2232 PURCHASE OF SHARES FROM THE COMPANY A person may become a member of a

2232 purchase of shares from the company a person may

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22.3.2 PURCHASE OF SHARES FROM THE COMPANY A person may become a member of a company by making a successful application for the company’s shares when the company issues or allots them to potential shareholders. While a public company can allot its shares to the public through the stock market, a private company cannot do so. S. 755 CA 2006 makes it an offence for a private company to allot its shares to the public. Shares of private companies can only be acquired by private arrangements. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY 402 COMPANY MEMBERS 22.3.3 PURCHASE OF SHARES FROM A MEMBER Another way of becoming a member is by buying shares from an existing shareholder. A shareholder can always sell his shares. In public companies, this is usually done through stockbrokers; in private companies, the sale has to be by private arrangement. Usually, though, members of a company are required to offer their shares to other members first before offering them to non-members. This is called right of pre-emption and is governed by s s. 561 573 CA 2006. 22.3.4 INHERITANCE A person may become a member of a company by inheriting the shares of a dead or bankrupt shareholder. This happens by operation of the law and is referred to as transmission. 22.3.5 EMPLOYEE SHARE SCHEME Membership of a company may also be acquired through an employee share scheme. The Companies Act allows the allotment of shares to present and former employees of a company or to their spouses, widow/widower, children or stepchildren under the age of 18 – see ss . 682(2) and .1166 CA 2006. The purpose of this scheme is to give greater and personal stake in a company to the employees as a way of increasing their commitment and productivity or as reward for their services. 22.4 MEMBERS’ MEETINGS A meeting of a company’s members is called a general meeting. General meetings are presided over by the company chairman who is responsible for their proper conduct – ss. 319 – 320 CA 2006. The articles of association will normally make provisions for the appointment of a chairman – usually one of the members of the Board of Directors. Where the chairman is unavailable, the directors shall nominate another director to be the chairman. Where there is no chairman or director, the members at a general meeting may elect anyone among themselves to be the chairman of the meeting. There are three types of general meetings – the Annual General Meeting (AGM), the Extraordinary General Meeting (EGM), and general meeting ordered by the court. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY COMPANY MEMBERS 403 22.4.1 THE ANNUAL GENERAL MEETING Annual General Meetings (AGM) are held once every year. Every Public company is required by law to hold AGM. The AGM must be held within six months of the company’s last annual account. It is an offence, punishable by fine, for a plc not to hold an AGM – s. 366 CA 2006. Private companies are no longer required to hold AGM. They may only do so if they wish or if members request for it. It is the responsibility of the directors of a company
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