South Africa: Quorums And Resolutions Under The Companies Act

Last Updated: 20 April 2015
Article by Claire Cowan

To the extent that it has not yet amended or replaced its constitutive documents to bring them into line with the Companies Act, 2008 ("the Act"), a company incorporated before 1 May 2011 is required to call shareholders' meetings and pass resolutions in accordance with the provisions of the Act, and not in accordance with the provisions of its Memorandum and Articles of Association.

The Act has brought about fundamental changes in the manner in which shareholder resolutions are passed.

Under the Companies Act, 1973, an ordinary resolution was typically passed on a show of hands if supported by more than 50% of the shareholders of the company present at a meeting and entitled to vote on the matter.  For example, if 12 shareholders entitled to vote on a matter were present at a meeting, a resolution would not be passed unless at least 7 of those 12 shareholders voted in favour of the resolution. 

The Act introduces a different threshold in this regard.  It provides that an ordinary resolution is passed if more than 50% of the shareholders who exercise voting rights on the matter, vote in favour of the resolution.  This means that if 12 shareholders are present at a meeting and entitled to vote on a matter and voting is on a show of hands, if only 4 of them exercise a vote in relation to the resolution and of the 4 that vote, 3 vote in favour of the resolution, the threshold would have been met to pass the resolution.  This is because more than 50% of the persons who exercised voting rights on the matter would have voted in favour of the resolution. 

For the purposes of counting the votes, an abstention is not taken into account since by abstaining, one has not "exercised" a vote.  It is very important that shareholders attend and exercise their votes at meetings as a failure to do so will not prevent a resolution from being passed by the other shareholders.
Although a poll can be called for under certain circumstances, the polled votes are also calculated with reference to the relative shareholdings of only those who exercised a vote on the matter under consideration.

Of course this cannot happen at a shareholders' meeting unless the meeting is quorate.  In terms of the Act, before shareholders can begin their meeting, the chairperson must ensure that persons representing at least 25% of the voting rights that can be exercised on at least one matter on the agenda for the meeting, are present.  

Once this quorum has been established, the Act introduces a further requirement that a matter may not be considered unless persons representing at least 25% of the voting rights which may be exercised on the matter, are present when the matter is called. 

Since the Act provides that all shares of the same class have identical rights, this second quorum is only a concern if shareholders' holding different classes of shares having different voting rights are attending the meeting, or if attendees leave the meeting before it draws to a close.  In such cases, before calling a matter to be considered at the meeting, the chairperson will have to assess whether the quorum requirements for considering the matter are satisfied.

If a company has more than 2 shareholders, the Act adds a third requirement to the effect that in addition to satisfying the above criteria, at least 3 shareholders must be present before a meeting can begin, or a matter may begin to be debated.

If a quorum is not present within one hour after the time at which a shareholders' meeting is scheduled to begin, the Act provides for an automatic postponement of the meeting for a period of one week.  At the postponed meeting, the shareholders present at the meeting in person or by proxy are deemed to be a quorum.

Instead of voting at a meeting, shareholders may vote on a resolution in writing within a period of 20 business days after the date on which they are given notice of the resolution.  The Act provides that a resolution is passed in this manner if it is supported by sufficient votes for it to have been adopted at a properly constituted shareholders' meeting.

It appears that when voting in writing, except for the election of directors which can be conducted by written polling, the outcome of the vote is calculated on a "show of hands" with reference to the shareholders who actually cast a vote, since the Act only permits shareholders to demand a poll when present at a meeting.
If the quorum requirements set out in the Act are not suitable, they can be changed in a company's memorandum of incorporation ("MOI").  For example, one could increase the quorum required before a matter may be considered so that on consideration of the matter, sufficient shareholders are present for a balanced decision to be made.   

It is also possible to include in an MOI, different percentages for passing resolutions on different matters, provided that at all times there are at least 10 percentage points between the highest requirement to pass an ordinary resolution and the lowest requirement to pass a special resolution. 

More stringent quorum requirements and higher thresholds for passing resolutions may assist to prevent a situation where resolutions are passed in the absence, or without the input, of the majority of the shareholders of a company. 

These are just some of the reasons why companies incorporated prior to 1 May 2011 should seriously consider reviewing and amending their MOIs if they have not done so already.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions