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Do your company’s minutes of meetings comply with the provisions of the Companies Act (Act No 73 of 2008)?

Your company probably holds meetings at least once a month, which, in terms of the Companies Act, can be differentiated between:

  1. Meetings held by the shareholders of the company; and
  2. Meetings held by the directors of the company.

Keeping a record of meetings

The way of recording discussions and decisions is obviously to do so in writing, such document being referred to as the minutes of the meeting.  The person who has presided over the meeting has the authority to sign the document as a correct record of the proceedings of the meeting.  Therefore, once the minutes have been signed, they become prima facie evidence of what transpired at the meeting.

Although there is no common-law requirement relating to the form in which such minutes must be kept, we advise that your company has an internal process with regard to documenting the proceedings of meetings, in order to ensure that there is an adequate record thereof.

Previously, the Companies Act of 1973 had very specific provisions regarding the keeping of minutes, i.e. that they had to be in written form and recorded in a bound book with consecutively numbered pages.  However, this has changed to be simpler.  In terms of the current Companies Act it is now possible for minutes to be maintained in electronic format.  Section 24 permits a company to maintain records in any form provided that the minutes can be converted into written form within a reasonable time.

Resolutions

The decisions taken at the meeting are known as resolutions, which could be defined as the outcome of consideration of issues that have been decided by due process, having been debated adequately and a decision being reached.  It is important to record these decisions as accurately as possible, so that there is no dispute later on as to what had been agreed on at the meeting.

Therefore, the Companies Act has specific rules when it comes to the documentation of resolutions:

  1. Shareholders resolutions

Shareholders of a Company can pass either a normal or a special resolution.  The voting percentages of shareholders that should vote in favour of a resolution in order to pass that resolution, will depend on the percentages as contained in the Memorandum of Incorporation of the Company.

The occasions when a company is required to pass a special resolution by the shareholders of the Company, are set out in Section 65 (11) of the Companies Act.

The Companies Act does not specifically require that shareholders’ resolutions be sequentially numbered or dated, but this will be good practice.

  1. Board resolutions

The Companies Act has specific requirements when it comes to resolutions passed by the directors of a company.  Section 73(7) requires that such resolutions must be dated and sequentially numbered.  For instance 201503 – 01 for the first resolution passed in March 2015.

It is important to note that the resolutions (i.e. the decisions taken at the meeting) should be sequentially numbered, and not the minutes of the meeting.

Furthermore, such resolutions are only effective as of the date of the resolution, unless the resolution states otherwise.

Recording disagreement

It often happens that all of the directors of a company do not agree with the decision being taken by the majority of the directors.

In view of Section 77 of the Companies Act, relating to directors incurring personal liability for certain wrongful actions or failure to act, it would be advisable for the directors concerned to request that the minutes / resolutions reflect that they did not agree with the decision being taken.  This is a right that cannot be denied the directors.

Do your company’s minutes of meetings comply with the provisions of the Companies Act?

At Aucamp Scholtz Lubbe, we are able to assist with this compliance function.  Should you have any queries relating to your company secretarial matters, kindly contact Cornel Roux at pty@asl.co.za, alternatively your relationship director.