Page 48 - Q&A

Is it out with the boardroom table and in with
online meetings?

June 2020
“Our company has for years prided itself on regular board and shareholder
meetings as the basis for the success of our business. Initially we stopped due to
the Covid-19 pandemic but have started meeting again using online meeting
Commercial requirements of the Companies Act by not meeting in person. We have no other
tools. With the pandemic continuing we are worried that we are not meeting the
choice right now. Is it acceptable from a compliance perspective?”
Most people, when they think of a board meeting visualize a board room
and table with directors or shareholders sitting around discussing topics of
importance to the company. Enter the Covid-19 pandemic and overnight this
image is changed, possibly forever, with boardroom chairs replaced by a laptop
screen, tablet or phone. So rightly so, questions arise as to how this situation
aligns with the Companies Act 71 of 2008 (“Companies Act”).
Fortunately, the Companies Act has envisaged a growing trend for companies
to be able to hold meetings with participants in remote locations and
participating via electronic means. Although the coronavirus has forced many
companies to meet like this, it is not novel territory for the Companies Act.
That said, it must still be understood that irrespective of the format of the meeting,
the Companies Act still requires prescribed methods of convening directors
and shareholders meetings. If a meeting is not duly called, the decisions resolved
at those meetings may be declared invalid. These methods are contained in the
Companies Act and the Memorandum of Incorporation of the company.

So, even if the meeting will take place electronically, directors and shareholders
generally need to be given notice of a formal meeting. Also, shareholders will
need to be given reasons for the meeting as well as of any general resolution to
be taken at the meeting. Once a meeting has been called, the next logical step
will be to convene the meeting. Here, as stated above, the Companies Act allows
directors and shareholders meetings to be held via electronic communication.

For shareholders meetings, resolutions that need to be taken by shareholders
can be circulated to the shareholders for consideration. The shareholders
who are entitled to vote can then submit their ballots or polls. In the event that
the resolution is adopted, it will have the same effect as if the resolution was
approved by voting at a meeting.
The same applies to directors. Unless the Memorandum of Incorporation
provides otherwise, directors may make decisions by written consent of the
majority of the directors, either in person or by way of electronic communication.
The effect will be the same as if the matter was resolved at a meeting of directors.

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