5.10 WHO HAS THE POWER TO ISSUE SHARES?
Another potential area for conflict in the future is the fact that the issue of shares is in the hands of the single shareholder/director or even in a company where the directors and the shareholders are the same. It may very well be a problem later on down the line when the company grows and where the shareholders are not fully represented on the board and the board has the power to issue shares. So insofar as the Short Form is concerned, I think that this clause is okay. In terms of the Long Form MOI (for a larger company) it may be that it needs to be strengthened. Perhaps it is a good idea to insert a clause to the effect that where the directors and the shareholders do not align then the power to issue shares must be with the shareholders by special resolution. This special resolution does not have to be filed at the CIPC. S41 of the act deals with shareholder approval to issue shares where they are issued to a director, a related or interrelated person to the company or a nominee of these. A special resolution is also required where the issue is more than 30% of the company. Where shares are issued in proportion to existing holdings then a special resolution is not necessary as nothing changes because voting rights remain the same.