15 10 5good poor standinFinancial good standing 10 no loans standing gPoints allocated 10 5 0Average earnings 5 >250k >150k >100k >50k 5 >4 >3 >2 >1Points allocated 10 8 6 4 2% foreign earnings 10 >50% >40% >30% >20% >10%Points allocated 10 8 6 4 210. In summary, the differences between an Author and a Publisher Member in terms of criteria that varyare as follows:CriterionNumberAuthorPublisherNumber of Works of Music >200 >2000 5Time value of Works of Music >600 >6000 25Average earnings >R250k >R2500k 5Points11. As a consequence of the foregoing, the cut-off for promotion of Publishers is different to that of AuthorMembers, as their criteria are different. A Member that is both an Author and a Publisher may qualifybe virtue of meeting the requirements of either category, separately.12. The initial basis for qualification for election is the aggregate points of a Member expressed as apercentage out of 100. Members with the highest point values being the most eligible to beconsidered for promotion.13. The Board then in its discretion will determine:13.1. a cut-off points value for election to Full Membership; and/or

1213.2. a limited number of Members to be elected to Full Membership with the Members with thehighest points score being eligible for ‘promotion’ by way of election.14. The Board’s current determination is that:14.1. only the top fifteen Members in respect of the relevant year with an allocated points score of60 or above, shall be eligible for promotion to Full Membership;14.2. where more than fifteen Members have an allocated points score of 60 or above, anelimination process based on:14.2.1. the number of points scored; then if the Members have equal points;14.2.2. the highest score obtained by the members in respect of the time value of the Worksof Music Administered by the company; and, if these are equal as well, then,14.2.3. the highest score obtained in respect of the percentage of documented Works ofMusic,shall be used, until the number of fifteen eligible Members has been reached.

1Annexure F2Performance Rights Royalty Payment RulesSAMRO PERFORMING RIGHTS ROYALTY PAYMENT RULESContents1. DEFINITIONS 22. OBJECTIVE 23. PERFORMING RIGHTS ADMINISTERED BY SAMRO 34. DISTRIBUTION CATEGORIES AND SUB-CATEGORIES 3a. RADIO 4b. GENERAL 4c. TELEVISION 4d. FILM 4e. FOREIGN 4f. MOBILE & INTERNET TRANSMISSION 45. DISTRIBUTABLE NET LICENCE REVENUE 46. PARTICIPATING WORKS OF MUSIC 5a. RADIO BROADCASTS 7b. TELEVISION BROADCASTS 7c. PUBLIC PERFORMANCE 7d. FILM 8e. FOREIGN 8f. MOBILE & INTERNET TRANSMISSION (MIT) 9g. EXCEPTIONS 97. AFFILIATED RIGHTS HOLDERS 98. DOCUMENTED DIVISION OF LICENCE REVENUE 10a. ARRANGERS 13b. SUB AUTHORS 14c. PUBLISHER SHARE 14d. SUB PUBLISHER SHARE 14e. PROPRIETOR 149. COMPUTED ROYALTY PAYMENT ALLOCATIONS 1410. REVENUE POINT FACTOR 1511. NOMINATION 15

21. DEFINITIONSExcept where a different definition is provided for a term in these Performing Rights Royalty PaymentRules, the words defined in SAMRO’s Constitution shall have the same defined meaning when usedin these Performing Rights Royalty Payment Rules.In these Performing Rights Royalty Payment Rules:Distributionmeans any Royalty Payment as defined in the Constitution in respect ofPerforming Rights, which may, pursuant to these Rules, be made amongthe Rights Holders out of the Licence Revenue received by SAMRO inrespect of the exercise of the rights, licence or authority in respect ofPerforming Rights granted by them to SAMRO, after Permitted RoyaltyDeductions and the determination of the Net Licence Revenue."Distributed" and "Distributable" have corresponding meanings, (the term“Distribution” being used instead of “payment” simply because of itscommon use in the industry).Jinglemeans music which is used as signature tunes, in commercial messages,programme promotions, public service announcements, and similarcategories of music.Rights Holdermeans an owner of the performing, mechanical or synchronisation right inany music and/or in any words which are or may be associated with anymusic, and any person who has assigned such rights to SAMRO,including any Permitted Successors.SAMROmeans Southern African Music Rights Organisation Co-operative Limited.VAT Actmeans Value-Added Tax Act (89 of 1991), as amended or replaced fromtime to time.Work of Musicshall have the same definition as in the Constitution in the context ofthese rules being the subject of the Performing Rights Administered bySAMRO.2. OBJECTIVESAMRO Performing Rights Royalty Payments in the various Distribution categories are aimed at

3• the equitable Distribution of Net Licence Revenue• to participating Works of Music• and their respective affiliated Rights Holders• in accordance with the documented division of Licence Revenue.This is done by way of computed Royalty Payments, calculated on a points basis, so as torepresent a fair allocation to the rights Administered by SAMRO, relative to actual Performancesor usage of Works of Music and Licence Revenue received.For the sake of clarity these Rules apply to the administration and Distribution of RoyaltyPayments in respect of Administered Performing Rights and not to the Administered NeedletimeRights.3. PERFORMING RIGHTS ADMINISTERED BY SAMROSAMRO Administers, inter alia, those rights as specified in the South African Copyright Act 98 of1978, section 6 (c), (d) and (e). The Act vests the exclusive right in copyright Works of Music todo or to authorise the doing of any of the following acts in the Republic:a. Performing the Work of Music in public;b. Broadcasting the Work of Music;c. Causing the Work of Music to be transmitted in a Diffusion Service, unless such servicetransmits a lawful broadcast, including the Work of Music, and is operated by the originalbroadcaster.In SAMRO’s environment this applies to those Rights Holders who have so directly or via theirAffiliated Societies granted the administration in their Works of Music to SAMRO.4. DISTRIBUTION CATEGORIES AND SUB-CATEGORIESSAMRO has three primary categories of Royalty Payments namely Radio & General, Televisionand Film (Cinematographic Film). Currently these Royalty Payments take place at varyingintervals per the Payment plan approved by the Board at its quarterly meetings, but at leastannually.

4These are subdivided into Distribution sub-categories as follows:-a. RADIOi. Public Serviceii. Private Servicesiii. Community Servicesiv. Radio Jinglesb. GENERALi. Recorded Musicii. Diffusion Servicesiii. Live Musiciv. Showsc. TELEVISIONi. Public Servicesii. Private Serviceiii. Re-Broadcast Transmissionsiv. Diffusion Servicesd. FILMi. Cinemase. FOREIGNi. All categoriesf. MOBILE & INTERNET TRANSMISSION (MIT)i. Ringtone Previewii. Ring back tonesiii. Download Previewiv. Internet radiov. Internet television5. DISTRIBUTABLE NET LICENCE REVENUENet Licence Revenue is determined in accordance with amounts reported in the statutory auditedAnnual Financial Statements. Total Net Licence Revenue for the determination of RoyaltyPayments in accordance with the computation in clause 9 is determined as follows:-Gross Licence RevenuelessPermitted Royalty DeductionsplusRevenue Add Backsless or plusTransfers to or from Reserves and Funds= Net Licence Revenue

5In addition to the Royalty Payments, VAT (calculated at the applicable rate) on the amount ofsuch Distributions will be paid to Members registered as “vendors” in terms of the VAT Act.The Net Licence Revenue is apportioned by analysing the revenue into various Distributioncategories. These categories include the following:• Distribution sub-categories, and within these• Distribution channels.General public Performance Licence Revenue is apportioned to the appropriated Distributionsub-categories according to surveyed, statistical, historical, or estimated usage patterns.The Performances and Net Licence Revenue for similar music genre Performance or usage maybe combined into a single collective Distribution sub-category.The Licence Revenue within Distribution sub-categories is apportioned according to the followingcriteria:-a. Primary gross Licence Revenue for the sub-categoryb. The quality and quantity of Performance dataWhere all information is available at a licensee level, Licence Revenue received is matched to thePerformances reported by the particular licensee where possible. If no Licence Revenue isreceived then no Distribution will take place for that particular licensee in respect thereof. If noPerformances are reported or expected to be received, the Licence Revenue received from suchsources will be allocated to similar sources from which performance returns have been received.All Royalty Payments to recipients will be subject to any applicable Taxes.6. PARTICIPATING WORKS OF MUSICa) Participating ‘Works of Music’ are those copyright Works of Music which have beencaptured (logged) from performance / broadcast / usage returns received from licensedmusic users, performing artists or independent third parties.b) Works of Music which are identified as being out of copyright (100% DP shares) arenormally excluded from participation.c) All music usage returns and usage reports received by SAMRO are considered forattribution for Distributions except in the following cases:

6- Performance returns which appear abnormal; and SAMRO reserves the right totake action in respect of potentially fraudulent submissions.- Where programme returns and usage reports which are incomplete or less than80% accurate in their reporting, in that they no longer represent a true reflectionof the actual Performance, broadcast or sound carrier recordings.- Where programme returns or usage reports have led to documentation querieswith SAMRO Members or clients, or with Affiliated Societies and which have notbeen answered in time for the current Distribution. These may be included in asubsequent Distribution.- Where programme returns and usage reports are illegible.- Where performance returns are received from community radio stations withLicence Revenue below a threshold as approved by the Board. Such LicenceRevenue shall be included in revenue of stations with similar genres.d) Performance returns which are received by SAMRO after the Distribution cut-off date, willusually participate in the following Distribution of the same sub-category.e) Where Works of Music usage information is available for the various sub-categories ofGeneral, Distributions will be based on the available information. If no information isavailable, then reference will be made to information provided for radio and television.f) Performed Works of Music for which SAMRO has not received Licence Revenuebecause of statutory or other reasons are excluded from participation, for exampleunlicensed venues.g) If a Rights Holder is able to prove within thirty-six months after the completion of aDistribution (as per the statement date) that his Works of Music were performed but werenot included in the performance returns received from music users and SAMRO hadreceived Licence Revenue from such music users for the related Payment Cycle, thenRoyalty Payments for such Performances will be calculated using the allocation andDistribution factors applicable to the Distribution in question.h) Programmes which are known to have been broadcast simultaneously on more than onechannel (simulcast) will be included only once in a Distribution, except in those caseswhere separate Licence Revenue was received for each channel.i) Net Licence Revenue received in respect of Works of Music or shares in dispute andrelated Royalty Payments will not be allocated or paid out until the dispute has beenresolved in terms of SAMRO’s Disputes and Counterclaims Policy.The following participation practices apply in the respective Distribution categories as follows:-

7a. RADIO BROADCASTSi. A systematic sampling method is employed for radio channels that do not furnishtheir returns in a compatible electronic format.ii.A full census is used in those broadcast channels that furnish their returnselectronically in a compatible format.iii.All programmes within a broadcast channel or station’s normal programmedaudio service participate in the respective Distribution sub-category irrespectiveof the time of broadcast.b. TELEVISION BROADCASTSi. TV commercials participate in separately created Distribution channels for eachmajor broadcast channel.ii.Signature music contained in the form of “Promos”, “Logos”, “Bumpers”, “Stings”etc. participate in channel or station Distribution channels.iii.A complete census of music in all channels, as reflected on the flighting orbroadcast schedules received, participates in the respective Distribution subcategories.iv.Musical content within a broadcast channel or station’s normal programmedaudio-visual service participates in the respective Distribution sub-categoryirrespective of the time of broadcast.c. PUBLIC PERFORMANCEi. If SAMRO receives Licence Revenue but with no usage returns, then suchrevenue will be added to other pools which most closely resemble the Works ofMusic used. If SAMRO receives returns but no Licence Revenue, then noDistribution will take place for the Performances in question.ii. Works of Music from major concerts or similar shows or events, participate to theextent of the Net Licence Revenue from that licence. For live and recorded publicperformances the following rules apply:a) Public performance data obtained from Members’ returns, where practical,participate to the extent of Net Licence Revenue obtained from the licensed

8establishments where Performances took place. This is subject to the returnbeing verified by the licensed establishment.(b) In addition to Rule 6(c) excluding, also excluded from Distributioncalculations are:- performance returns for live (non-recorded) music Performances whichare submitted by the Rights Holders without corresponding confirmationof such Performances by the organisers of such events, or wheneversuch performance returns reach SAMRO later than three months afterthe event was held.- performance returns which appear abnormal; and SAMRO reserves theright to take action in respect of potentially fraudulent submissions.- performance returns which, noticeably, contain frequently the name ofindividual Rights Holders without factual cause for such occurrences willbe excluded from Distribution calculations until their authenticity can beascertained through relevant proof obtained from the submitter of thereturns, the Rights Holder(s) concerned, or the licensed establishment.d. FILMi. A complete census of all Works of Music included in film soundtracks reportedparticipate in this category.ii.The number of Performances per film is weighted to take account of the boxoffice income per film reported.iii.Works of Music used in commercials participate in this category.iv.Musical content within a film participates in the Distribution category irrespectiveof the time of screening.e. FOREIGNi. The only calculation performed on foreign income received from AffiliatedSocieties is the conversion of foreign amounts to the South African Rand at theprevailing foreign exchange rate on the date of receipt of the respective foreignamount.

9ii.Allocations to Rights Holders are done in accordance with SAMRO’s Worksdocumentation (as to who the Rights Holders are and what their shares are),irrespective of foreign society allocations.iii.Shares received for non-SAMRO Works of Music and Rights Holders arehandled, as per CISAC guidelines.iv.In the absence of an automated matching and allocation system for foreignLicence Revenue, where the total foreign Licence Revenue amount receivedfrom an Affiliated Society from online or new media exploitation is less thanR1,000, such total amount will be added to the Licence Revenue received fromthat society for all other, non-online uses, and allocated to those participatingSAMRO Works of Music and Rights Holders.f. MOBILE & INTERNET TRANSMISSION (MIT)i. A full census is used for those service providers that furnish their returnselectronically in a compatible format.ii.All Works of Music contained in a service provider’s usage reports participateirrespective of the time of usage.g. EXCEPTIONS:Where the costs of a Distribution described in points a. to f. above, are disproportionallyhigher than the Licence Revenue received, SAMRO may, with the approval of SAMRO’sexecutive Directors, allocate it to other Licence Revenue streams for this or subsequentDistributions.7. AFFILIATED RIGHTS HOLDERSPayment of Net Licence Revenue will only be made to those Rights Holders whose rights areadministered by virtue of their affiliation to SAMRO or other CISAC Affiliated Societies, asindicated on the international Interested Parties Index (IPI - formerly CAE file) at the time of theDistribution. Furthermore, only Rights Holders whose Works of Music have been verified ashaving been performed during the period relating to the Distribution, and whose shareholding inthe Work of Music has been proven via a notification of such shareholding in terms of the SAMROrules before the commencement of the Distribution, will be eligible to participate in theDistribution. Royalty Payment allocations pertaining to shares of non-affiliated and unidentifiedRights Holders will be retained as Royalty Payments in progress for a limited period pending their

10identification or affiliation, after which they will be Distributed at the next supplementaryDistribution, failing which, such amounts will be written back to Distributable revenue at the end ofthe financial period in terms of SAMRO’s accounting practices, three years after the time of theoriginal primary Distribution. No Licence Revenue allocations or related Royalty Payment aremade to Public Domain shares with that portion being allocated to the remaining non-PublicDomain shares.8. DOCUMENTED DIVISION OF LICENCE REVENUENotwithstanding the definition of “Author” and “Publisher” in SAMRO’s constitution, all references to“Author”, “Sub Author”, “Publisher”, “Sub Publisher” and “Arranger” in this paragraph shall have themeaning attributed to them generally in the industry with reference to SAMRO’s past practice.Net Licence Revenue allocated to participating Works of Music in the Distribution will only beDistributed to Rights Holders if the Work of Music can be clearly identified and the respective sharesplit has been appropriately notified and documented.SAMRO’s default standard share splits are as set out in the following tables:-

11Category Type of Work Rights Holders Fraction %Manuscript Worksof MUSIC 1. Music Only Composer 12/12 100.00%100.00%2. Song Composer 6/12 50.00%Author 6/12 50.00%100.00%3. Music Arrangement Composer 10/12 83.33%Arranger 2/12 16.67%100.00%4. Song Arrangement Composer 5/12 41.67%Author 5/12 41.67%Arranger 2/12 16.67%100.00%5. Song Revised Lyrics Composer 5/12 41.67%Author 5/12 41.67%Sub Author 2/12 16.67%100.00%6. Song Arrangement Composer 5/12 41.67%Revised Lyrics Author 5/12 41.67%Arranger 1/12 8.33%Sub Author 1/12 8.33%100.00%

12Category Type of Work Rights Holders Fraction %Original Published 1. Music Only Composer 8/12 66.67%Works Publisher 4/12 33.33%100.00%2. Song Composer 4/12 33.33%Author 4/12 33.33%Publisher 4/12 33.33%100.00%3. Music Arrangement Composer 6/12 50.00%Arranger 2/12 16.67%Publisher 4/12 33.33%100.00%4. Song Arrangement Composer 3/12 25.00%Author 3/12 25.00%Arranger 2/12 16.67%Publisher 4/12 33.33%100.00%5. Song Revised Lyrics Composer 3/12 25.00%Author 3/12 25.00%Sub Author 2/12 16.67%Publisher 4/12 33.33%100.00%6. Song Arrangement Composer 3/12 25.00%Revised Lyrics Author 3/12 25.00%Arranger 1/12 8.33%Author 1/12 8.33%Publisher 4/12 33.33%100.00%

13Category Type of Work Rights Holders Fraction %Sub Published 1. Music Only Composer 6/12 50.00%Works Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%Notes:2. Song Composer 3/12 25.00%Author 3/12 25.00%Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%3. Music Arrangement Composer 4/12 33.33%Arranger 2/12 16.67%Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%4. Song Arrangement Composer 2/12 16.67%Author 2/12 16.67%Arranger 2/12 16.67%Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%5. Song Revised Lyrics Composer 2/12 16.67%Author 2/12 16.67%Sub Author 2/12 16.67%Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%6. Song Arrangement Composer 2/12 16.67%Revised Lyrics Author 2/12 16.67%Arranger 1/12 8.33%Sub Author 1/12 8.33%Publisher 2/12 16.67%Sub Publisher 4/12 33.33%100.00%a. ARRANGERSOnly clearly identifiable arrangements notified to SAMRO by the arranger and authorisedby the copyright holder are recognised for Works of Music in copyright. An arranger’sshare for non-copyright Works of Music will be recognised only for those arrangementswhich are clearly identifiable and in the opinion of a qualified musicologist have madesufficient original contribution.

14Arrangements of the South African National Anthem need to have been authorised inwriting by the State Herald. While the arranger’s share in the authorised arrangement ofthe South African National Anthem will be documented, no royalties will be payable forarrangements in the said Work of Music, except in instances where the State Herald hasexpressly and in writing authorised the collection and payment of royalties to thearranger.b. SUB AUTHORSOnly those translations or revisions of lyrics authorised by the copyright holder forcopyright Works of Music are recognised.c. PUBLISHER SHAREThe Publisher share shall normally amount to "4/12" or 33.33% unless otherwisespecifically agreed - up to a maximum of “6/12” or 50%.d. SUB PUBLISHER SHAREThe Sub Publisher share shall be subject to the agreement between the Publisher andSub Publisher, but shall not exceed the share that the Publisher per se has.Should all Rights Holders agree contractually to a variation of the normal division of fees,the new division will apply subject to (c) above.e. PROPRIETORThe categorisation of a Proprietor shall be determined by the Board, with reference to thenature of the interest held by such Proprietor and the categorisation of the person fromwhom the interest was acquired (i.e. whether the disposing party is an Author or aPublisher, etc.)9. COMPUTED ROYALTY PAYMENT ALLOCATIONSRoyalty Payment allocations are computed on a points basis according to international norms andstandards established by CISAC (International Confederation of Societies of Authors andComposers) and the Board from time to time. The Net Licence Revenue for each distribution subcategoryis divided by the accumulated points per distribution sub-categories to obtain a RevenuePoint Factor (Rand Point Factor) per distribution sub-category. The accumulated points earned foreach participating Work of Music in the distribution sub-category, is then multiplied by the relevant

15Revenue Point Factor, so as to compute the Royalty Payment amount per Work of Music for therelevant distribution sub-category. The resultant Royalty Payment for each Work of Music is thenallocated to each of the accredited Rights Holders according to their respective shares in theWork of Music according to the documented share split.10. REVENUE POINT FACTORThe Revenue Point Factor (Rand Point Factor) is determined as follows:-Revenue Point Factor11. NOMINATION= Net Licence Revenue per Distribution ChannelTotal Points per Distribution ChannelAny Rights Holder may by notice in Writing to SAMRO request SAMRO to pay the whole or anystated proportion of the total sum of such Rights Holder’s allocated Royalty Payment in respect ofPerforming Rights to a Person named in such notice together with the nominee’s payment bankdetails, provided that such notice does not refer to a specific subject matter Work of Music. Anysuch request must be accompanied with such verification and identification and supportingdocuments as SAMRO may require from time to time and SAMRO may require ‘in person’identification. If SAMRO accepts any aforementioned nomination, then SAMRO shall pay to thePerson so named in the notice, the whole or the stated proportion of each future allocated RoyaltyPayment from such date determined by SAMRO within 30 Business Days of the date ofacceptance of the nomination. Payment to any such a nominee shall be at the nominator’s riskand shall constitute full discharge of SAMRO’s liability to the nominator.

1Annexure F3Reproduction Rights Royalty Payment RulesSAMRO REPRODUCTION RIGHTS ROYALTY PAYMENT RULESTABLE OF CONTENTSPage1. Definitions 22. Introduction 33. Reproduction Rights Administered by SAMRO 44. Payment Method and Categories 45. Distributable Net Licence Revenue 66. Participating Works of Music 67. Documented Division of Fees 78. Standard Share Splits 89. Computed Royalty Allocations (Blanket Licences)10. Computed Royalty Allocations (On-line - New Media, Ringtones and DigitalDownloads)121211. Nomination 13

21. DEFINITIONSExcept where a different definition is provided for a term in these Reproduction Rights Royalty PaymentRules, the words defined in SAMRO’s Constitution shall have the same defined meaning when used inthese Reproduction Rights Royalty Payment Rules. Unless the context clearly indicates otherwise thefollowing terms shall have the corresponding defined meaning set out below:Administrative Amountmeans the administrative amount reflected in the Administration of IPRights Agreement concluded between SAMRO and the relevantRights Holder (failing which, determined by the Board) that isdeducted from the Licence Revenue for the purpose of determiningthe Royalty Payment due in respect of the Administration of therelevant Reproduction Rights.BIEMmeans Bureau International des Sociétés Gérant les Droitsd'Enregistrement et de Reproduction Mécanique, being theinternational organisation representing mechanical rights societies.Distributionmeans any Royalty Payment which may, pursuant to these Rules, bemade among the Rights Holders out of the monies received bySAMRO in respect of the exercise of the rights, licence or authoritygranted by them to SAMRO in relation to Reproduction Rights, afterthe determination of the Net Licence Revenue; "Distributed" and"Distributable" have corresponding meanings, (the term “Distribution”being used instead of “payment” simply because of its common usein the industry).Ephemeral Exemptionshall have the meaning referred thereto in section 12(5) (a) & (b) ofthe Copyright Act of 1978.Net Licence Revenuehas the meaning ascribed thereto in the Constitution, with referenceto Reproduction Rights in this context.Work of Musicshall have the defined meaning in the Constitution in respect of whichSAMRO Administers the Reproduction Rights.Rights Holdermeans an owner of the performing, or Reproduction Right in anyWork of Music which are or may be associated with any Work of

3Music, and any Person who has assigned such rights to SAMRO,including any Permitted Successors.SAMROmeans the Southern African Music Rights Organisation Co-operativeLimited (SAMRO).VAT Actmeans Value-Added Tax Act (89 of 1991), as amended or replacedfrom time to time;Worksmeans Works of Music.Notwithstanding the definition of “Author” and “Publisher” in the Constitution, unless the context clearlyindicates otherwise, all references to “Author”, “Sub Author”, “Publisher”, “Sub Publisher” and“Arranger” shall have the meaning attributed to them generally in the industry with reference toSAMRO’s past practise.2. INTRODUCTIONThe essence of a Reproduction Rights Distribution is to identify the Licence Revenue collected throughthe licensed use of a particular Work of Music, allocate the Licence Revenue collected amongst theRights Holders of that work, deduct the appropriate commission and Taxes and pay the balance asRoyalty Payments to the Rights Holders as soon after collection as possible.These Rules are intended to ensure that Reproduction Rights Distributions represent fair value of thoserights administered by SAMRO, relative to actual reproductions of Works of Music and LicenceRevenue received.In formulating these Rules, cognisance has been taken of the terms of agreements between SAMROand:• its Members; and• its Affiliated Societies;• the terms of agreements between Rights Holders;• the circumstances in which Reproductions of Works of Music generally occur; and• economic and viable methods of Distributing Royalty Payments.

4SAMRO complies with resolutions of the Bureau International Des Societies Gerant Les DroitsD’enregistrement et de Reproduction Mecanique (BIEM) and International Confederation of Societies ofAuthors and Composers (CISAC).Licence Revenue in relation to Reproduction Rights collected and distributed to SAMRO by AffiliatedSocieties are subject to the laws and conditions applicable in the country of collection.3. REPRODUCTION RIGHTS ADMINISTERED BY SAMROSAMRO Administers these rights as specified in the Copyright Act of South Africa 1978, for thoseRights Holders who have so directly or via their Affiliated Societies granted the Administration in theirWorks of Music to SAMRO for the use of their works in any form of Reproduction. This may includeReproduction for the following:Broadcast, which includes reproductions made for Radio and TV programs licensed on ablanket basisPhono Reproductions, which includes reproductions for CD’s, audio tapes, videos and DVD’smanufactured for retail sales and licensed by the BIEM contract or similar contractMobile and Internet Reproductions which includes any type of internet reproduction notalready mentioned below:• Ringtones mobile/cell phone ring tones licensed on a blanket basis• Downloads (Online), which includes internet digital downloads licensed on ablanket basisWork-by-Work (Individual), which includes individual reproductions of the above as well asrecordings in films, advertising, private recordings, etc. licensed individually on a work by workbasisNew Media, which includes any other type of internet reproduction not already mentioned abovee.g. internet radio stations4. DISTRIBUTION METHOD AND CATEGORIESLicence Revenue collections allocated to Reproduction Rights are identifiable to the licences issued –thus Licence Revenue collected from a TV blanket licence, a record company, BIEM contract or anindividual Work-by-Work licence will be determined with reference to the Works of Music used in the

5actual recordings covered by such a licence based on the available information, subject to the specificrules below. (Licence Revenue from one licence will not be combined with any other licence even of asimilar nature, nor will Licence Revenue be attributed on a sampling basis except where providedotherwise. Exceptions made are usually where Licence Revenue generated from broadcasters does notjustify a full census.)The Rights Holders must be able to identify the Work of Music, the relevant Licence Revenue and itssource in order for it to be allocated for the purpose of determining the Distribution.The Distribution types should follow the categories of Reproduction Rights set out in point 3 above.Once the Licence Revenue from each individual licence source has been allocated, it should bepossible to combine similar sources onto one royalty statement to the Rights Holder, e.g. all Phonocompany Licence Revenue could, once the individual allocation process has been completed, becombined onto one statement for each participating Rights Holder– the relevant Works of Music beinglisted alphabetically with the sources and the relevant data/periods being clearly shown.SAMRO primary Reproduction Rights Distributions are Broadcast, Phono Reproductions, Downloads(on-line), Work-by-Work and New Media.Currently, Distributions take place at varying intervals per the Payment plan approved by the Board atits quarterly meetings and include the following types:a. Broadcasto TVo Radiob. Phono Reproductionso BIEM Contractso Privatec. Ring Toneso Blanket Licencesd. Digital Downloads (On-line)o Blanket licenceso Single licencee. Work-by-Worko Individual licencesf. New Mediao Blanket licencesg. Foreigno Affiliated Societies

6(Licence Revenue collected and distributed to SAMRO by Affiliated Societies are subject tothe laws and conditions applicable in the country of collection.)5. DISTRIBUTABLE NET LICENCE REVENUEReproduction Royalty Payments are determined as follows:-Gross Licence Revenue collected (as per licences)= Gross Licence Revenue allocated to Rights HoldersLess Relevant Administrative AmountLess Provision for applicable TaxesPlus Revenue Add Backs= Net Licence Revenue payable to Rights Holders as a Royalty PaymentIn addition to the Reproduction Rights Distribution, VAT (calculated at the applicable rate) on suchamount will be paid to Rights Holders registered as “vendors” in terms of the VAT Act.In the case of blanket licences, the gross Licence Revenue collected is apportioned over the Works ofMusic that have been reproduced in terms of the relevant licence for the period, in accordance with theRules set out in sections 8 & 9 hereunder.In all other cases, the gross Licence Revenue collected is allocated to the Work of Music licensed andreported.SAMRO Reproduction Rights Administration Expenses and reserves are met out of relevantAdministrative Amounts deducted from the Licence Revenue allocated to Rights Holders andinvestment income earned on Royalty Payments awaiting Distribution.All Royalty Payments to recipients will be subject to any applicable Taxes.6. PARTICIPATING WORKS OF MUSICa. Local RoyaltiesIn the Distribution of Royalty Payments arising from Reproduction Rights Licence Revenue, onlyWorks of Music in copyright that have been reproduced in terms of the relevant licence and asdeclared by the person making the recording, may participate. Public Domain (DP) works areexcluded.In the case of Works of Music recorded by broadcasters with their own facilities, such recordingsmay be ephemeral and thus disqualify the relevant works from participating in the Royalty

7Payment. Only recordings of Works of Music declared by the relevant broadcaster shallparticipate.In all cases, participating Works of Music shall be as declared by the person/ organisationmaking the recording. SAMRO does not guarantee that the Work of Music declared is in fact theWork of Music recorded.Distributions of the allocated Royalty Payments attributable to any Licence Revenue received onunidentified Works of Music shall be retained and, in the absence of identification, such amountswill be written back to Reproduction Rights Distributable revenue at the end of the financialperiod in terms of SAMRO’s accounting practices, three years after the time of the originalprimary Distribution.b. Foreign RoyaltiesDistributions of Royalty Payments will only be made to those Rights Holders whose rights areAdministered by virtue of their affiliation to SAMRO or other BIEM Affiliated Societies, asindicated on the international Interested Parties Index (IPI) at the time of the Distribution. LicenceRevenue pertaining to shares of non-affiliated and unidentified rights holders will be retained asroyalty Distributions in progress for a limited period pending their identification or affiliation, afterwhich they will be Distributed at the next Distribution, failing which such amounts will be writtenback to distributable revenue in terms of point 6.No License Revenue allocations or Royalty Payments are made to Public Domain shares withthat portion being allocated to the remaining non-Public Domain shares.7. DOCUMENTED DIVISION OF FEESNet Licence Revenue allocated to participating Works of Music will only be Distributed to RightsHolders if the Work can be clearly identified and the respective shares have been appropriately notifiedand documented.

AuthorPublish9Category Type of Work Rights Holders Fraction %Original Published 1. Music OnlyComposer50.00Works (non AngloPublisher50.00American Works)100.002. Song3. Music Arrangement4. Song Arrangement5. Song Revised Lyrics6. Song ArrangementRevised LyricsComposerAuthorPublisherComposerArrangerPublisherComposerAuthorSub AuthorPublisherComposerAuthorSub AuthorPublisher3/123/126/129/243/2412/244.5/244.5/243/2412/24Co4.5/24 m4.5/24 p3/24 o12/24 ser4.5/24 A4.5/24 u1.5/24 t1.5/24 h12/24 orArrangerSub25.0025.0050.00100.0037.5012.5050.00100.0018.7518.7512.5050.0018.7518.7512.5050.00100.0018.7518.756.256.2550.00100.006/126/12

10Category Type of Work Rights Holders Fraction %Sub-publisher works 1. Music OnlyComposer6/1250.00Publisher2/1216.67Sub Publisher4/1233.33100.002. SongComposerAuthorPublisherSub Publisher3/123/122/124/1225.0025.0016.6733.33100.003. Music ArrangementComposerArrangerPublisherSub Publisher4/122/122/124/1233.3316.6716.6733.33100.004. Song ArrangementComposerAuthorArrangerPublisherSub Publisher2/122/122/122/124/1216.6716.6716.6716.6733.33100.005. Song Revised Lyrics6. Song ArrangementRevised LyricsComposerAuthorSub AuthorPublisherSub PublisherComposerAuthorArrangerSub AuthorPublisherSub Publisher2/122/122/122/124/122/122/121/121/122/124/1216.6716.6716.6716.6733.33100.0016.6716.678.338.3316.6733.33100.00The Anglo American Rule states that:a. If there are original publishers and all original publisher/s are one of the “Anglo American”performing rights societies then 100% is allocated to the original publishers.b. If there are no original publishers and all ES publisher/s are one of the “Anglo American”societies then 100% is allocated to the publishers.

11SUB-PUBLISHED WORKSFor sub-published works, reference must be made to the sub-publishing agreement between thepublisher and the sub-publisher.Notes:a. ARRANGERSOnly clearly identifiable arrangements notified to SAMRO by the arranger and authorised by thecopyright holder are recognised for works in copyright. An arranger’s share for non-copyrightworks will be recognised only for those arrangements which are clearly identifiable and in theopinion of a qualified musicologist have made sufficient original contribution.Arrangements of the South African National Anthem need to have been authorised in writing bythe State Herald. While the arranger’s share in the authorised arrangement of the South AfricanNational Anthem will be documented, no royalties will be payable for arrangements in the saidwork, except in instances where the State Herald has expressly and in writing authorised thecollection and Distribution of Licence Revenue to the arranger.b. SUB-AUTHORSOnly those translations or revisions of lyrics authorised by the copyright holder for copyrightWorks of Music are recognised.c. PUBLISHER SHAREThe Publisher share is limited to 50% in the case of non-Anglo American works and 100% in thecase of Anglo-American Works of Music.d. SUB PUBLISHER SHAREThe Sub Publisher share shall be subject to the agreement between the Publisher and SubPublisher, but shall not exceed the share that the publisher per se has.Should all rights holders agree contractually to a variation of the normal division of fees, thenew division will apply subject to (c) above.

12e. PROPRIETORThe categorisation of a Proprietor shall be determined by the Board, with reference to thenature of the interest held by such Proprietor and the categorisation of the person fromwhom the interest was acquired (i.e. whether the disposing party is an Author or a Publisher,etc.)9. COMPUTED ROYALTY ALLOCATIONS (Blanket Licences)Basic Principlesa. Only Works of Music contained on performance returns received from the Broadcaster within theDistribution period form part of the Distribution for that period. For Distribution purposes, a singleunique performance per work (or per film carrier per work, if applicable) will be considered as onereproduction of such work.b. All participating BIEM represented Rights Holders, excluding Public Domain rights holders, areallocated a share of the blanket licence Licence Revenue. Participating BIEM represented RightsHolders who are represented by any other BIEM society covering the same territory as SAMRO,are not allocated a share of the Licence Revenue from the blanket licence.c. The recording time of works shall be assessed in seconds to arrive at the points per participatingWork of Music in the Distribution.d. The Revenue Point Factor (Rand Point Factor) is determined as follows:-Revenue Point Factor= Distributable Revenue per Distribution ChannelTotal Points per Distribution Channel10. COMPUTED ROYALTY ALLOCATIONS (On-line - New Media, Ringtones and Digital Downloads)Basic Principlesa. Due to the high volumes of downloaded Works of Music, only Works of Music whose Rand valueis cumulatively higher than the level determined by the Board over single or multiple usage fileswill be eligible for Distribution validation and processing.b. Reported usage of all Works of Music that does not exceed the Rand value level determined bythe Board are retained and accumulated as new usage files are added.

13c. Works of Music that do not meet the level approved by the Board over three (3) years will beflagged as ‘Not Distributable’ and the undistributable amount written back to revenue in terms ofpoint 6a of these Rules.11. NOMINATIONAny Rights Holder may by notice in Writing to SAMRO request SAMRO to pay the whole or any statedproportion of the total sum of such Rights Holder’s allocated Royalty Payment in respect ofReproduction Rights to a Person named in such notice together with the nominee’s payment bankdetails, provided that such notice does not refer to a specific subject matter Work of Music. Any suchrequest must be accompanied with such verification and identification and supporting documents asSAMRO may require from time to time and SAMRO may require ‘in person’ identification. If SAMROaccepts any aforementioned nomination, then SAMRO shall pay to the Person so named in the notice,the whole or the stated proportion of each future allocated Royalty Payment from such date determinedby SAMRO within 30 Business Days of the date of acceptance of the nomination. Payment to any sucha nominee shall be at the nominator’s risk and shall constitute full discharge of SAMRO’s liability to thenominator.

1Annexure F4SAMROGrant of Rights Payment Rules1. Introduction(a)Except where a different definition is provided for a term in these Grant of Rights PaymentRules, the words defined in SAMRO’s Constitution shall have the same defined meaning whenused in these Grant of Rights Payment Rules. Unless the context clearly indicates otherwisethe following terms shall have the corresponding defined meaning set out below:(i)“Net Non Licence Revenue” means the net Non Licence Revenue after thedeductions contemplated in clause 30.4 of the Constitution; and(ii)“Performing Rights Royalty Payments” means Royalty Payments in respect ofAdministered Performing Rights;(iii)“SAMRO” means the Southern African Music Rights Organisation Co-operativeLimited.(iv)“VAT Act” means Value-Added Tax Act (89 of 1991), as amended or replaced fromtime to time.(b)Non Licence Revenue arises partially from the investment returns earned on revenue collectedfrom licensing activities before Royalty Payments are paid, and partially from revenue realisedfrom the disposal of assets, administration fees and rental income. These rules should be readin conjunction with SAMRO’s Membership Rules and the other Payment Rules.2. Participants in Grant of Rights PaymentsThe following Members shall participate in Grant of Rights Payments:(a)Associate Members and Full Members; and(b)Candidate Members who were paid (or were allocated for payment) Performing Rights RoyaltyPayments in the preceding financial year.

2Allocation to participants3. The Net Non Licence Revenue will be paid to Members as follows:(a)Pre-allocation(i)Pre-allocation amounts of R 1 000 (one thousand rand) shall be paid to eachparticipating Full Member and each Associate Member, and R 500 (five hundredrand) shall be paid to each participating Candidate Member.(ii)Only Candidate Members who were paid (or were allocated for payment)Performing Rights Royalty Payments in the preceding financial year will participatein the pre-allocation, while “Associate” and “Full” Members participate in the preallocationregardless of whether Performing Rights Royalty Payments were paid (orwere allocated for payment) to them.(b)Proportional Allocation(i)The proportional allocation is based on the proportion the Member’s PerformingRights Royalty Payments paid during the last completed financial year bears to thetotal of all participants’ Performing Rights Royalty Payments in that same financialyear, the weighting in terms of Rule 4 and the shares indicated in sub-paragraph(b)(iii) below.(ii)“Full” Members will receive the full proportional allocation.(iii)The proportional allocation for “Associate” Members is phased in over four years. Inthe first year of attaining “Associate” Membership status, the Member shall receive¼ of the proportional allocation; in the second year 2/4; in the third year 3/4; andfrom the fourth year onwards the Member receives 4/4. In this regard, only fullyears of Membership are counted in order to determine in which category theMember falls, and the duration of Membership is determined at the end of therelevant financial year in respect of which the proportional allocation is to be made.(iv)However, where a Member has acquired all or part of another Member’s interest inthe disposing Member’s Administered IP Rights and as a result thereof has beenelected to Associated Membership in terms of the Membership Rules, then, for thepurpose of determining the acquiring Members entitlement to the proportionalallocation, the acquiring Member shall be deemed to have been an Associate

3Member from the date on which the disposing Member became an AssociateMember.4. Calculation of the proportional allocation of Grant of Rights PaymentThe proportional allocation before determining phasing-in shares is calculated based on weightingfactors determined by the Board in the following categories:(a)Performing Rights Royalty Payments in respect of Works of Music of South African origin;(b)Performing Rights Royalty Payments in respect of Works of Music in the public domain andSouth African origin; and(c)Performing Rights Royalty Payments in respect of Works of Music of foreign origin.5. Adjustments to Non Licence RevenueIf at any time adjustments are made to any License Revenue/Performance Rights Royalty Paymentsand/or the allocation thereof (for example due to errors or incomplete information), then SAMRO shallcontemporaneously recalculate the proportional allocation portion of the Grant of Rights Paymentbased on the adjusted Licence Revenue/Performance Rights Royalty Payments and the Grant ofRights Payment shall be adjusted accordingly. Such adjustments shall be made taking into account theGrant of Rights Payment ‘status’ of the Member, the weighting factor and the phasing-in periodapplicable to Grant of Rights Payment at the time of its original calculation. The original calculation ofGrant of Rights Payment will be adjusted and the affected Members debited or credited accordingly.Any reduction in a Grant of Rights Payment that has been already paid to a Member shall be set-offagainst any amounts due by SAMRO to the Member.6. Taxes(a)In addition to the Grant of Rights Payment, VAT (calculated at the applicable rate) on suchamount will be paid to Members which are registered as “vendors” in terms of the VAT Act.(b)All Grant of Rights Payments to Members will be subject to any applicable Taxes.7. Deceased Members(a)From the date of death of any Member, until the earlier of the date on which a DeceasedMember’s Interest is transferred to an Heir (as contemplated in the Constitution) and the end ofthe Transitionary Period in clause 10.8 of the Constitution, any Grant of Rights Payments towhich the Member would, if living, have been entitled in relation to the Member’s Administered

4IP Rights, shall be made to the executor or other personal representative of the Member’sdeceased estate, or to any lawful Heir(s) of such deceased Member in the event that the estatehas been wound-up, as set out in the Constitution.(b)In this regard, if the Deceased Member’s Interest has been transferred to his Heirs:(i)the Grant of Rights Payment in respect of the deceased Member’s Administered IPRights will be calculated as if the deceased Member were still alive and a separateMember;(ii)for such calculation, the duration of such deceased Member’s Membership will becalculated as the period from the date on which the deceased Member first became aMember; and(iii)such Grant of Rights Payment will then be apportioned among his Heirs inaccordance with each Heir’s pro rata share in the Deceased Member’s Interest.(c)Where a Person is both an existing Member and an Heir, such Person is entitled to a Grant ofRights Payment in respect of both:(i)its own Administered IP Rights; and(ii)the deceased Member’s Administered IP Rights (as calculated in accordance withsub-paragraph 7(b)),which amounts shall be calculated separately, as if they were payments to 2 (two) separateMembers.8. NominationAny Member may by notice in Writing to SAMRO request SAMRO to pay the whole or any statedproportion of the total sum of such Member’s allocated Grant of Rights Payment to a Person named insuch notice together with the nominee’s payment bank details, provided that such notice does not referto a specific subject matter Work of Music. Any such request must be accompanied with suchverification and identification and supporting documents as SAMRO may require from time to time andSAMRO may require ‘in person’ identification. If SAMRO accepts any aforementioned nomination, thenSAMRO shall pay to the Person so named in the notice, the whole or the stated proportion of eachfuture allocated Grant of Rights Payment from such date determined by SAMRO within 30 BusinessDays of the date of acceptance of the nomination. Payment to any such a nominee shall be at thenominator’s risk and shall constitute full discharge of SAMRO’s liability to the nominator.---000---