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Salient features of proposed new memorandum of incorporation

The salient features of the New MOI to be adopted by Blue Label:

  Theme   Contents of New MOI
  Definitions   Words and expressions defined in the Act and which are not defined in the New MOI, shall have the meanings given to them in the Act.
  Amendments to the New MOI   Subject to the Listings Requirements and the Act, the New MOI may only be amended in accordance with section 16(1)(c) of the Act and if approved by a special resolution. The board is empowered to correct errors substantiated as such from objective evidence or which are self evident errors in the New MOI.
  Authorised securities   As stipulated in clause 5.1 of the New MOI, the Company is authorised to issue (which includes shares already issued at any time) 1 000 000 000 (one billion) ordinary shares with a par value of R0.000001 each.
  Shareholders’ voting rights   Clause 20.20 of the New MOI provides that every shareholder who is present at a shareholders’ meeting, whether as a shareholder or as proxy for a shareholder shall be entitled to:

(i) 1 (one) vote if voting is by a show of hands, irrespective of the number of voting rights associated with the ordinary shares held by that shareholder; and
(ii) such number of voting rights associated with the ordinary shares held by that shareholder if voting is by polling.

The holders of any securities, other than ordinary shares, shall not be entitled to vote on any resolution at a shareholders’ meeting.
  Authority to issue and repurchase securities   In terms of clause 5.5 (and in respect of capitalisation shares, clause 14) of the New MOI, the directors will have the authority to issue shares, provided the requisite approval of the shareholders has been obtained as required by the Act and the Listings Requirements.

Clauses 39 and 40 of the New MOI authorises the Company to repurchase its securities, including pursuant to an odd-lot offer, subject to the requirements of the Act and the Listings Requirements.
  Financial assistance   Clause 13 of the New MOI stipulates that the board may authorise the Company to provide financial assistance to any person 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 such securities of the Company, as set out in section 44 of the Act.
  Pre-emption on issue of shares   Clause 5 of the New MOI provides that subject to certain exceptions contemplated in the Act (e.g. where shares are issued in terms of an approved share incentive scheme), where the Company contemplates an issue of shares, such offer will be made to the existing holders of that class of shares in proportion to their existing shareholding, except with the prior approval of shareholders by ordinary resolution and the Listings Requirements.
  Holding of beneficial interest   Clause 12 of the New MOI provides for securities to be held by one shareholder for the beneficial interest of another. In terms of section 56(3) of the Act these securities may be voted upon by the holder of the beneficial interest at a shareholders’ meeting without a proxy, provided that the beneficial interest includes the right to vote on the matter and the person’s name is on the Company’s register of disclosures as the holder of a beneficial interest.
  Audit committee and auditor   Section 94 of the Act prescribes that the Company is required to have an audit committee elected by its shareholders at its annual general meeting. Clauses 20 and 33 of the New MOI, read with section 94 of the Act, sets out the requirements regarding the election, as well as the duties of this committee.

Clause 20 of the New MOI, read with section 93 of the Act, deals with the requirements of the Act in respect of external auditors.
  Shareholders’ meetings   The Company shall be subject to any prohibition in the Listings Requirements concerning the passing, by way of round robin resolution, of resolutions that could be voted on at a shareholders’ meeting convened in terms of the Listings Requirements.

All shareholders’ meetings must be convened in accordance with the Act, and the Listings Requirements.

A shareholder may appoint a proxy, who need not be a holder of the Company’s securities as provided for in section 58 of the Act.

Provision is made in clause 20.28 of the New MOI for shareholders to participate in shareholders’ meetings by electronic communication as required in section 61(10) of the Act.

Clause 20.7 of the New MOI provides that the quorum for a shareholders’ meeting is at least 25% of all the voting rights that are entitled to be exercised, provided at least 3 (three) holders are present (or represented by proxy) at the meeting.
  Record date   Clause 16 of the New MOI requires the board to determine the record dates to ascertain participation and rights of shareholders, in accordance with the Listings Requirements (and any other prescribed requirements).
  Election of directors and alternate directors and filling of vacancies   Clause 25.1 of the New MOI provides that in addition to the minimum number of directors, if any, that the Company must have to satisfy any requirement in terms of the Act to appoint an audit committee and a social and ethics committee, the board shall comprise of not less than 5 (five) directors, to be elected by the shareholders, as contemplated in section 68 of the Act.

The appointment of alternate directors is permitted by clause 26 of the New MOI.

In terms of clause 25.5 of the New MOI, the board is authorised to fill any vacancy occurring on the board. However such director shall cease to hold office at the first annual general meeting held after his appointment, unless he is elected at that meeting.
  Cessation of office as director or alternate director   In addition to the grounds on which a director (and alternate director) may cease to hold office as such as set out in the Act, a director shall cease to hold office as such in the following circumstances listed in clause 25.35 of the New MOI:

(a) if he becomes insolvent, or assigns his estate for the benefit of his creditors, or files a petition for the liquidation of his affairs, or compounds generally with his creditors; or
(b) if he becomes of unsound mind; or
(c) if he is absent from board meetings for 6 (six) consecutive months without leave of the directors and is not represented at any such meetings during such 6 (six) consecutive months by an alternate director and the directors resolve that the office be vacated, provided that the directors shall have the power to grant any director leave of absence for any or an indefinite period; or
(d) 1 (one) month or, with the permission of the directors earlier, after he resigns his office by notice in writing to the Company; or
(e) if his employment relationship with the Company is terminated for whatsoever reason, including but not limited to, resignation, retirement, misconduct or otherwise;
(f) if he is removed by resolution of the board approved by at least 2/3 of the votes cast on the relevant resolution, for being negligent or derelict in performing the functions of a director, provided that the Company has the minimum number of directors as prescribed by the Act and this New MOI.
  Remuneration of directors, alternate directors and members of board committees   In terms of clause 28.2 of the New MOI, the directors shall be paid all their travelling and other expenses properly and necessarily incurred by them in and about the business of the Company, including in relation to attending board meetings or of committees thereof. If any director is required to perform extra services or to reside abroad or shall be specifically occupied in and about the Company’s business, he shall be entitled to receive such remuneration, which may be either in addition to or in substitution for any other remuneration, as determined by a disinterested quorum of the board.

In terms of clause 26.3 of the New MOI, an alternate director shall not have any claim of any nature against the Company for any remuneration of any nature whatsoever.
  Retirement of directors   Clause 25.17 of the New MOI provides that with effect from the annual general meeting of the Company and subject to the provisions relating to the disqualification of directors, at least 1/3 of the directors or, if their number is not three or a multiple of three, the number nearest to 1/3, but not less than 1/3 then holding that position, shall retire. The directors who are to retire are, firstly those who have been appointed to fill a casual vacancy or as an additional to the board, and secondly, those who have held their position for the longest period since their last election, but as between persons who became directors on the same day, the determination shall be made by ballot, unless otherwise agreed among themselves.
  Executive directors   The board may from time to time appoint one or more of the directors as executive directors or the managing directors of the Company, on such terms and conditions as to remuneration and otherwise as may be determined from time to time by the board and as set out in clause 27 of the New MOI.

Any executive or managing director appointed in terms of clause 27 of the New MOI may be appointed by contract for a maximum period of three years at any one time and is subject to the same provisions regarding retirement by rotation and dismissal as any other director of the Company. The executive or managing director shall be eligible for reappointment at the expiry of any period of appointment. Should he cease to hold the office of director for any cause he shall ipso facto cease to be the managing director or executive director without prejudice to any claim he may have for damages as a result thereof.
  Board committees   If and for so long as it is required to do so in terms of the Act, the board must appoint a social and ethics committee and an audit committee, having the powers and functions prescribed in sections 72 and 94 of the Act, it being recorded that at least 1/3 of the members of the audit committee at any particular time must have academic qualifications or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resources management.

If and for so long as any of the Company’s securities are listed on the JSE Limited, the board shall appoint such board committees as are required by the Listings Requirements having regard to such functions and powers as are prescribed by or in terms of the Listings Requirements.
  Proceedings of directors   In terms of clause 25.34 of the New MOI, the quorum requirement for a board meeting to begin, the voting rights at such a board meeting and the requirements for approval of a resolution at such a board meeting shall be at least 5 (five) directors (or their alternates) present at such board meeting in person.

In terms of clause 25.14 of the New MOI, the board may appoint a chairperson and/or a deputy chairperson of the board and determine the period for which each is to hold office. At any board meeting the chairperson of the board, or if he is not present or willing to act as such, the deputy chairperson present and willing to act as such, shall act as chairperson. If no chairperson or deputy chairperson has been elected or willing to act as such within 10 minutes of the time appointed for the holding of the meeting, the directors present at any board meeting shall choose one of their number to be chairperson of the board meeting.

In terms of clause 25.15 of the New MOI, in the case of a tied vote the chairperson may not have a second or deciding vote, and the resolution being voted on fails.

In terms of clause 25.12 of the New MOI, written resolutions may be adopted by the written consent of the board provided that all of the directors adopt such resolutions by written consent.
  Distributions   The Company shall be entitled to make distributions (including dividends) as stipulated in clause 17 of the New MOI subject to the requirements set out in section 46 of the Act being met which include, for example, the solvency and liquidity test (as contained in section 4 of the Act).
  Notices   Clause 22 of the New MOI regulates, inter alia, the manner in which notices may be given to shareholders of the Company.
  Indemnity   Clause 30 of the New MOI provides that the Company may advance expenses to a director, directly or indirectly indemnify a director, or purchase insurance cover to protect a director or the Company, as contemplated in section 78 of the Act.

 
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