Explanatory notes

Presentation of the annual financial statements

In terms of section 61(8)(a) of the Act, the directors report, audited Group and Company annual financial statements for the immediately preceding financial year and an audit committee report is to be presented to shareholders at the AGM.

Ordinary resolution numbers 1 to 3 (inclusive): Re-election and election of directors of the Company

In accordance with the Company’s memorandum of incorporation, one third of the directors are required to retire at each annual general meeting and may offer themselves for re-election. Messrs GD Harlow and NN Lazarus SC retire by rotation at the AGM in accordance with article 15.1 of the Company’s memorandum of incorporation, and have offered themselves for re-election. Brief biographies in respect of directors offering themselves for re-election are contained on pages 24 and 25 of the Integrated Annual Report 2012.

The Company’s memorandum of incorporation furthermore states that, any person appointed to fill a casual vacancy or as an addition to the board shall retain office only until the following annual general meeting of the Company and shall then retire and be eligible for election. Mr JS Vilakazi retires from the board in accordance with article 13.2 of the Company’s memorandum of incorporation.

The board is satisfied with the performance of each of the directors standing for re-election and election, as appropriate, and that they continue to make an effective and valuable contribution to the Company and to the board.

The board recommends to shareholders that they should vote in favour of the re-election and election, as appropriate, of the retiring directors referred to in Ordinary resolution numbers 1 to 3 (inclusive).

Ordinary resolution number 4: Re-appointment of external auditors

In terms of section 90(1) of the Act, each year at its annual general meeting, the Company must appoint an auditor meeting the requirements of section 90(2) of the Act.

PwC has expressed its willingness to continue in office and Ordinary resolution number 4 proposes the re-appointment of PwC as the Company’s auditors until its next annual general meeting.

In addition, Mr EJ Gerryts is re-appointed as the individual registered auditor for the ensuing year as contemplated in section 90(3) of the Act.

The Audit, Risk and Compliance Committee has satisfied itself that the proposed auditor, PwC and Mr Gerryts, are independent of the Company in accordance with sections 90 and 94 of the Act and the applicable rules of the International Federation of Accountants.

The Audit, Risk and Compliance Committee has recommended the re-appointment of PwC as independent registered auditor of Blue Label for the 2013 financial year.

Ordinary resolution numbers 5 to 8 (inclusive): Election of Audit, Risk and Compliance Committee members

In terms of section 94(2) of the Act, audit committee members must be elected by shareholders at each annual general meeting. King III likewise requires shareholders of a public company to elect the members of an audit committee at each annual general meeting.

In terms of Regulation 42 of the Companies Regulations, 2011 relating to the Act, at least one-third of the members of the Company’s Audit, Risk and Compliance Committee at any particular time must have academic qualifications, or experience, in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management. The proposed members have experience in audit, accounting, commerce, economics, law, corporate governance and general industry, as is evident from the curriculum vitae of each of the members contained on pages 22 to 25 of the Integrated Annual Report 2012.

Ordinary resolution number 9: General authority granted to the directors to allot and issue authorised but unissued ordinary shares

In terms of the Company’s memorandum of incorporation, read with the Listings Requirements, shareholders of the Company may authorise the directors to, inter alia, issue any unissued ordinary shares and/or grant options over them, as the directors deem appropriate.

The existing authorities granted by shareholders at the previous annual general meeting held on 22 November 2011, will expire at the AGM unless renewed. The authorities granted under these resolutions are subject to the Act, the Listings Requirements and the memorandum of incorporation of the Company.

The directors have decided to seek annual renewal of this authority in accordance with best practice and are of the opinion that the granting of this general authority by shareholders is in the best interests of the Company. The directors have no current plans to make use of this authority, but wish to ensure that by having it in place, they have the flexibility to allow the Company to take advantage of business opportunities that may arise in the future.

Ordinary resolution number 10: General authority to issue ordinary shares for cash in terms of the Listings Requirements

In terms of Ordinary resolution number 10, shareholders authorise the directors to allot and issue the authorised but unissued shares, as the directors in their discretion deem appropriate.

In terms of the Listings Requirements, when shares are issued, or considered to be issued, for cash (including the extinction of a liability, obligation or commitment, restraint, or settlement of expenses), the shareholders have to authorise such issue with a 75% (seventy-five per cent) majority.

The existing general authority to issue shares for cash granted by shareholders at the previous annual general meeting, held on 22 November 2011, will expire at the AGM, unless renewed. The authority will be subject to the provisions of the Act and the Listings Requirements.

The aggregate number of ordinary shares capable of being allotted and issued for cash are limited as set out in the resolution.

The directors have no current plans to make use of this authority, but consider it beneficial to renew this authority to enable the Company to take advantage of any business opportunity that may arise in future.

Ordinary resolution number 11: Indemnification of directors

Section 78(5) of the Act provides that the Company may indemnify its directors and officers in respect of any liability arising other than as contemplated in the Act.

Furthermore, in terms of section 78(7), the Company may purchase insurance cover to, inter alia, protect a director against any liability or expense for which the Company is permitted to indemnify a director in terms of section 78(5). In this regard, the Company has, and shall from time to time, obtain insurance cover for its directors and officers in terms of directors and officers liability insurance policies (“Policies”). The cover afforded to the Company’s directors and officers (“Officers”) in terms of such policies might be limited insofar as the scope and quantum of cover is concerned.

The Company wishes to indemnify its Officers against any liability not covered by the Policies and to the extent that such indemnification is permissible according to law. The board is in favour of the Company granting the indemnity but cannot vote on the matter as the directors have an interest in the outcome of the resolution. In these circumstances the proposal to grant the indemnity is referred to shareholders for their consideration and resolution.

Ordinary resolution number 12: Directors’ authority to implement Special and Ordinary resolutions

The reason for Ordinary resolution number 12 is to authorise any director of the Company to do all things necessary to implement the Ordinary and Special resolutions passed at the AGM and to sign all such documentation required to give effect and to record the Ordinary and Special resolutions.

Advisory vote: Endorsement of the remuneration policy

King III, in dealing with boards and directors, requires companies to table their remuneration policy to shareholders for a non-binding advisory vote at the annual general meeting. This vote enables shareholders to endorse the remuneration policy adopted for the remuneration of executive directors. The Blue Label remuneration policy is contained in pages 53 to 56 of the Integrated Annual Report 2012.

The advisory vote is of a non-binding nature only and failure to endorse this resolution will therefore not have any legal consequences relating to existing arrangements. However, the board will take the outcome of the vote into consideration when considering the Company’s remuneration policy and the remuneration of executive directors.

Special resolution number 1: Non-executive directors’ remuneration

Special resolution number 1 is proposed to enable the Company to comply with the provisions of sections 65(11)(h), 66(8) and 66(9) of the Act, which stipulate that remuneration to directors for their services as directors may be paid only in accordance with a special resolution approved by shareholders.

Special resolution number 1 thus requires shareholders to approve the fees payable to the Company’s non-executive directors for the period 1 June 2012 to 31 May 2013.

Full particulars of all remuneration paid to non-executive directors for their services as directors as well as remuneration paid for consulting services rendered, are contained on pages 184 and 185 of the Integrated Annual Report 2012.

Special resolution number 2: General authority to repurchase shares

Special resolution number 2 seeks to allow the Group by way of a general authority to acquire its own issued shares (reducing the total number of ordinary shares of the Company in issue in the case of an acquisition by the Company of its own shares). Any decision by the directors to use the general authority to acquire shares of the Company will be taken with regard to the prevailing market conditions, the share price, the cash needs of the Company together with various other factors and in compliance with the Act, Listings Requirements and the memorandum of incorporation of the Company.

The directors are of the opinion that the renewal of this general authority is in the best interests of the Company as it allows the Group to repurchase the securities issued by the Company through the order book of the JSE Limited should the market conditions and price justify such action.

Special resolution number 3: Approval for the Company to grant financial assistance in terms of sections 44 and 45 of the Act

The Company in the ordinary course of its business will need to provide financial assistance to certain of its subsidiaries, associates and joint ventures in accordance with section 45 of the Act and furthermore it may be necessary for the Company to provide financial assistance in the circumstances contemplated in section 44 of the Act.

Notwithstanding the title of section 45 of the Act, being “Loans or other financial assistance to directors”, on a proper interpretation thereof, the body of the section also applies to financial assistance provided by a company to any related or inter-related company or corporation, a member of a related or inter-related corporation, and to a person related to any such company, corporation or member.

Furthermore, section 44 of the Act may also apply to the financial assistance so provided by a company to any related or inter-related company or corporation, a member of a related or inter-related corporation, or a person related to any such company, corporation or member, in the event that the financial assistance is provided for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the Company or a related or inter-related company, or for the purchase of any securities of the Company or a related or inter-related company.

Both sections 44 and 45 of the Act provide, inter alia, that the particular financial assistance may only be provided –

	pursuant to a special resolution of shareholders, adopted within the previous 2 (two) years, which approved such assistance either for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category; and
	the board is satisfied that
	– immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as contemplated in the Act); and – the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company.

Special resolution number 4: Adoption of a new memorandum of incorporation

The Act came into force on 1 May 2011. The Act contemplates that a company’s founding documents namely, its memorandum of association and articles of association be combined into one document, namely the memorandum of incorporation. Blue Label proposes to adopt a new memorandum of incorporation, in substitution for its memorandum of association and articles of association (which in the course of law became its memorandum of incorporation upon the advent of the Act) in order to ensure that the Company’s constitutional documents are in harmony with the Act and changes to the Listings Requirements.

Shareholders are advised that if a company’s memorandum of incorporation is amended to materially and adversely alter the preferences, rights, limitations or other terms of a class of shares, any holder thereof is entitled to seek relief as contemplated in sections 37(8) and 164 of the Act.

In order to enable shareholders to make an assessment of whether they consider their rights or interests to be affected as aforesaid, the complete New MOI and the existing memorandum of incorporation (formerly the Company’s memorandum and articles of association) have been posted on the Company’s website which is www.bluelabeltelecoms.co.za. Copies of both the New MOI and the existing memorandum of incorporation are also available for inspection at the Company’s registered office during normal business hours at any time prior to the commencement of the AGM. The New MOI should be read in its entirety for a full appreciation of the contents thereof.