9.6 SPECIAL RESOLUTION IN SECTION 65(11) – FUNDAMENTAL TRANSACTION
This section deals with the required special resolution to approve any proposed fundamental transaction to the extent required by Part A of Chapter 5.
We need to look at s 112 which deals with the proposal to dispose of all or the greater part of the assets of an undertaking. Where the disposal is not pursuant to a business rescue plan or between companies within the same group, wholly owned subsidiary and holding company and various other combinations a company may not dispose of all or the greater parts of its assets or undertaking unless this disposal has been approved by a special resolution of the shareholders in accordance with s 115 and the company has satisfied all other requirements as set out in s 115 to the extent those requirements are applicable to such a disposal of that company.
There are also some requirements in regard to the notice of a shareholders meeting to consider. A resolution to approve a disposal must be delivered within the prescribed time and in the prescribed manner to each shareholder of the company and this will be subject to s62 which deals with all the notice requirements of the meeting. The notice must include or will be accompanied by a written summary of the precise terms of the transactions or series of transaction to be considered at the meeting.
Any part of an undertaking or assets of a company to be disposed of must be fairly valued as calculated in the prescribed manner as at the date of the proposal which must be determined in the prescribed manner.
A resolution as specified above is effective only to the extent that it authorises a specific transaction.
We now need to look at some of the requirements for the approval of this transaction in terms of s 115. Ss 1 says that despite the provisions of s 65 the provision of the Company’s MOI or any resolution adopted by the board or holders of its securities to the contrary a company may not dispose of, or give effect to an agreement or series of agreements to dispose of all, or the greater parts of its assets or undertaking, implement an amalgamation or merger, or implement a scheme of arrangement unless the disposal etc. has been approved in terms of this section or is subject to an approved business rescue plan.
Ss 1(b) deals with the situation where the takeover amalgamation etc. needs to be handled by the takeover regulations panel where a compliance certificate is to be issued.
Ss 115 (2) deals with the fact that the transaction must be approved by special resolution and at least 25% of all voting rights on the matter or any higher if the MOI says so. Part B deals with the situation where the shareholders are a holding company and may indicate the major portion of the holding company assets have been disposed of. Where there is opposition to the transaction of at least 15% then the company has to apply to court to get the court to review the transaction in accordance with ss 7.