NOTICE OF ANNUAL GENERAL MEETING for the year ended 24 June 2012

Notice is hereby given that the annual general meeting of holders of all classes of shares of the Company will be held at 13h00 at Massmart House, 16 Peltier Drive, Sunninghill Ext 6, Sandton, on Wednesday, 21 November 2012, for purposes of:

1. Transacting the following business:
 
1.1 to present the audited annual financial statements of the Company and its subsidiaries (the Group) for the year ended 24 June 2012;
1.2 to elect directors in the place of those resigning and retiring in accordance with the Company’s Memorandum of Incorporation; and
1.3 such other business as may be transacted at an annual general meeting.
2.

Considering and, if deemed fit, passing, with or without modification, the below mentioned ordinary and special resolutions.

The Board of directors of the Company has determined, in accordance with section 59 of the Companies Act, 71 of 2008, as amended (Act), that the record date for shareholders to be recorded as shareholders in the securities register of the Company in order to: (i) be entitled to receive this notice of annual general meeting is Friday, 12 October 2012 and (ii) be entitled to attend, participate and vote at the annual general meeting is Friday, 16 November 2012. The last date to trade to be entitled to attend, participate and vote at the annual general meeting is Friday, 9 November 2012.

Ordinary business

The audited annual financial statements of the Company and the Group (as approved by the directors of the Company), including the directors’ report, the Audit and Risk Committee report and the external auditor’s report for the year ended 24 June 2012, circulated together with this notice, are presented to the shareholders for their consideration.

The complete audited annual financial statements for the year ended 24 June 2012 are set out in the integrated annual report. The complete audited financial statements for the year ended 26 June 2011 can be found on the Company’s website: www.massmart.co.za

Ordinary resolutions

INSIGHT

INITIAL APPOINTMENT DATES OF DIRECTORS STANDING FOR RE-ELECTION:

D Cheesewright 20 August 2012
JA Davis 20 June 2011
NN Gwagwa 1 November 2006
GRC Hayward 15 May 2001
I Zwarenstein 7 May 2012

  1. “Resolved that Mr D Cheesewright, who resigns as required by the Memorandum of Incorporation and has offered himself for re-election, be and is hereby re-elected to the Board of directors of the Company.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 1 for it to be adopted.

  2. “Resolved that Mr JA Davis, 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.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 2 for it to be adopted.

  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.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 3 for it to be adopted.

  4. READ MORE

    MASSMART AT A GLANCE

    Biographical details of directors are available here and here.

  5. “Resolved that Mr GRC Hayward, 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.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 4 for it to be adopted.

  6. “Resolved that Mr I Zwarenstein, who resigns as required by the Memorandum of Incorporation and has offered himself for re-election, be and is hereby re-elected to the Board of directors of the Company.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 5 for it to be adopted.

  7. READ MORE

    CORPORATE GOVERNANCE

    Further details relating to the directors.

  8. “Resolved that Ernst & Young Inc. (with Mr Allister Carshagen as the Audit Partner) be and are hereby elected as the Company’s auditors for the ensuing financial year to hold office until the Company’s next annual general meeting, as approved by the Audit and Risk Committee and recommended to shareholders.”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 6 for it to be adopted.

  9. “Resolved that the following persons be and are hereby appointed, each by way of a separate vote, as members of the Audit and Risk Committee:
    7.1 CS Seabrooke (Chairman)
    7.2 NN Gwagwa*
    7.3 P Langeni.”
     

    * Subject to her re-election as a director pursuant to ordinary resolutionnumber 3.

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolutions numbers 7.1, 7.2 and 7.3 for them to be adopted.

  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, 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% of the number of ordinary shares already in issue. Such allotment will be in accordance with and subject to the Act and the JSE Limited (JSE) Listings Requirements (JSE Listings Requirements).”

    In terms of the Act, more than 50% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 8 for it to be adopted.

  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:
    9.1 the shares shall be of a class already in issue;
    9.2 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);
    9.3 the issues in the aggregate in any one financial year shall not exceed 5% of the number of shares already in issue;
    9.4 the maximum discount at which the shares may be issued shall be 10% of the weighted average traded price of the shares over the 30 business days prior to the date that the price of the issue is agreed between the Company and the party subscribing for the shares;
    9.5 the authority hereby granted will be valid until the Company’s next annual general meeting, provided that it will not extend to beyond 15 months; and
    9.6

    once shares representing, on a cumulative basis within a financial year, 5% or more of the Company’s issued ordinary and/or preference share capital prior to that issue, 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 9 is passed by a majority of 75% or more of the votes cast by all shareholders present or represented by proxy at the annual general meeting, excluding any votes cast by the Massmart Holdings Limited Employee Share Trust.

INSIGHT

BUYBACKS IN THE 2012 FINANCIAL YEAR

Date Number
of
shares
Share
price
(R)
Total
trans-
action
value
(Rm)
25 Aug 11 91,662 150.60 13.8
29 Aug 11 75,000 152.02 11.4
30 Aug 11 27,883 154.41 4.3
31 Aug 11 30,000 158.82 4.8
1 Sept 11 50,000 160.10 8.0
2 Sept 11 25,445 161.15 4.1
6 Sept 11 50,000 158.65 7.9
14 Sept 11 25,000 155.56 3.9
26 Sept 11 50,000 146.26 7.3
31 Oct 11 50,000 159.23 8.0
14 Nov 11 37,000 155.79 5.8
21 Nov 11 20,000 157.31 3.1
21 Nov 11 25,000 157.49 3.9
22 Feb 12 50,000 182.59 9.1
22 Feb 12 50,000 183.43 9.2
23 Feb 12 50,000 178.71 8.9
23 Feb 12 50,000 178.73 8.9
23 Feb 12 50,000 179.45 9.0
24 Feb 12 50,000 174.10 8.7
27 Feb 12 50,000 171.80 8.6
28 Feb 12 50,000 173.79 8.7
29 Feb 12 50,000 175.44 8.8
8 Mar 12 50,000 172.46 8.6
9 Mar 12 50,000 173.13 8.7
21 May 12 50,000 164.77 8.2
28 May 12 36,113 160.04 5.8
30 May 12 20,000 163.73 3.3
30 May 12 30,000 163.85 4.9

Special resolutions

Special Resolution Number 1

“Resolved, as a special resolution, that the Company and/or its subsidiaries be and are hereby authorised to generally repurchase 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 Memorandum of Incorporation of the Company, the Companies Act, 71 of 2008, as amended (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, or for 15 months from the date of this special resolution, whichever period is shorter;
1.2 repurchases may not be made at a price greater than 10% above the weighted average of the market value for the shares determined over the 5 business days immediately preceding the date that the repurchase is effected;
1.3 repurchases in the aggregate in any one financial year shall not exceed 15% 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 variation) and where full details of the programme have been disclosed in an announcement over the Securities Exchange News Service prior to the commencement of the prohibited period;
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% of the Company’s initial number of issued ordinary and/or preference share capital and for each 3% in aggregate thereafter; and
1.8

a resolution by the Board of directors that it authorises such repurchase, that the Company and its subsidiaries have passed the solvency and liquidity test as set out in section 4 of the Act and that, since the application by the Board of directors of the solvency and liquidity test, there have been no material changes to the financial position of the Group.”

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 repurchase/s will take place:
  • the Company and the Group will in the ordinary course of business be able to pay its debts for a period of 12 months after the date of the proposed repurchase/s;
  • 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 12 months after the date of the proposed repurchase/s, such assets and liabilities being recognised and measured 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 24 June 2012;
  • the issued share capital and reserves of the Company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the proposed repurchase/s; and
  • the working capital available to the Company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the proposed repurchase/s.

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.

The following additional information, which appears in the integrated annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of special resolution number 1:

The directors, whose names are set out here in the integrated annual report, collectively and individually, accept responsibility for the accuracy of information contained in this special resolution number 1 and certify that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement false or misleading and that they have made all reasonable enquiries in this regard.

Other than the facts and developments reported in the integrated annual report, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the date of this notice.

In terms of the Act, at least 75% of the voting rights exercised on this resolution must be cast in favour of special resolution number 1 for it to be adopted.

Special Resolution Number 2

“Resolved, as a special resolution, that the following directors’ remuneration (due to the applicable directors for services rendered by them in their capacities as such), be and is hereby approved for the period commencing on 22 November 2012 to the date on which the Company’s annual general meeting in respect of its 2013 financial year will be held:

Chairman of the Board R822,000
Deputy Chairman R590,000
Directors R244,000
Committee Chairmen R238,000
Committee Members R113,000."


In terms of the Act, at least 75% of the voting rights exercised on this resolution must be cast in favour of special resolution number 2 for it to be adopted.

Special Resolution Number 3

Approval of new Memorandum of Incorporation
3.1

“Resolved, as a special resolution of the holders of ordinary shares and subject to the passing of special resolution numbers 3.2 and 3.3, that the existing Memorandum of Incorporation of the Company (previously known as the Memorandum and Articles of Association of the Company) be and is hereby replaced in its entirety by the Memorandum of Incorporation (a draft of which has been tabled at the annual general meeting and initialled by the chairman for identification purposes), with effect from the date of filing the notice of amendment with the Companies and Intellectual Property Commission.”

In terms of the Act, at least 75% of the voting rights exercised by holders of ordinary shares on this resolution must be cast in favour of special resolution number 3.1 for it to be adopted.

3.2

“Resolved, as a special resolution of the holders of ‘A’ preference shares and subject to the passing of special resolutions 3.1 and 3.3, that the existing Memorandum of Incorporation of the Company (previously known as the Memorandum and Articles of Association of the Company) be and is hereby replaced in its entirety by the Memorandum of Incorporation (a draft of which has been tabled at the annual general meeting and initialled by the chairman for identification purposes), with effect from the date of filing the notice of amendment with the Companies and Intellectual Property Commission.”

In terms of the Act, at least 75% of the voting rights exercised by holders of “A” preference shares on this resolution must be cast in favour of special resolution number 3.2 for it to be adopted.

3.3

“Resolved, as a special resolution of the holders of ‘B’ preference shares and subject to the passing of special resolutions 3.1 and 3.2, that the existing Memorandum of Incorporation of the Company (previously known as the Memorandum and Articles of Association of the Company) be and is hereby replaced in its entirety by the Memorandum of Incorporation (a draft of which has been tabled at the annual general meeting and initialled by the chairman for identification purposes), with effect from the date of filing the notice of amendment with the Companies and Intellectual Property Commission.”

In terms of the Act, at least 75% of the voting rights exercised by the holders of “B” preference shares on this resolution must be cast in favour of special resolution number 3.3 for it to be adopted.

The full text of the proposed new Memorandum of Incorporation is available on the Company’s website: www.massmart.co.za, or on request to info@massmart.co.za, and is available for inspection at the Company’s registered office during normal business hours from 1 November 2012 up to and including the date of the annual general meeting.

Special Resolution Number 4

"Resolved, as a special resolution, to the extent required in terms of, and subject to the provisions of, section 45 of the Companies Act 71 of 2008, as amended (Act), that the shareholders hereby approve of the Company providing, at any time and from time to time during the period of 2 years commencing on the date of this special resolution, any direct or indirect financial assistance as contemplated in such section of the Act to any 1 or more related or inter-related companies or corporations (as defined in the Act) of the Company and/or to any 1 or more members of any such related or inter-related company or corporation and/or to any 1 or more persons related to any such company or corporation, on such terms and conditions as the Board of directors of the Company, or any one or more persons authorised by the Board of directors of the Company from time to time for such purpose, deems fit, provided that any such financial assistance shall not in the aggregate exceed an amount of R10,000,000,000 in any financial year.".

In terms of the Act, at least 75% of the voting rights exercised on this resolution must be cast in favour of special resolution number 4 for it to be adopted.

The following direct and/or indirect financial assistance was provided by the Company to related and/or inter-related companies and/or corporations of the Company in respect of the financial year ended 24 June 2012:

  Rbn
Cross Suretyships in respect of banking facilities 5.9
Promissory notes in respect of operating leases 0.3
Loans to subsidiary companies 1.4
Total 7.6


It is anticipated that such financial assistance will increase during the period of 2 years commencing on the date of special resolution number 4, mainly as a result of the Group’s expansion and acquisition plans but that the total financial assistance after such anticipated increase will not exceed R10 billion.

In the event that the Company provides financial assistance to its subsidiary companies in the form of loans, the Company’s solvency and liquidity will not be impaired as the Company will raise an asset in its books for the equivalent amount then due by that subsidiary.

Notice to shareholders of the Company in terms of section 45(5) of the Act of a resolution adopted by the Board authorising the Company to provide direct or indirect financial assistance
  • By the time this notice of annual general meeting is delivered to shareholders, the Board of directors will have adopted a resolution (section 45 Board Resolution) authorising the Company to provide, at any time and from time to time during the period of 2 years commencing on the date on which special resolution number 4 is adopted, any direct or indirect financial assistance as contemplated in section 45 of the Act to any one or more related or inter-related companies or corporations of the Company and/or to any one or more members of any such related or inter-related company or corporation and/or to any one or more persons related to any such company or corporation, provided that any such financial assistance shall not in the aggregate exceed an amount of R10,000,000,000 in any financial year.
  • The section 45 Board Resolution will be effective only if and to the extent that special resolution number 4 is adopted by the shareholders, and the provision of any such direct or indirect financial assistance by the Company, pursuant to such resolution, will always be subject to the Board of directors being satisfied that (i) immediately after providing such financial assistance, the Company will satisfy the solvency and liquidity test as referred to in section 45(3)(b)(i) of the Act, and that (ii) the terms under which such financial assistance is to be given are fair and reasonable to the Company as referred to in section 45(3)(b)(ii) of the Act.
  • In as much as the section 45 Board Resolution contemplates that such financial assistance will in the aggregate exceed one–tenth of one percent of the Company's net worth at the date of adoption of such resolution, the Company hereby provides notice of the section 45 Board Resolution to shareholders. Such notice will also be provided to any trade union representing any employees of the Company.

VOTING PERCENTAGES

Ordinary shares 216,081,309
‘A’ preference shares 10,134,631
‘B’ preference shares 3,112,778
Issued share capital 229,328,718

Identification, voting and proxies

Shareholders are entitled to attend, speak and vote at the annual general meeting.

In terms of section 63(1) of the Act, any person attending or participating in the annual general meeting must present reasonably satisfactory identification and the person presiding at the annual general meeting must be reasonably satisfied that the right of any person to participate in and vote (whether as a shareholder or as proxy for a shareholder) has been reasonably verified. Forms of identification include valid identity documents, driver’s licences or passports.

EMPLOYEE SHARE TRUST

    %
Massmart Holdings Limited Employee Share Trust 8.6
Massmart Thuthukani Empowerment Trust 1.8
Massmart Black Scarce Skills Trust 0.2
Public Shareholders 89.4

Shareholders holding dematerialised shares, but not in their own name, must furnish their Central Securities Depository Participant (CSDP) or broker with their instructions for voting at the annual general meeting. If your CSDP or broker, as the case may be, does not obtain instructions from you, it will be obliged to act in accordance with your mandate furnished to it, or if the mandate is silent in this regard, complete the form of proxy attached.

Unless you advise your CSDP or broker, in terms of the agreement between you and your CSDP or broker by the cut-off time stipulated therein, that you wish to attend the annual general meeting or send a proxy to represent you at the annual general meeting, your CSDP or broker will assume that you do not wish to attend the annual general meeting or send a proxy.

If you wish to attend the annual general meeting or send a proxy, you must request your CSDP or broker to issue the necessary letter of authority to you. Shareholders holding dematerialised shares, and who are unable to attend the annual general meeting and wish to be represented thereat, must complete the form of proxy attached in accordance with the instructions therein and lodge it with or mail it to the transfer secretaries, Computershare Investor Services Proprietary Limited (Computershare).

A form of proxy (which is attached) must be dated and signed by the shareholder appointing a proxy and should be forwarded to reach Computershare by no later than 13h00 on Monday, 19 November 2012. Before a proxy exercises any rights of a shareholder at the annual general meeting, such form of proxy must be so delivered.

In compliance with the provisions of section 58(8)(b)(i) of the Act, a summary of the rights of a shareholder to be represented by proxy, as set out in section 58 of the Act, is set out immediately hereunder:

MASSMART EMPLOYEE SHARE TRUSTS

Massmart Holdings Limited Employee Share Trust 8.6
Massmart Thuthukani Empowerment Trust 1.8
Massmart Black Scarce Skills Trust 0.2
Public shareholders 89.4
Shares held by the employee share trust will not be taken into account for ordinary resolution number 9 and special resolution number 1
  • A shareholder entitled to attend and vote at the annual general meeting may appoint any individual (or two or more individuals) as a proxy or as proxies to attend, participate in and vote at the annual general meeting in the place of the shareholder. A proxy need not be a shareholder of the Company.
  • A proxy may delegate the proxy's authority to act on behalf of a shareholder to another person, subject to any restrictions set out in the instrument appointing the proxy.
  • The appointment of a proxy is suspended at any time and to the extent that the shareholder who appointed such proxy chooses to act directly and in person in the exercise of any rights as a shareholder.
  • The appointment of a proxy is revocable by the shareholder in question cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to Computershare. The revocation of a proxy appointment constitutes a complete and fi nal cancellation of the proxy's authority to act on behalf of the shareholder as of the later of: (i) the date stated in the revocation instrument, if any and (ii) the date on which the revocation instrument is delivered to Computershare as required in the first sentence of this paragraph.
  • If the instrument appointing the proxy or proxies has been delivered to Computershare, as long as that appointment remains in effect, any notice that is required by the Act or the Company's Memorandum of Incorporation to be delivered by the Company to the shareholder, must be delivered by the Company to: (i) the shareholder or (ii) the proxy or proxies, if the shareholder has: (a) directed the Company to do so in writing and (b) paid any reasonable fee charged by the Company for doing so.
  • Attention is also drawn to the "Notes to the form of proxy".
  • The completion of a form of proxy does not preclude any shareholder from attending the annual general meeting.
  • Shareholders may participate (but not vote) electronically in the annual general meeting. Shareholders wishing to participate in the annual general meeting electronically should contact the assistant company secretary on info@massmart.co.za or +27 11 517 0000 not less than five business days prior to the annual general meeting. Access to the annual general meeting by way of electronic participation will be at the shareholder’s expense. Only persons physically present at the annual general meeting or represented by a valid proxy shall be entitled to cast a vote on any matter put to a vote of shareholders.

By order of the Board

Philip Sigsworth

Philip Sigsworth

Company Secretary

5 October 2012