A question was posed to us during the course of last week concerning the requirements and powers of a General Meeting of Shareholders for a private company in Namibia. We will focus our attention to private companies only since the requirements for other company formats differ.
The questions posed also asked what protection is afforded to minority shareholders of private companies, especially in cases where a major shareholder might try and frustrate the workings of a company through not attending shareholders meetings.
The requirements of for a general meeting of shareholders are listed in Section 188 of the Namibian Companies Act, Act 28 of 2004 (“the Act”). A general meeting of shareholders may be called by the directors of a company OR by 2 or more shareholders of a company holding 10% or more of the issued share capital of the company.
If 2 or more shareholders call for a general meeting, they must issue a written notice to this effect and deliver such notice to the registered office of the company. The directors of the company are the required to issue a notice to shareholders, within 14 days after receiving the notice from the 2 or more shareholders, that such a general meeting will take place. The date set for the general meeting must not be before 21 days since the director’s notice issued to shareholders and not later than 35 days from said notice.
If the directors fail to issue said notice they may be held personally responsible for such failure and may be subject to a fine as determined the Act. The 2 or more shareholders that requested the meeting may then proceed to issue said notice to shareholders themselves to inform the other shareholders of the intended general meeting. The meeting date must comply with the same stipulations as mentioned in the preceding paragraph.
The quorum for a general meeting will be 2 shareholders being present, irrespective of the percentage shareholding that they hold, unless the articles of association of said company has been amended to require something else. No consensus currently exists as to whether or not the stipulations of a shareholders agreement may over-ride this stipulation set in the Act. At the outset one would feel that it may not since that would infringe on the basic rights afforded shareholders in the Act, however the shareholders in question did agree to the terms of the shareholders agreement in writing. We are not aware of any cases where the courts have expressed themselves on the matter. If the rights of the minorities are infringed by a major shareholder that uses the stipulations of a shareholders agreement to frustrate the workings of a company, then one might feel that the courts will protect the rights of the minorities that are afforded to them by the Act.
Section 260 of the Act grants any shareholder the right to approach the Court if he/she feels that his rights and privileges are not protected or respected. The only concern with this section of the Act is the costs associated with approaching the courts and the time that such a process may take.
Section 265 of the Act grants the shareholders of a company the right to approach the Minister, in this case the Minister of Trade and Industry or his/her representative, to investigate the affairs of a company. In order to be granted such investigation 20% of the shareholders of a company must request such investigation in writing. The Minister or his/her representative may then appoint such investigators as he/her sees fit in the particular circumstances. We are not aware of cases where this section has actually been applied in Namibia or utilised in Namibia by aggrieved shareholders.
The right of association as granted by the Namibian Constitution is beneficial, but carries an implied responsibility to ensure that you can trust and work with the parties that you associate with. As can be seen from the notes above, to deal with cases where such associations are not working out can be onerous and costly.