Notice is hereby given that the Annual General Meeting (AGM) of holders of all classes of shares of the Company will be held on Thursday, 21 May 2020 at 09h00 at Massmart House, 16 Peltier Drive, Sunninghill Ext 6, Sandton, for purposes of:

1. Transacting the following business:
i. presenting the audited consolidated Group Annual Financial Statements of the Company and its subsidiaries (Group) for the year ended December 2019, and the associated Directors’ report and Independent Auditors report, the Audit Committee report and the Social and Ethics Committee report
ii. electing Directors in the place of those resigning and/or retiring in accordance with the Company’s Memorandum of Incorporation
iii. the election and appointment of Ernst & Young Inc. (with Roger Hillen) as the Company’s external auditor for the ensuing financial year
i.v such other business as may be transacted at an AGM.
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 respective record dates 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 AGM is Friday, 3 April 2020; and (ii) be entitled to attend, participate and vote at the AGM is Friday, 15 May 2020. The last date to trade to be entitled to attend, participate and vote at the AGM is Tuesday, 12 May 2020.

Ordinary business

The summary consolidated Group Financial Statements of the Company and the Group (as approved by the Directors of the Company), including the Directors’ report and Independent Auditor’s report, the Audit Committee report and the Social and Ethics Committee report for the year ended December 2019, circulated together with this notice of AGM, are presented to the shareholders for their consideration.

Ordinary resolutions

Ordinary resolution number 1

Resolved that Mitchell Slape, who was appointed during the reporting period and has offered himself for election, be and is hereby elected to the Board of Directors of the Company as an Executive Director in the capacity of Chief Executive Officer.

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 Mohammed Abdool-Samad, who was appointed during the reporting period and has offered himself for election, be and is hereby elected to the Board of Directors of the Company as an Executive Director in the capacity of Chief Financial Officer.

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 Charles Redfield, who was appointed during the reporting period and has offered himself for election, be and is hereby elected to the Board of Directors of the Company as a Non-Executive Director (Walmart nominee).

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 Phumzile 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 her capacity as a Non-Executive Director.

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 Dr Nolulamo (Lulu) Gwagwa, who retires by rotation and has offered herself for re-election, is hereby re-elected to the Board of Directors of the Company in her capacity as a Non-Executive Director.

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 Ernst & Young Inc. (with Roger Hillen as the Audit Partner) be and are hereby elected as the Company’s external auditor for the ensuing financial year to hold office until the Company’s next AGM, as approved by the Audit Committee and recommended to shareholders. It is recorded that Roger Hillen has served as the Company’s Audit Partner since 26 May 2017 and this will be his third reporting period. The Company’s external auditor, Ernst & Young Inc. were appointed on 7 November 2012 and have served tenure of seven reporting periods.

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.

Ordinary resolution number 7

Resolved that the following persons be and are hereby appointed, each by way of a separate vote, as members of the Audit Committee:

7.1 Olufunke Ighodaro (Chairman)
7.2 Lindiwe Mthimunye
7.3 Nolulamo (Lulu) Gwagwa

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 resolution numbers 7.1, 7.2 and 7.3 for such resolutions to be adopted. It is noted that Phumzile Langeni has elected to retire from the Audit Committee at the upcoming AGM to focus on her other Board and Committee duties.

Ordinary resolution number 8

Resolved that, subject to the JSE Limited (JSE) Listings Requirements (JSE Listings Requirements), the Directors be and are hereby authorised to issue 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:

8.1 the securities shall be of a class already in issue, or convertible into a class already in issue
8.2 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)
8.3 the issues of securities in the aggregate under the authority of this resolution during the period in 8.5 below shall not exceed 5% of the number of securities of that class already in issue as at the date of this notice of AGM, excluding treasury shares, being 217,654,833 ordinary shares, determined in accordance with the relevant provisions of the JSE Listings Requirements, provided that:
 
8.3.1 any equity securities issued under the authority during the period contemplated in 8.5 below must be deducted from such number in 8.3 above
8.3.2 in the event of a sub-division or consolidation of the issued equity securities during the period contemplated in 8.5 below, the existing authority must be adjusted accordingly to represent the same allocation ratio
8.4 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 measured 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 (or, if no shares of the Company have been traded in that period, subject to a ruling by the JSE)
8.5 the authority hereby granted will be valid until the Company’s next AGM, provided that it will not extend beyond 15 months from the date on which this resolution is passed
8.6 once shares representing, on a cumulative basis within the period contemplated in 8.5 above, 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 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 8 is passed by a majority of 75% or more of the votes cast by all shareholders present or represented by proxy at the AGM, excluding any votes cast by the Massmart Holdings Limited Employee Share Trust.

Ordinary resolution number 9

Resolved that, by way of a non-binding advisory vote, the remuneration policy of the Company, as outlined on the Remuneration Report, is endorsed.

As this is a non-binding advisory vote, no minimum voting threshold is required. Nevertheless, for record purposes, in terms of the King IV Report on Governance for South Africa, 2016 more than 75% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 9 for it to be adopted. This non-binding advisory vote allows shareholders to express their views on the remuneration policies adopted by the Company. In the event that 25% or more of the voting rights exercised are cast against this resolution, the Board of Directors will invite dissenting shareholders to engage with the Remuneration Committee on their concerns in line with the provisions of the JSE Listings Requirements.

Ordinary resolution number 10

Resolved that, by way of a non-binding advisory vote, the remuneration implementation report of the Company, as outlined in the Integrated Annual Report, is endorsed.

As this is a non-binding advisory vote, no minimum voting threshold is required. Nevertheless, for record purposes, in terms of the King Report on Governance for South Africa more than 75% of the voting rights exercised on this resolution must be cast in favour of ordinary resolution number 10 for it to be adopted. This non-binding advisory vote allows shareholders to express their views on the remuneration implementation report adopted by the Company. As set out in the JSE Listings Requirements, if 25% or more of the voting rights exercised are cast against this resolution, the Board of Directors will invite dissenting shareholders to engage with the Remuneration Committee on their concerns

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 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 AGM 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 (reported trades are prohibited)
1.5 the Company may appoint only 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 has been submitted to the JSE in writing prior to the commencement of the prohibited period. The Company will instruct an independent third party, which makes its investment decisions in relation to the Company’s securities independently of, and uninfluenced by, the Company, prior to the commencement of the prohibited period to execute the repurchase programme submitted to the JSE
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 at the time that the general authority from shareholders is granted and for each 3% in aggregate of the initial number of that class acquired 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, 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 AGM
  • 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 AGM, such assets and liabilities being recognised and measured in accordance with the accounting policies used in the Annual Financial Statements of the Company and the Group for the year ended December 2019
  • 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 AGM
  • 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 AGM.

The general authority to repurchase the ordinary and/or preference shares in the issued shares of the Company is limited to the authority granted 1.1 to 1.8 above..

The following additional information, which appears in the Integrated Annual Report of which this notice of AGM forms part, is provided in terms of the JSE Listings Requirements for purposes of special resolution number 1:

  • Major shareholders;
  • Material changes;
  • Share capital of the Company on page IBC
  • Responsibility statement

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 AGM 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 consolidated Group Annual Financial Statements for the year ended December 2019.

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 Non-Executive 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 21 May 2020 to the date of the Company’s next AGM. In line with the current performance of the Company, the Remuneration Committee has recommended that there be no annual increment applied to the Non-Executive Director fees. The Board adopted the recommendation of the Remuneration Committee at its meeting held in February 2020.

Role 2020 Fee
(R’000)
2019 Fee
(R’000)
2.1 Chairman of the Board 1,575.0 1,575.0
2.2 Deputy Chairman of the Board 840.0 840.0
2.3 Independent non-Executive Directors 420.0 420.0
2.4 Audit Committee Chairman 368.0 368.0
2.5 Risk Committee Chairman 289.0 289.0
2.6 Remuneration Committee Chairman 289.0 289.0
2.7 Nomination and Social and Ethics Committee Chairmen 289.0 289.0
2.8 Audit Committee member 184.0 184.0
2.9 Other Board Committee members 147.0 147.0

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 resolution numbers 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8 and 2.9 for such resolutions to be adopted. The Remuneration Report for the year ended December 2019 can be found here.

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 interrelated companies or corporations (as defined in the Act) of the Company that are currently or in the future have become subsidiaries (whether local or foreign) of the Company on such terms and conditions as the Board of Directors of the Company, or by any one or more persons or Committees 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 R15 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 interrelated companies and/or corporations of the Company as at the financial year ended December 2019:

  Rbn
Cross suretyships in respect of banking facilities 12.3
Loans to subsidiary companies 0.4
Total 12.7

 

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 plans but that the total financial assistance after such anticipated increase will not exceed R15 billion in any financial year. Before this limit may be exceeded shareholder approval under section 45 of the Act would again have to be sought.

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 AGM 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 R15 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 associates of the Company. At present there are no unionised associates of the Company.

Special resolution number 4

Resolved, as a special resolution, to the extent required in terms of, and subject to the provisions of, the Massmart Share Incentive Plan (SIP) and Massmart Annual Incentive Plan (AIP), that the shareholders hereby approve the proposed amendments to the SIP and AIP Rules insofar as they incorporate reference and inclusion of the malus and clawback provisions.

In line with developments around Executive remuneration practices within South Africa, amendments have been recently effected to remuneration policies to recoup benefits paid to Executives as part of Executive share schemes. This is often based on circumstances where there have been errors in financial accounts or, more controversially and untested, where there has been Executive misconduct. Additionally, the inclusion of these clauses in the AIP and SIP will ensure Executive accountability regarding variable pay and mitigates excessive risk taking. The Remuneration Committee and the Board propose that amendments be effected to Massmart’s existing Remuneration Policy insofar as it incorporates reference and application of malus and clawback provisions into the AIP and SIP Rules.

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.

General

Identification, voting and proxies

Shareholders are entitled to attend, speak and vote at the AGM.

In terms of section 63(1) of the Act, any person attending or participating in the AGM must present reasonably satisfactory identification and the person presiding at the AGM must be reasonably satisfied that the right of any person to participate in and vote (whether as shareholder or a 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 AGM.

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 AGM or send a proxy to represent you at the AGM, your CSDP or broker will assume that you
do not wish to attend the AGM or send a proxy.

If you wish to attend the AGM 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 AGM 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 09h00 on Tuesday, 19 May 2020 for administrative purposes, or thereafter to the Company by hand no later than 08h00 on Thursday, 21 May 2020. Before a proxy exercises any rights of a shareholder
at the AGM, 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:

  • A shareholder entitled to attend and vote at the AGM may appoint any individual (or two or more individuals) as a proxy or as proxies to attend, participate in and vote at the AGM in the place of the shareholder. A proxy need not be a shareholder of the Company
  • A proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy and, subject to the rights of a shareholder to revoke such appointment (as set out below), remains valid only until the end of the AGM
  • 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 final 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 AGM
  • 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 office of the Company Secretary on
    nicole.morgan@massmart.co.za or +27 11 517 6347 not less than five business days prior to the Annual General Meeting and are required to provide identification reasonably satisfactory to the office of the Company Secretary for purposes of verifying that shareholders right to participate. Access to the Annual General Meeting by way of electronic participation will be at the shareholders 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

Nicole Morgan
Interim Group Company Secretary
2 April 2020

The summary consolidated Group Financial Statements for the year ended December 2019 are set out here

The audited consolidated Group Annual Financial Statements for the year ended December 2019 can be found here