Filing a shareholder proposal in South Africa

This country factsheet provides an overview of the key legal and technical processes related to filing a shareholder proposal in South Africa. Seven additional country factsheets are available, covering Australia, Canada, France, Germany, Japan, the UK and the US.

For more information on how to use shareholder proposals to effect positive change at investee companies, read our guide to filing impactful shareholder proposals.

The information on regulatory requirements in this guidance is correct as of 2022.

Overview of key legal and technical processes in South Africa
Key legislation	Companies Act 71 of 2008^[1] Johannesburg Stock Exchange (JSE) Listing Requirements
Right to file Can a shareholder propose an issue to be included and voted upon at a general meeting?	Shareholders are permitted under section 65(3) of the Companies Act (2008) to propose a resolution concerning “any matter in respect of which they are each entitled to exercise voting rights”. In addition, shareholders may require that the resolution is submitted to shareholders for consideration: at the next shareholders meeting; by written vote; or at a meeting that is demanded by one or more investors (holding in aggregate at least 10% of the voting rights entitled to be exercised in relation to the matter proposed to be considered at the meeting).^[2] However, the use of shareholder proposals to raise a matter of ESG concern with a company’s board is a relatively new and emerging form of shareholder engagement in South Africa.^[3] There are challenges related to issuers contesting the interpretation of section 65(3), the fact that this is an untested area of law, and there being no procedural guidance from the securities regulator (JSE).
Resolution ‘ask’ What power do shareholders have to request a company to take a certain action?	Shareholders have the power to propose a resolution concerning “any matter in respect of which they are each entitled to exercise voting rights”. The Companies Act (2008) refers to the use of shareholder resolutions for some matters such as electing and removing directors, and where shareholder approval is required for certain transactions (such as transactions between the company and a related entity or an individual who has a relationship with the company). While there is no express reference in the Act, other than in section 65(3), to shareholder-proposed resolutions, there is also no indication that those matters which are referred to as requiring a shareholder resolution constitute a closed list of issues on which shareholders can vote. The default position of the Companies Act is that the management of the company is a function that is fundamentally within the purview of the board. Therefore, a proposal by shareholders must be carefully considered to avoid the accusation that it is an attempt to ‘usurp’ the powers of the board. However, Section 7 of the Companies Act 2008 specifies that the Act must be interpreted in a manner that promotes compliance with the Bill of Rights in the Constitution, and in accordance with several other purposes of the Act, including encouraging transparency and high standards of corporate governance.
Ownership threshold What level of shareholding is required to file?	Any two shareholders of the company.
Ownership period Are there any rules around how long shares must have been held for?	No.
Demonstrating ownership What paperwork must proponents provide to demonstrate their holding?	There is no legal or regulatory guidance as to whether shareholders should demonstrate a record of ownership when submitting a resolution.
Filing packet What formal documents are required to submit a proposal and in what form should they be sent?	Section 65(4) states that a resolution must be a) expressed with sufficient clarity and specificity; and b) accompanied by sufficient information or explanatory material to enable a shareholder who is entitled to vote on the resolution to determine whether to participate in the meeting and to seek to influence the outcome of the vote on the resolution. There is no procedural guidance beyond Section 65(4). Filing proponents are advised to include the resolution, clearly stating which shareholders are proposing it, and a brief supporting / explanatory statement. Proposal documents should be presented to the company secretary at the registered address or via email in written form (English language).
Key filing dates When must the resolution be received by?	The JSE listing requirements do not stipulate^[4] the notice period for an AGM. This means there is no typical AGM season and a lack of clarity on key filing dates. It is recommended that proponents of a shareholder proposal look to file as soon as all information is prepared. Paragraph 10.11 of the JSE listing requirements states that ordinary and special resolutions are subject to a minimum notice period of 15 business days. However, as shareholder proposed resolutions must be included in the company’s AGM notice, which is typically released at least a month before, a resolution received after the release of the AGM notice is likely to encounter resistance, even though neither the Companies Act nor the JSE listing requirements prevent the amendment of an AGM notice after it has been released.
Company response How is the company bound to act on receipt of a proposal?	There is no requirement for JSE-listed companies to announce receipt of a shareholder proposal. If a request for a shareholder meeting is considered valid, the company must issue a notice of meeting within 10 business days from the date of receipt of the request to call a meeting, unless the JSE decides otherwise.^[5] The notice of meeting to vote on certain corporate actions will be included in a detailed circular issued to shareholders providing detailed information about the proposed resolution(s).
Right to reject or appeal? Can companies reject the proposal and is there a formal appeals process?	At any time before the start of the meeting, a shareholder or director who believes that the form of the resolution does not meet the requirement of section 65(4) a or b (see above), may seek leave to apply to a court for an order restraining the company from putting the resolution to a vote until the requirements are met. There is no formal appeals system if a company rejects a resolution proposal. There are no legal precedents.
Resubmission Can a proponent re-file at a future AGM if a resolution fails to gather enough support to pass?	Yes. There are no restrictions with regards to filing another proposal in subsequent years if a resolution fails to pass or meet a certain voting threshold.
Withdrawal Can a shareholder withdraw a resolution after it is filed?	Possible.
Representation Is the filer of a shareholder resolution proposal required to attend the AGM?	Filing proponents are not required to attend the AGM to represent the resolution. Shareholders have the right to participate in and speak at shareholder meetings and under section 58 of the Companies Act (2008) a shareholder can appoint an individual (who need not be a shareholder of the company) as a proxy to attend, speak and vote on their behalf.
Voting thresholds What is the voting threshold required for the resolution to pass?	An ordinary resolution must be passed with the support of more than 50% of the voting rights exercised on the resolution. A special resolution must be passed with the support of at least 75% of the voting rights exercised on the resolution. Noting that a company’s Memorandum of Incorporation (MOI) may permit a different percentage of voting rights to approve ordinary and special resolutions, provided there is a margin of at least 10% between the requirements.
Useful resources	Just Share (2021), Legal opinion on shareholders’ right to file climate change-related shareholder resolutions Lexology (2020), Resolutions that may be competently proposed by shareholders, according to the Companies Act (South Africa) Moore Stephens (2011), Companies Act Guide

Overview of key legal and technical processes in South Africa

Key legislation

Companies Act 71 of 2008^[1]
Johannesburg Stock Exchange (JSE) Listing Requirements

Right to file

Can a shareholder propose an issue to be included and voted upon at a general meeting?

Shareholders are permitted under section 65(3) of the Companies Act (2008) to propose a resolution concerning “any matter in respect of which they are each entitled to exercise voting rights”.

In addition, shareholders may require that the resolution is submitted to shareholders for consideration:

at the next shareholders meeting;
by written vote; or
at a meeting that is demanded by one or more investors (holding in aggregate at least 10% of the voting rights entitled to be exercised in relation to the matter proposed to be considered at the meeting).^[2]

However, the use of shareholder proposals to raise a matter of ESG concern with a company’s board is a relatively new and emerging form of shareholder engagement in South Africa.^[3] There are challenges related to issuers contesting the interpretation of section 65(3), the fact that this is an untested area of law, and there being no procedural guidance from the securities regulator (JSE).

Resolution ‘ask’

What power do shareholders have to request a company to take a certain action?

Shareholders have the power to propose a resolution concerning “any matter in respect of which they are each entitled to exercise voting rights”.

The Companies Act (2008) refers to the use of shareholder resolutions for some matters such as electing and removing directors, and where shareholder approval is required for certain transactions (such as transactions between the company and a related entity or an individual who has a relationship with the company). While there is no express reference in the Act, other than in section 65(3), to shareholder-proposed resolutions, there is also no indication that those matters which are referred to as requiring a shareholder resolution constitute a closed list of issues on which shareholders can vote.

The default position of the Companies Act is that the management of the company is a function that is fundamentally within the purview of the board. Therefore, a proposal by shareholders must be carefully considered to avoid the accusation that it is an attempt to ‘usurp’ the powers of the board.

However, Section 7 of the Companies Act 2008 specifies that the Act must be interpreted in a manner that promotes compliance with the Bill of Rights in the Constitution, and in accordance with several other purposes of the Act, including encouraging transparency and high standards of corporate governance.

Ownership threshold

What level of shareholding is required to file?

Any two shareholders of the company.

Ownership period

Are there any rules around how long shares must have been held for?

No.

Demonstrating ownership

What paperwork must proponents provide to demonstrate their holding?

There is no legal or regulatory guidance as to whether shareholders should demonstrate a record of ownership when submitting a resolution.

Filing packet

What formal documents are required to submit a proposal and in what form should they be sent?

Section 65(4) states that a resolution must be a) expressed with sufficient clarity and specificity; and b) accompanied by sufficient information or explanatory material to enable a shareholder who is entitled to vote on the resolution to determine whether to participate in the meeting and to seek to influence the outcome of the vote on the resolution.

There is no procedural guidance beyond Section 65(4). Filing proponents are advised to include the resolution, clearly stating which shareholders are proposing it, and a brief supporting / explanatory statement. Proposal documents should be presented to the company secretary at the registered address or via email in written form (English language).

Key filing dates

When must the resolution be received by?

The JSE listing requirements do not stipulate^[4] the notice period for an AGM. This means there is no typical AGM season and a lack of clarity on key filing dates.

It is recommended that proponents of a shareholder proposal look to file as soon as all information is prepared.

Paragraph 10.11 of the JSE listing requirements states that ordinary and special resolutions are subject to a minimum notice period of 15 business days. However, as shareholder proposed resolutions must be included in the company’s AGM notice, which is typically released at least a month before, a resolution received after the release of the AGM notice is likely to encounter resistance, even though neither the Companies Act nor the JSE listing requirements prevent the amendment of an AGM notice after it has been released.

Company response

How is the company bound to act on receipt of a proposal?

There is no requirement for JSE-listed companies to announce receipt of a shareholder proposal. If a request for a shareholder meeting is considered valid, the company must issue a notice of meeting within 10 business days from the date of receipt of the request to call a meeting, unless the JSE decides otherwise.^[5]

The notice of meeting to vote on certain corporate actions will be included in a detailed circular issued to shareholders providing detailed information about the proposed resolution(s).

Right to reject or appeal?

Can companies reject the proposal and is there a formal appeals process?

At any time before the start of the meeting, a shareholder or director who believes that the form of the resolution does not meet the requirement of section 65(4) a or b (see above), may seek leave to apply to a court for an order restraining the company from putting the resolution to a vote until the requirements are met.

There is no formal appeals system if a company rejects a resolution proposal.

There are no legal precedents.

Resubmission

Can a proponent re-file at a future AGM if a resolution fails to gather enough support to pass?

Yes. There are no restrictions with regards to filing another proposal in subsequent years if a resolution fails to pass or meet a certain voting threshold.

Withdrawal

Can a shareholder withdraw a resolution after it is filed?

Possible.

Representation

Is the filer of a shareholder resolution proposal required to attend the AGM?

Filing proponents are not required to attend the AGM to represent the resolution.

Shareholders have the right to participate in and speak at shareholder meetings and under section 58 of the Companies Act (2008) a shareholder can appoint an individual (who need not be a shareholder of the company) as a proxy to attend, speak and vote on their behalf.

Voting thresholds

What is the voting threshold required for the resolution to pass?

An ordinary resolution must be passed with the support of more than 50% of the voting rights exercised on the resolution.

A special resolution must be passed with the support of at least 75% of the voting rights exercised on the resolution.

Noting that a company’s Memorandum of Incorporation (MOI) may permit a different percentage of voting rights to approve ordinary and special resolutions, provided there is a margin of at least 10% between the requirements.

Useful resources

Just Share (2021), Legal opinion on shareholders’ right to file climate change-related shareholder resolutions

Lexology (2020), Resolutions that may be competently proposed by shareholders, according to the Companies Act (South Africa)

Moore Stephens (2011), Companies Act Guide