NOTICE OF ANNUAL GENERAL MEETING for the year ended 23 December 2012

INSIGHT

INITIAL APPOINTMENT DATES OF DIRECTORS STANDING FOR RE-ELECTION:

MJ Lamberti 30 August 1990
P Langeni 25 August 2004
GM Pattison 7 December 2004
JP Suarez 20 June 2011

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MASSMART AT A GLANCE

Biographical details of directors.


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CORPORATE GOVERNANCE

Further details relating to the directors.

Notice is hereby given that the annual general meeting of holders of all classes of shares of the Company will be held at 09h00 at Massmart House, 16 Peltier Drive, Sunninghill Ext 6, Sandton, on Wednesday, 22 May 2013, for purposes of:

1. Transacting the following business:
 
1.1 to present the audited annual financial statements of the Company and its subsidiaries (Group) for the year ended 23 December 2012, and the associated Directors’ report and External Auditor’s report, the Audit and Risk Committee report and the Social and Ethics Committee report;
1.2 to elect Directors in the place of those 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 April 2013; and (ii) be entitled to attend, participate and vote at the annual general meeting is Friday, 17 May 2013. The last date to trade to be entitled to attend, participate and vote at the annual general meeting is Friday, 10 May 2013.

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 and External Auditor's Report, the Audit and Risk Committee report and the Social and Ethics Committee report for the year ended 23 December 2012, circulated together with this notice, are presented to the shareholders for their consideration.

The complete audited annual financial statements for the year ended 23 December 2012 are available here:

The complete audited financial statements for the year ended 24 June 2012 can be found on the Company’s website: www.massmart.co.za

Ordinary resolutions

Ordinary Resolution Number 1

“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.”

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.

Ordinary Resolution Number 2

“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.”

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.

Ordinary Resolution Number 3

“Resolved that Mr GM Pattison, 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 3 for it to be adopted.

Ordinary Resolution Number 4

“Resolved that Mr JP Suarez, 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.

Ordinary Resolution Number 5

“Resolved that Ernst & Young Inc. (with Mr Allister Carshagen as the Audit Partner) be and is 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 5 for it to be adopted.

Ordinary Resolution Number 6

“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:

6.1   CS Seabrooke (Chairman)
6.2   NN Gwagwa
6.3   MJ Lamberti*
6.4   P Langeni.**”

* Subject to his re-election as a director pursuant to ordinary resolution number 1
** Subject to her re-election as a director pursuant to ordinary resolution number 2

In terms of the Act, more than 50% of the voting rights exercised on each of these resolutions must be cast in favour of each of ordinary resolutions numbers 6.1, 6.2, 6.3 and 6.4 for it to be adopted.

Ordinary Resolution Number 7

“Resolved that, subject to the JSE Limited Listings Requirements (JSE Listings Requirements), the directors be and are hereby authorised to issue the ordinary shares in the authorised but unissued shares of the Company (or to issue options or convertible securities convertible into ordinary shares) for cash to such person or persons on such terms and conditions as they may deem fit, subject to the following:

7.1   the securities shall be of a class already in issue, or convertible into a class already in issue;
7.2   the securities 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);
7.3   the issues of securities in the aggregate under the authority of this resolution in any one financial year shall not exceed 5% of the number of securities of that class already in issue (determined in accordance with the relevant provisions of the JSE Listings Requirements);
7.4   the maximum discount at which the shares may be issued shall be 10% of the weighted average traded price of
the shares of the Company 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;
7.5   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 from the date of this resolution; and
7.6   once shares representing, on a cumulative basis within a financial year, 5% or more of the Company’s issued ordinary and/or preference shares 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 7 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.

Ordinary Resolution Number 8

“Resolved that, in terms of Schedule 14 of the JSE Listings Requirements, the Company hereby adopts the rules of the Massmart Holdings Limited 2013 Share Plan.”

The rules of the Massmart Holdings Limited 2013 Share Plan (Share Plan) will be tabled at this annual general meeting and initialled by the Chairman for identification. A summary of the principal terms of which are set out in the schedule headed “Summary of the Principal Terms of the Massmart Holdings Limited 2013 Share Plan” annexed to this notice of annual general meeting.

Pursuant to the JSE Listings Requirements, the Company will only be entitled to adopt the Share Plan if this ordinary resolution number 8 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, In compliance with paragraphs 14.6 and 14.7 of Schedule 14 of the JSE Listings Requirements, a summary of the principal terms of the Share Plan has been circulated together with this notice of annual general meeting and the complete Share Plan 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 days prior to the annual general meeting.

Special resolutions

INSIGHT

BUYBACKS IN THE 26 weeks ended 23 December 2012

Date   No of
shares
  Share price (R)   Total
trans-
action
value
(Rm)
22 Aug 12   100,000   169.49   17.03
04 Sep 12   10,280   169.67   1.75
05 Sep 12   39,720   169.84   6.78
20 Sep 12   50,000   168.79   8.48
08 Oct 12   50,000   165.71   8.33
23 Oct 12   50,000   173.80   8.73
24 Oct 12   18,698   173.99   3.27
29 Oct 12   50,000   172.59   8.67
05 Nov 12   48,010   177.19   8.55
06 Nov 12   39,420   177.50   7.03
09 Nov 12   42,153   177.50   7.52
14 Nov 12   23,390   176.71   4.15
15 Nov 12   75,251   176.42   13.34
16 Nov 12   61,658   177.19   10.98
21 Nov 12   13,141   177.50   2.34
22 Nov 12   4,392   177.90   0.79
23 Nov 12   35,000   177.95   6.26
29 Nov 12   2,850   178.26   0.51
            124.51

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 shares 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 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 five business days immediately preceding the date that the repurchase is effected (or, if no shares of the Company have been traded in that period, subject to a ruling by the JSE);
1.3   repurchases in the aggregate in any one financial year shall not exceed 15% of that class of the Company’s issued shares;
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;
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 shares 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, has been passed.”


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 given under special resolution number 1 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 given under special resolution number 1:
 
  • 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 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 12 months after the date of this notice of annual general meeting, 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 23 December 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 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 12 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 under the authority given in terms of special resolution number 1.

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:

  • directors and management – here
  • major shareholders – here
  • material changes – here
  • directors’ interests in shares – here
  • share capital of the Company – here
  • responsibility statement – here
  • litigation – here

The Directors, whose names are set out here of the integrated annual report, collectively and individually, accept responsibility for the accuracy of information contained in this statement 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, to which this notice of annual general meeting is attached, there have been no material changes in the financial or trading position of the Company and its subsidiaries since the publication of the audited financial statements for the year ended 23 December 2012.

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 (payable to the applicable Directors for services to be rendered by them in their capacities as such), be and is hereby approved, each by way of a separate vote, for the period commencing on 23 May 2013 to the date on which the Company’s annual general meeting in respect of its financial year ending December 2013 will be held:

  2.1 Chairman of the Board R822,000 
  2.2 Deputy Chairman R590,000 
  2.3 Directors R244,000 
  2.4 Committee Chairmen R238,000 
  2.5 Committee Members R113,000"

In terms of the Act, at least 75% of the voting rights exercised on each of these resolutions must be cast in favour of special resolutions numbers 2.1, 2.2, 2.3, 2.4 and 2.5 for it to be adopted.

Special Resolution Number 3

"Resolved, as a special resolution, to the extent required in terms of, and subject to the provisions of, section 45 of the Act, that the shareholders hereby approve of the Company providing, at any time and from time to time during the period of two 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 one or more related or inter-related companies or corporations (as defined in the Act) 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, 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 R12 billion 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 3 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 23 December 2012:

  Rbn
Cross-Suretyships in respect of banking facilities 5.9
Promissory Notes in respect of operating leases 0.2
Loans to subsidiary companies 1.1
Total 7.2

It is anticipated that such financial assistance will increase during the period of two years commencing on the date of special resolution number 3, 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 R12 billion in any financial year.

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 two years commencing on the date on which special resolution number 3 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 R12 billion in any financial year.

The Section 45 Board Resolution will be effective only if and to the extent that special resolution number 3 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.

General

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.

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.

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 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 must be dated and signed by the shareholder appointing a proxy and should be forwarded to reach Computershare by no later than 09h00 on Monday, 20 May 2013. Before a proxy exercises any rights of a shareholder at the annual general meeting, such form of proxy must be so delivered.