Round Robin Resolutions under Section 60 of the Companies Act 71 of 2008

The Companies Act 71 of 2008 (CoA) provides an alternative mechanism for companies to adopt resolutions without convening a formal shareholders’ meeting. This mechanism, colloquially referred to as "round robin" resolutions, allows both ordinary and special resolutions to be passed in writing, provided that the requirements of section 60 are met.

Properly adopted written resolutions carry the same legal weight as those passed during a duly convened shareholders’ meeting. Additionally, section 60(3) extends this mechanism to the election of directors, permitting written polling of shareholders in place of a formal meeting.

Requirements for Passing Round Robin Resolutions

To validly pass a written shareholders’ resolution, the following conditions, as stipulated in section 60(1) of the CoA, must be satisfied:

• Submission to All Entitled Shareholders: The resolution must be submitted for consideration to all shareholders who are entitled to exercise voting rights in relation to the resolution.
• Timeframe for Voting: Shareholders entitled to vote on the resolution must do so in writing within 20 business days from the date the resolution is submitted. This statutory timeframe emphasizes the importance of timely action.

Voting Thresholds

The level of support required to pass a written resolution mirrors the thresholds applicable to resolutions passed at shareholders’ meetings. Section 60(2)(a) specifies that:

• An ordinary resolution: Requires support from shareholders holding at least 50% of the voting rights (or a higher percentage if stipulated in the company’s Memorandum of Incorporation (MOI)).
• A special resolution: Requires support from shareholders holding at least 75% of the voting rights (unless a different percentage is provided in the MOI).

The doctrine of unanimous assent may also apply, allowing unanimous written consent to substitute for a formal meeting in certain circumstances. However, this is not permissible where the CoA explicitly requires a physical meeting.

Post-Adoption Obligations

For listed companies, additional disclosure obligations apply under the JSE Listings Requirements. Companies must report the results of shareholders’ meetings and annual general meetings (AGMs) within 48 hours via the Stock Exchange News Service (SENS).

Restrictions on Round Robin Resolutions

Certain matters are excluded from the scope of round robin resolutions. These include:

• Annual General Meetings (AGMs): Section 60(5) explicitly prohibits conducting AGM business via written resolutions.
• Removal of Directors: Section 71 requires that a meeting of shareholders be convened to address the removal of directors, ensuring the affected director has the opportunity to make representations.
• Fundamental Transactions: Fundamental transactions, as outlined in sections 112 to 114, must be approved at a shareholders’ meeting through a special resolution, as required by section 115(2).

Despite these restrictions, the election of directors is explicitly permitted by way of a written resolution under section 60(3). This provision underscores the flexibility offered by round robin resolutions in certain corporate actions.

Conclusion

Round robin resolutions under section 60 of the CoA provide a streamlined alternative to convening formal shareholders’ meetings, enabling companies to adopt resolutions efficiently while maintaining statutory compliance. However, careful attention must be paid to the specific requirements and restrictions imposed by the Act to avoid procedural missteps.