ONLINE ANNUAL REPORT 2010

NOTICE OF ANNUAL GENERAL MEETING
for the year ended 27 June 2010


Notice is hereby given that the annual general meeting of the Company will be held at 08h30 at Massmart House, 16 Peltier Drive, Sunninghill Ext 6, Sandton, on Wednesday, 24 November 2010, for purposes of:

1. Transacting the following business:
 
  1.1 to receive and adopt the annual financial statements of the Company and the Group for the year ended 27 June 2010;
 
  1.2 to elect directors in the place of those retiring in accordance with the Company’s Articles of Association; and
 
  1.3 to transact such other business as may be transacted at an annual general meeting.
     
2. Considering and, if deemed fit, passing, with or without modification, the following ordinary and special resolutions:
 

Insight

Initial appointment dates of directors standing for re-election
KD Dlamini 1 November 2006
NN Gwagwa 1 November 2006
MJ Lamberti 30 August 1990
P Langeni 25 August 2008
IN Matthews 1 November 2001
   

Read more

Biographical details of these directors can be found here

Massmart at a Glance


Further details relating to the directors can be found here

Corporate Governance

ORDINARY RESOLUTIONS

1.
  
“Resolved that the annual financial statements of the Company and the Group for the year ended 27 June 2010, circulated together with this notice, be and are hereby adopted.”

2.
  
“Resolved that Mr KD Dlamini, who retires by rotation and has offered himself for re-election, be and is hereby re-elected to the Board of Directors of the Company.”

3.
  
“Resolved that Dr NN Gwagwa, who retires by rotation and has offered herself for re-election, be and is hereby re-elected to the Board of Directors of the Company.”

4.
  
“Resolved that Mr MJ Lamberti, who retires by rotation and has offered himself for re-election, be and is hereby re-elected to the Board of Directors of the Company.”

5.
  
“Resolved that Ms P Langeni, who retires by rotation and has offered herself for re-election, be and is hereby re-elected to the Board of Directors of the Company.”

6.
  
“Resolved that Mr IN Matthews, who retires by rotation and has offered himself for re-election, be and is hereby re-elected to the Board of Directors of the Company.”

7.
  
“Resolved that the non-executive directors’ annual remuneration for the 2011 financial year, be set as follows:
  Chairman of the Board R725,000
  Deputy Chairman R520,000
  Directors R215,000
  Committee Chairmen R210,000
  Committee Members R100,000
 
with members of the Audit Committee each receiving an additional R25,000 due to the increased meetings and responsibilities brought about by the Corporate Laws Amendment Act and King III on Corporate Governance for South Africa.”
 
8. “Resolved that Deloitte & Touche (with Mr André Dennis as the Audit Partner) be and are hereby re-elected as the Company’s auditors for the ensuing financial year, as approved by the Massmart Audit Committee and recommended to shareholders.”
 
9. “Resolved that the appointments of the following as members of the Audit Committee be and are hereby ratified and confirmed:
 
  IN Matthews (Chairman)
CS Seabrooke
P Maw
P Langeni."
 
10. “Resolved that all the ordinary shares in the authorised but unissued share capital of the Company be and are hereby placed under the control of the directors in terms of section 221(2) of the Companies Act, No. 61 of 1973, as amended (the “Act”), who shall be authorised to allot and issue such shares to such person or persons on such terms and conditions as they may deem fit but not exceeding 5% (five percent) of the number of ordinary shares already in issue. Such allotment will be in accordance with the Act and the JSE Limited (“JSE”) Listings Requirements (“JSE Listings Requirements”).”
 
11. “Resolved that, subject to the JSE Listings Requirements, the directors be and are hereby authorised to issue the ordinary shares in the authorised but unissued share capital of the Company for cash to such person or persons on such terms and conditions as they may deem fit, subject to the following:”
 
  11.1 the shares shall be of a class already in issue;
 
  11.2 the shares shall be issued to public shareholders (as defined in the JSE Listings Requirements) and not to related parties (as defined in the JSE Listings Requirements);
 
  11.3 the issues in the aggregate in any one financial year shall not exceed 5% (five percent) of the number of shares already in issue;
 
  11.4 the maximum discount at which the shares may be issued shall be 10% (ten percent) of the weighted average traded price of the shares over the 30 (thirty) business days prior to the date that the price of the issue is agreed between the Company and the party subscribing for the shares;
 
  11.5 the authority hereby granted will be valid until the Company’s next annual general meeting, provided that it will not extend to beyond 15 (fifteen) months; and
 
  11.6 once the shares have been issued, the Company shall publish an announcement in accordance with paragraph 11.22 of the JSE Listings Requirements.”
 
  Pursuant to the JSE Listings Requirements, the Company will only be entitled to implement this general authority to allot and issue ordinary shares for cash if this Ordinary Resolution Number 11 is passed by a majority of 75% (seventyfive percent) or more of the votes cast by all Massmart shareholders present or represented by proxy at the annual general meeting, excluding any votes which may be cast by the Massmart Holdings Limited Employee Share Trust.
 
12. “Resolved that in terms of Schedule 14 of the JSE Listings Requirements and in accordance with section 222 of the Act, where applicable, the Company hereby amends the rules of the Massmart Holdings Limited Employee Share Scheme (first adopted by the Company at a General Meeting held on 12 June 2000) incorporated in the Massmart Holdings Limited Employee Share Trust (the “Trust”) by the substitution in their entirety of the existing terms of the Trust with the amended and restated terms of the Trust. The amended and restated terms of the Trust will be tabled at this annual general meeting and initialled by the Chairman for identification, the salient terms and conditions of which are as set out in the Notice of Amendment to the Massmart Holdings Limited Employee Share Scheme annexed to this notice of annual general meeting.”

Pursuant to the JSE Listings Requirements, the Company will only be entitled to effect the amendments to the terms of the Trust if this Ordinary Resolution Number 12 is passed by a majority of 75% (seventy-five percent) or more of the votes cast by all Massmart shareholders present or represented by proxy at the annual general meeting, excluding all the votes attaching to all shares held by the Trust. In compliance with Schedules 14.6 and 14.7 of the JSE Listings Requirements, a summary of the principal terms of the Trust has been circulated together with this notice of annual general meeting and the amended and restated terms (both in marked-up format showing the exact changes to the current terms and in clean format) will be made available for inspection by shareholders during normal business hours at the registered office of the Company for a period of not less than 14 (fourteen) days prior to the annual general meeting.

Definitions

“Related party” means

  • a material shareholder
  • any person that is, or within the12 months preceding the date of the transaction was, a director of the issuer or of any subsidiary of its holding company
  • any advisor to the issuer that has,or within the 12 months preceding the date of the transaction had, a benefi cial interest, whether direct or indirect, in the listed company or any of its associates
  • any person that is, or within the 12 months preceding the date of the transaction was, a principal executive offi cer of the issuer, by whatever position he may be, or may have been, designated and whether or not he is, or was, a director
  • the asset manager or management company of a property entity including anyone whose assets they manage or administer
  • the controlling shareholder of the above asset manager/management company
  • an associate of any of the persons mentioned above

Read more

Details of the Schedule 14 changes to the Trust and a summary of the principal terms of the Trust can be found here

Shareholders Information

Insight

Buybacks in the 2010 fi nancial year
Date Number
of shares
Share
price
Total
transaction
value (Rm)
16-Mar-10 100,000 101.73 10.2
1-April-10 200,000 108.75 21.9
29-April-10 30,843 109.97 3.4
7-May-10 18,070 109.49 2.0
11-May-10 50,000 113.00 5.7
12-May-10 50,000 122.25 6.1
14-May-10 50,000 120.00 6.0
14-May-10 50,000 119.99 6.0
19-May-10 100,000 119.43 12.0
20-May-10 50,000 117.88 5.9
20-May-10 50,000 116.70 5.9
21-May-10 50,000 114.83 5.8
21-May-10 50,000 113.43 5.7
25-May-10 50,000 112.62 5.7
26-May-10 100,000 113.22 11.4
27-May-10 50,000 116.04 5.8
28-May-10 50,000 116.96 5.9
28-May-10 50,000 117.71 5.9
31-May-10 50,000 118.33 5.9

SPECIAL RESOLUTIONS

Provided shareholders holding in the aggregate not less than 25% (twenty-five percent) of the total votes of all shareholders entitled to vote at the annual general meeting are present in person or by proxy, the approval of a 75% (seventy-five percent) majority of the votes cast by shareholders present or represented by proxy at the annual general meeting and entitled to vote is required for the special resolutions to become effective:

Special Resolution Number 1

“Resolved that the Company and/or its subsidiaries be and are hereby authorised in terms of sections 85(2) and 85(3) of the Companies Act, No. 61 of 1973, as amended (the “Act”), and the JSE Limited (“JSE”) Listings Requirements (“JSE Listings Requirements”), from time to time to acquire the ordinary and/or preference shares in the issued share capital of the Company from such shareholder/s, at such price, in such manner and subject to such terms and conditions as the directors may deem fit, but subject to the Articles of Association of the Company, the Act and the JSE Listings Requirements, and provided that:

1.1 the authority hereby granted will be valid until the Company’s next annual general meeting, provided that it will not extend to beyond 15 (fifteen) months from the date of registration of this special resolution;
 
1.2 acquisitions may not be made at a price greater than 10% (ten percent) above the weighted average of the market value for the shares determined over the 5 (five) business days prior to the date that the price for the acquisition is effected;
 
1.3 acquisitions in the aggregate in any one financial year shall not exceed 15% (fifteen percent) of that class of the Company’s issued share capital;
 
1.4 the repurchase of shares will be effected through the order book operated by the JSE trading system and will be done without any prior understanding or arrangement between the Company and the counterparty;
 
1.5 the Company may only appoint one agent, at any point in time, to effect the repurchases on the Company’s behalf;
 
1.6 neither the Company nor its subsidiaries may repurchase shares during a prohibited period (as defined in the JSE Listings Requirements) unless a repurchase programme is in place where the dates and quantities of shares to be traded during the relevant period are fixed (not subject to any variation) and where full details of the programme have been disclosed in an announcement over the Stock Exchange News Service prior to the commencement of the prohibited period; and
 
1.7 an announcement complying with paragraph 11.27 of the JSE Listings Requirements will be published by the Company when the Company and/or its subsidiaries have cumulatively repurchased 3% (three percent) of the Company’s issued ordinary and/or preference share capital and for each 3% (three percent) in aggregate thereafter.”
   
Statement by the Board of Directors
In accordance with the JSE Listings Requirements, the directors state that:
(a) the intention of the directors is to utilise the authority at a future date, provided that the cash resources of the Company are in excess of its requirements. In this regard, the directors will take into account, inter alia, an appropriate capitalisation structure for the Company and the long-term cash needs of the Company, and will ensure that any such utilisation is in the interests of the shareholders.
 
(b) having considered the effect of the maximum number of ordinary and preference shares that may be acquired pursuant to the authority and the date upon which such acquisition/s will take place:
 
 
  • the Company and its subsidiaries (the “Group”) will in the ordinary course of business be able to pay its debts for a period of twelve months after the date of this notice of annual general meeting;
  • the assets of the Company and the Group will be in excess of the liabilities of the Company and the Group for a period of twelve months after the date of this notice of annual general meeting, such assets and liabilities being fairly valued in accordance with International Financial Reporting Standards and in accordance with the accounting policies used in the annual financial statements of the Company and the Group for the year ended 27 June 2010;
  • the issued share capital and reserves of the Company and the Group will be adequate for ordinary business purposes for a period of twelve months after the date of this notice of annual general meeting; and
  • the working capital available to the Company and the Group will be adequate for ordinary business purposes for a period of twelve months after the date of this notice of annual general meeting.
 

The Company will ensure that its sponsor provides the necessary sponsor letter on the adequacy of the working capital in terms of the JSE Listings Requirements, prior to the commencement of any repurchase of the Company shares on the open market.


Reason and effect
The reason for Special Resolution Number 1 is to give a mandate to the directors to repurchase ordinary and preference shares in the Company.

The effect of Special Resolution Number 1 will be that the Company and its subsidiaries will be authorised to acquire ordinary and preference shares in the Company.

Special Resolution Number 2

“Resolved that Article 43.1.7 of the Articles of Association of the Company be and is hereby amended by the replacement of the words ‘Black Management Trust’ with ‘Black Scarce Skills Trust’.”

Reason and effect
The reason for Special Resolution Number 2 is that the name of the Black Management Trust has been changed to the Black Scarce Skills Trust (the “BSST”).

The effect of Special Resolution Number 2 is that the Articles of Association of the Company will be rendered conformant with the new name of the BSST.

Special Resolution Number 3

“Resolved that Article 43.2.12 of the Articles of Association of the Company be and is hereby deleted in its entirety and replaced with the following:

‘43.2.12 A “B” Preference Share shall, unless it is converted into an ordinary share in the Company pursuant to the provisions of Article 43.2.9, be automatically redeemed at an amount equal to its par value on the date that is the 7th (seventh) anniversary of the date on which that “B” Preference Share was allocated to a Beneficiary in terms of the Management Trust, or if that “B” Preference Share has not been allocated in terms of the Management Trust, on 30 September 2016 or such later date as the board of directors of the Company may determine.’.”

Reason and effect
The reason for Special Resolution Number 3 is that it is presently provided in Article 43.2.12 of the Articles of Association of the Company that if a “B” Preference Share has not been allocated to a beneficiary of the Black Scarce Skills Trust (the “BSST”) by 30 September 2016, it will automatically be redeemed on such date. The amendment of this Article will introduce a degree of flexibility into the BSST.

The effect of Special Resolution Number 3 will be to permit the trustees of the BSST to continue to allocate unallocated “B” Preference Shares to beneficiaries of the BSST beyond 30 September 2016 if the board of directors of the Company so determines.

VOTING AND PROXIES

All holders of ordinary and preference shares in the share capital of the Company are entitled to attend and vote at the annual general meeting. Subject to any rights or restrictions for the time being attached to any ordinary and/or preference shares, on a show of hands, every holder of ordinary and/or preference shares who is present in person, or a proxy, or in the case of a company, the representative appointed in terms of section 188 of the Companies Act, No. 61 of 1973, as amended (the “Act”), has one vote irrespective of the number of shares he/she holds or represents. On a poll, each holder of ordinary and/or preference shares or his/her proxy has so many votes for each ordinary and preference share (as the case may be) as is determined in accordance with section 195 of the Act read with the Company’s Articles of Association.

In terms of the JSE Limited (“JSE”) Listings Requirements (“JSE Listings Requirements”), Massmart ordinary shares held by and registered in the name of the Massmart Holdings Limited Employee Share Trust will not have their votes at the annual general meeting taken into account for JSE Listings Requirements resolution approval purposes.

However, Massmart preference shares held by the Massmart Thuthukani Empowerment Trust and the Massmart Black Scarce Skills Trust will have their votes at the annual general meeting taken into account for JSE Listings Requirements resolution approval purposes.

If you hold certificated shares (ie have not dematerialised your shares in the Company) or are registered as an ‘own name’ dematerialised shareholder, then:

  • you may attend and vote at the annual general meeting; alternatively
  • you may appoint a proxy to represent you at the annual general meeting by completing the attached form of proxy and returning it to the registered office of the Company to be received by no later than 48 (forty-eight) hours prior to the time appointed for the holding of the annual general meeting (excluding Saturdays, Sundays and public holidays within South Africa).

If you own dematerialised shares (ie have replaced the paper share certificates representing the shares with electronic records of ownership under the electronic and clearing settlement system for transactions that take place on the JSE, Strate Limited, and are not registered as an ‘own name dematerialised shareholder’ (ie you have not specifically instructed your Central Securities Depository Participant (“CSDP”) to hold your shares in your own name on the Company’s sub-register), then, subject to the mandate between yourself and your CSDP or broker:

  • if you wish to attend the annual general meeting you must contact your CSDP or broker, as the case may be, and obtain the relevant letter of representation from it; alternatively
  • if you are unable to attend the annual general meeting but wish to be represented at the annual general meeting, you must contact your CSDP or broker, as the case may be, and furnish it with your voting instructions in respect of the annual general meeting. You must not complete the attached form of proxy. The instructions must be provided in accordance with the mandate between yourself and your CSDP or broker, as the case may be, within the time period required by your CSDP or broker, as the case may be.

CSDPs, brokers or their nominees, as the case may be, recorded in the Company’s sub-register should, when authorised in terms of their mandate or instructed to do so by the owner on behalf of whom they hold dematerialised shares in the Company, vote by either appointing a duly authorised representative to attend and vote at the annual general meeting or by completing the attached form of proxy in accordance with the instructions thereon and returning it to the registered office of the Company to be received not less than 48 (forty-eight) hours prior to the time appointed for the holding of the annual general meeting.

Voting percentages  
Ordinary shares 201,495,504
‘A’ Preference shares 17,673,670
‘B’ Preference shares 3,871,523
Issued share capital 223,040,697

Shares held by the employee share trust will not be taken into account for Special Resolution Number 1

In terms of the JSE Listings Requirements for Special Resolution Number 1, general information is included in the annual report to which this notice of annual general meeting is attached, including:

(i) Directors and management
(ii) Major shareholders
(iii) Material changes
(iv) Directors’ interests in shares
(v) Share capital of the Company
(vi) Litigation

The Directors whose names appear on pages 15 to 17 of the annual report, collectively and individually, accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this notice of the annual general meeting contains all information required by law and the JSE Listings Requirements.

By order of the Board

Ilan Zwarenstein

Ilan Zwarenstein
Company Secretary

6 October 2010

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