Table of Essentials: the essentials of this MOI are determined by the table below. Essential Point Answer Guidance These are simple tips, for further free guidance resources, please visit skylaw.co (We suggest you delete this column when you are finished completing the questions, the document will look more professional!) Company name: [INSERT] Proprietary Limited Pretty much self explanatory Company Registration Number: [INSERT] You will get this from your company incorporation docs, eg. Incorporation Certificate. An example of this number is 2015/123456/07 (don’t use that number as your own!) Date on which the shareholders adopt the Special Resolution Date: [INSERT] Be sure to pass a shareholder’s special resolution with the same date. (You can find free examples of resolutions and guidance notes at skylaw.co) What is the financial year end of the Company? Choose one and delete the others: 28 February Other: [INSERT] Number of authorized shares Number: [INSERT] In words: [INSERT] Remember: “authorized shares” are the number of shares which the company has been authorized to potentially issue. It is not the same as “issued shares” which are the number of shares actually issued and held by shareholders. The number of authorized shares is so important we ask you to say it twice! Seriously. Under no circumstances must you issue more shares than you have authorized.
Shareholders until the Company has repaid claims by Shareholders on Loan Account Subject to clause 25, the must declare dividends in the following circumstances: [INSERT] consult your shareholders and your accountant when setting such a dividend policy. Restrictions on share transfers Restrictions on share transfers apply as described in clause 10. Keep if applicable: However, any shareholder may transfer its shares to a company or a trust formed primarily for the benefit of: that shareholder and/or (in the case of a shareholder who is a natural person) his/her spouse and/or descendants As this is an MOI for a private company, by definition the transfer of shares by its shareholders are restricted. On that basis we have included clause 10, which describes the most basic of restrictions on transfer. Namely, this means that no shareholder can sell its shares without first offering its shares to the other shareholders. The column to the left provides you with the ability to change the restriction on transfer. Essentially, it allows any shareholder to hold its shares through another entity. That may be through a company or a The only condition is that the company or the trust be created for the primary benefit of the original shareholder or his/her family. If those conditions are satisfied, then the relevant shareholder can make that transfer without first offering the shares to the other shareholders AND without the consent of the other shareholders. Nominee arrangements Choose one and delete the others: Nominee arrangements are permitted without restriction Nominee arrangements are permitted, but restricted Nominee arrangements are not permitted and clause 12 of the MOI is automatically applicable as This allows one person (a “nominee”) to hold shares on behalf of another (a “beneficial owner”). This is important: the holder will not be the true shareholder. Rather, all benefits (including the right to decide how shares votes are voted) actually lie with the beneficial owner.
appropriate to the above selection. Shareholder loans: interest Choose one and delete the others: Shareholder loans will not attract interest Shareholder will attract interest at the following rate of interest: [INSERT] percent. It is very common for shareholders to provide loan funding to their company. This clause just records whether interest will be paid by the company to the shareholders, and if so how much. When it comes to interest, consider paying interest equal to the “prime” rate of interest your bank charges you, plus a “margin”. E.g. Prime rate charged by XX Bank plus 2%. Alternatively, you can fix this interest percentage. Shareholder loans: repayment Choose one and delete the others: All shareholder loans will be repaid proportionately over time (“pro rata”) as and when the Company has the funds to do so. Shareholder loans will be not be repaid proportionately over time (“pro rata”) but rather will be paid as follows (but only as and when the Company has the funds to do so): if any shareholder provides loan funding in a greater proportion than its shareholding in the Company; then the amount by which the loan is out of proportion will be repaid first, in priority to any other shareholder loan, until it is proportionate to the lender’s shareholding; and then Typically shareholder loans are repaid proportionately (pro rata). For example: if Shareholder A has loaned R90 and Shareholder B has loaned R10; and the company has R10 free to repay its loans; then the company will repay R9 rand to shareholder A and R1 to shareholder B That is the first option in the column to the left. However, in other circumstances, this may not be appropriate. For example, where one shareholder has provided a much larger amount of loan funding.
The following number of directors: [INSERT NUMBER] The directors who have been nominated and appointed by the following shareholders: [INSERT SHAREHOLDER NAME]; [INSERT SHAREHOLDER NAME] [INSERT SHAREHOLDER NAME]; The following named directors: [INSERT DIRECTOR NAME] [INSERT DIRECTOR NAME] [INSERT DIRECTOR NAME] directors resign, you will need to amend this MOI to change that! How will directors vote Choose one and delete the others: Each director will have one vote Each director will vote number of shares held by shareholder who nominated that directors (divided by the number of directors nominated by that shareholder, who vote on the same topic) Where a certain shareholder has the right to nominate a director, we far prefer each director to have the number of votes equal to the number of shares held by the shareholder who nominates him. It gets slightly more complicated when a shareholder has the right to appoint more than one director! Basically, you need to ensure that each of that shareholder’s directors votes an equal number of votes. However, if only one director is present at the meeting, then he/she can vote all the votes. The Board’s power to amend this MOI Choose one and delete the others: The Board may only correct obvious errors: for example, spelling, punctuation, reference, grammar or similar defects.
a specific authority in respect of any particular allotment or issue of the Shares contemplated in clause 7.1. The approval contemplated by clause 7.1 be effective for the period provided in the Special Resolution in question but may be revoked at any time by Special Resolution. The Board may issue capitalisation Shares or offer a cash payment in lieu of awarding a capitalisation Share in accordance with section 47 of the Act. PREEMPTION ON ISSUE OF EQUITY SECURITIES Each Shareholder has a right, before any other Person who is not a Shareholder, to be offered and subscribe for a percentage of the Securities to be issued by the Company. This right: must be exercised within a reasonable period determined by the Board; will be in proportion to the Voting Power of that Shareholder’s general Voting Rights immediately before the offer was made; can be waived on behalf of all Shareholders by a Special resolution of Shareholders. The offer to the Shareholders referred to in clause 8.1 shall be Delivered in Writing and must state: the number of Securities offered; a reasonable time, determined by the Board, by which the offer must be accepted; and the requisite portion of the subscription price to be paid, failing which the offer shall be deemed to have been rejected. In exercising a right in terms of clause 8.1, a Shareholder may subscribe for fewer Securities than the Shareholder would be entitled to subscribe for under that section. After the time in which to accept the offer expires, or upon the receipt of a reasonable indication from the Person to who the offer is made that he/it declines to accept the Securities offered, the Directors may issue such Securities on terms that they resolve to be most favourable to the Company. CERTIFICATES EVIDENCING ISSUED SECURITIES AND SECURITIES REGISTER