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ANNUAL INTEGRATED REPORT '12

EXPLANATORY NOTES TO SPECIAL RESOLUTIONS CONTAINED IN THE NOTICE OF AGM

SPECIAL RESOLUTION NUMBER 1: FEES PAYABLE TO NON-EXECUTIVE DIRECTORS

Explanatory note to special resolution number 1

The Board has recommended that the level of fees paid to non-executive directors be adjusted as proposed with effect from 1 October 2012. Please refer to the Remuneration report for more details on non-executive director fees.

SPECIAL RESOLUTION NUMBER 2: FINANCIAL ASSISTANCE TO DIRECTORS, PRESCRIBED OFFICERS, EMPLOYEE SHARE SCHEME BENEFICIARIES AND RELATE D OR INTER-RELATE D COMPANIES AND CORPORATIONS

Explanatory note to special resolution number 2

The Company would like the ability to provide financial assistance, if necessary, in accordance with section 45 of the Act. Furthermore, it may be necessary or desirous for the Company to provide financial assistance to related or inter-related companies and corporations to subscribe for options or securities or purchase securities of the Company or another company related or inter-related to it. Under the Act, the Company will, however, require the special resolution referred to above to be adopted. In the circumstances and in order to, among others, ensure that the Company’s subsidiaries and other related and inter-related companies and corporations have access to financing and/or financial backing from the Company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution number 2. Sections 44 and 45 contain exemptions in respect of employee share schemes that satisfy the requirements of section 97 of the Act. To the extent that any Murray & Roberts share incentive scheme does not satisfy such requirements, financial assistance (as contemplated in sections 44 and 45) to be provided under any such scheme will, among others, also require approval by special resolution.

SPECIAL RESOLUTION NUMBER 3: ADOPTION OF NEW MEMORANDUM OF INCORPORATION Explanatory

Explanatory note to special resolution number 3

Material amendments to the current memorandum and articles of association of Murray & Roberts Holdings Limited (“Company”)

The following is an overview of the material changes to the memorandum and articles of association of the Company, which are currently in force (“Current MOI”) and which are to be substituted by the proposed memorandum of incorporation (“Proposed MOI”). Please note that this is intended as a summary for information purposes only, and is not intended as a substitute for the thorough perusal of the document to which it relates. Shareholders are requested to familiarise themselves with the contents of the Proposed MOI, which is available for inspection at the Company’s registered office from 1 October 2012 to 31 October 2012 at and after any adjourned meeting.

New additions

The following items constitute additions to the provisions of the Current MOI of the Company (references to articles in brackets are to articles of the Proposed MOI for the Company)

1.1 the requirements of Schedule 10 to the listings requirements (“Listings Requirements”) of the JSE Limited (“JSE”)

all provisions required to be included in the MOI of the Company in terms of the Listings Requirements of the JSE, insofar as these did not previously appear in the MOI, have been included and approved by the JSE, namely the following have been included -

1.1.1

alteration and amendment of the MOI

1.1.1.1	no alteration or amendment may be effected to the MOI unless the JSE has approved the proposed amendment/s;
1.1.1.2	in addition, where an amendment relates to the variation of the preferences, rights and other terms attaching to a class of securities (where there are more than 1 (one) in issue), the affected securities holders may vote at the general meeting of ordinary shareholders provided that their votes shall carry no special rights or privileges and shall not exceed 24,99% (two four point nine nine percent) of the aggregate voting rights of all shareholders at the meeting; and
1.1.1.3	the approvals contemplated above are not required if an amendment is ordered by a court in terms of section 16 of the Companies Act, 2008 (“Companies Act”) (article 3.3.1);

1.1.2

Company rules

the Board of the Company may not make or amend any rules of the Company (article 3.4);

1.1.3

variation of rights and other terms attaching to shares in response to “external fact/s”

the application of the provisions of sections 37(6) and 37(7) of the Companies Act have been excluded (article 4.1.2.1);

1.1.4

pari passu

1.1.4.1	all listed securities in each class rank pari passu (article 4.1.2.2.1);
1.1.4.2	for as long as there are cumulative or non-cumulative preference shares in issue, no further securities ranking in priority to or pari passu with preference shares may be created without a special resolution passed at a separate general meeting of such preference shareholders (article 4.1.2.2.2);

1.1.5

rights attaching to ordinary shares

ordinary shareholders shall have only one vote in respect of each ordinary share held (article 4.1.2.3.2);

1.1.6

alteration of authorised securities

no alteration of share capital or authorised securities may be made except in compliance with the Listings Requirements (article 4.2);

1.1.7

issues of capitalisation shares

the Board may inter alia approve the issue of capitalisation shares as set out in section 47(1) of the Companies Act (article 4.3);

1.1.8

power of Board to issue securities for special consideration restricted

securities for which listings are sought must be fully paid up and transferable and the power of the Board in section 40(5) of the Companies Act is excluded (article 5.2);

1.1.9

issues of securities

1.1.9.1	issues of securities, convertible securities or options may only be effected in compliance with the Listings Requirements (article 5.1);
1.1.9.2	the manner and procedures for pre-emptive offers on issue are set out in detail (article 5.3);4.1.2.2.2);

1.1.10

issue of debt instruments

the granting of special privileges to holders of debt instruments is prohibited (article 5.4);

1.1.11

acquisition by the Company of its own shares

the acquisition by the Company of its own shares is subject to approval by special resolution and the Listings Requirements (article 9);

1.1.12

no liens

paid up securities of the Company may not be subject to liens in favour of the Company (article 10);

1.1.13

record date

record dates must be determined with reference to the Listings Requirements (article 13);

1.1.14

compliance with the Listings Requirements

the Company is required to hold meetings to adhere to the Listings Requirements in addition to those contemplated in the Companies Act and is not restricted from doing so (articles 14.2.3 and 14.3);

1.1.15

conduct of shareholders’ meetings

all shareholders’ meetings required in terms of the Listings Requirements are to be held in person, and may not be conducted by means of a written resolution as contemplated in section 60 of the Companies Act (article 14.4.1);

1.1.16

quorum for shareholders’ meetings

1.1.16.1	quorum for shareholders’ meetings shall be at least 3 (three) shareholders, and shareholders holding at least 25% (two five percent) of the voting rights exercisable at the relevant meeting (article 14.7.1);
1.1.16.2	any shareholders’ meeting which ceases to be quorate must be adjourned immediately (article 14.7.5);

1.1.17

notices of shareholders’ meetings

1.1.17.1	notices of general and annual general meetings must be delivered to each shareholder entitled to vote at such meeting and who has elected to receive such documents (article 14.8.2);
1.1.17.2	for as long as shares of the Company remain listed, notices of shareholders’ meetings must be sent to the JSE at the same time as they are sent to shareholders, and must be announced through SENS (article 14.8.3);

1.1.18

ratification of ultra vires acts prohibited

the ratification of ultra vires acts by shareholders is prohibited where this would be contrary to the Listings Requirements or the other provisions of the MOI (article 14.10);

1.1.19

appointment of directors

1.1.19.1	all directors must be elected by the shareholders entitled to exercise voting rights and shareholders shall have the right to nominate any person for appointment (article 15.2.1);
1.1.19.2	the appointment of any person by the Board to fill a casual vacancy or as an addition to the Board must be confirmed at the next annual general meeting of the Company, failing which such person must vacate his or her office (article 15.2.6.1);
1.1.19.3	where the number of directors falls below the minimum number prescribed in the MOI, the remaining directors must within 3 (three) months fill such vacancies or call a general meeting to do so (article 15.2.7);
1.1.19.4	a failure to have such minimum number of directors during the 3 (three) month period does not limit or negate the authority of the Board or invalidate anything done by the Board during such period but, after such 3 (three) month period, the remaining directors shall only be permitted to act for the purpose of filling vacancies or calling general meetings of the Company (article 15.2.7);

1.1.20

retiring non-executive directors may be re-elected if eligible

a retiring non-executive director may be re-elected if he or she is eligible, as recommended by the nomination committee of the Company (article 15.3.2.5);

1.1.21

payment policy

1.1.21.1	dividends are payable to shareholders registered as at a date subsequent to the declaration or confirmation of the dividend, whichever is later (article 16.1.1);
1.1.21.2	any distribution by the Company must be in compliance with section 46 of the Companies Act and the Listings Requirements (article 16.1.3);
1.1.21.3	any dividend or payment due to shareholders on or in respect of a share must be held in trust by the Company indefinitely (subject to the laws of prescription) (article 16.1.6.1);
1.1.21.4	payments to all holders of securities in the Company must be made in accordance with the Listings Requirements and capital shall not be repaid on the basis that it may be called up again (article 16.4);

1.1.22

financial statements

a copy of the financial statements must be distributed to the shareholders by no less than 15 (fifteen) business days prior to the annual general meeting or in accordance with other, relevant provisions of the Listings Requirements (article 17.1);

1.2 other provisions included

1.2.1

alteration of rights attaching to shares

the special rights attached to the ordinary shares shall not be regarded as being amended by the creation or allotment of any securities ranking pari passu with or after, but not in priority to the ordinary shares as regards participation in the Company’s assets or profits, unless the special rights attaching to the ordinary shares, or the further securities created and/or allotted so provide (article 3.3.3);

1.2.2

winding up

1.2.2.1	on winding up, the assets remaining after payment of the debts of the Company and the costs of liquidation shall be used to repay the amount paid by the ordinary shareholders on the ordinary shares held by them, with the balance distributed among the ordinary shareholders pro rata to their shareholding and subject to the special rights attaching to other securities; and
1.2.2.2	the assets of the Company may by special resolution be paid in specie or vested in trustees for the benefit of ordinary shareholders (articles 4.1.2.3.4 and 4.1.2.3.5);

1.2.3

securities register

the administration of the securities of the Company may at the discretion of the directors be outsourced to a suitable firm (article 4.4);

1.2.4

financial assistance

the Board may not authorise the provision of financial assistance in terms of section 44 of the Companies Act unless the provision thereof complies with the Listings Requirements (article 8);

1.2.5

acquisition of the Company’s shares

1.2.5.1	if a special resolution authorising the acquisition by the Company of its own shares is in the form of a general approval, such approval is valid only until the next annual general meeting or for 15 (fifteen) months from the date thereof, whichever is the shorter; and
1.2.5.2	a subsidiary is entitled to acquire securities in the Company, subject to the approval of the relevant securities holders (article 9);

1.2.6

annual general meetings

annual general meetings shall be held not later than 6 (six) months after the end of each financial year (article 14.3.2);

1.2.7

electronic participation in shareholders’ meetings

1.2.7.1	each shareholders’ meeting must be reasonably accessible within the Republic of South Africa for electronic participation by the shareholders, as contemplated in section 61(10) of the Companies Act; and
1.2.7.2	the manner and procedures for electronic participation by shareholders are set out in detail (article 14.6);

1.2.8

the chairman shall not have a casting vote

in the case of an equality of votes at a shareholders’ meeting, the chairman shall not have a casting vote (article 14.11.1);

1.2.9

additional election

the appointment of a director appointed by the Board on a temporary basis is subject to confirmation at the next annual general meeting in addition to any director elected thereat in terms of the provisions of the MOI relating to the retirement of non-executive directors (article 15.2.8);

1.2.10

payment policy

1.2.10.1	any dividend or other monies payable on or in respect of a security shall not bear interest against the Company (article 16.1.6.2);
1.2.10.2	the Company may terminate the payment of dividends and any other monies payable on or in respect of a security to a securities holder if the correspondence enclosing a dividend/cheque is returned undelivered or remains uncashed, and/or any payment by electronic transfer is unsuccessful due to incorrect banking details provided by the securities holder on 3 (three) or more consecutive occasions; further procedural clarity in this regard is also provided for (article 16.1.8);
1.2.10.3	if the shareholders resolve to apply for the Company to be struck off the register of companies, the directors may nominate trustees as paying agents for the final repayment of capital and all amounts unclaimed in respect of dividends not forfeited by the shareholders, to be held by such trustees for the benefit of persons entitled thereto until claimed, or until such amounts become liable to be paid into the Guardians Fund (article 16.3.9);

1.2.11

capitalisation

various procedural steps pertaining to the manner of distribution of excess share capital, the resolution of difficulties pertaining to such distribution, the reduction of share capital, and the disposal of unclaimed amounts are provided for in detail (articles 16.3.4 to 16.3.8);

1.3 provisions amended

the following articles of the Current MOI have been amended -

1.3.1.

right to call a meeting

whereas article 10.2 of the Current MOI provides that directors are to convene a general meeting, the Proposed MOI provides –

1.3.1.1	the Board may call a shareholders’ meeting at any time;
1.3.1.2	if there are insufficient directors in the Republic of South Africa capable of forming a quorum, any 2 (two) shareholders of the Company may convene a shareholders’ meeting; and
1.3.1.3	the secretary of the Company may call a meeting for the purposes of section 61(11) of the Companies Act (article 14.2);

1.3.2

adjournment of shareholders’ meetings

article 11.5 of the Current MOI provides that, where a shareholders’ meeting is to be adjourned, the chairperson of the meeting shall adjourn such meeting to a day not earlier than 7 (seven) days and not later than 21 (twenty-one) days after the date of the meeting: the Proposed MOI provides that a shareholders’ meeting may be adjourned to a day not earlier than 7 (seven) calendar days and not later than 20 (twenty) business days after the date of the meeting (article 14.7.4);

1.3.3

voting by shareholders only by polling

article 11.6 of the Current MOI provides that, at a shareholders’ meeting, voting may be by a show of hands or by polling: the Proposed MOI provides that voting shall only be by polling (article 14.11);

1.3.4

composition of the Board

article 15.1 of the Current MOI provides that the minimum number of directors shall be 4 (four): in terms of the Proposed MOI, the Board shall comprise the minimum number of directors required in terms of the Companies Act, being at least 6 (six) directors (article 15.1);

1.3.5

rotation of non-executive directors

article 16 of the Current MOI provides inter alia that each year at the annual general meeting 1/3 (one-third) of the directors (or the number nearest to, but not less than 1/3 (one-third)) shall retire from office: the Proposed MOI provides that each year the higher of 1/3 (one-third) of the non-executive directors (if such number is not a round number, the number will be rounded up) and 3 (three) non-executive directors shall so retire (article 15.3);

1.3.6

chairman of the Board

article 20.6 of the Current MOI provides for the election of the chairman of the Board: the Proposed MOI provides that the chairman will be elected by the Board from their own number and that, should the chairman be subject to rotation and not re-elected, he or she shall cease to hold such office immediately after the relevant annual general meeting and the Board shall elect a new chairman (article 15.4);

1.3.7

quorum for Board meetings

article 20.2 of the Current MOI provides that a quorum for Board meetings is a majority of the directors for the time being, with ½ (one half) comprising non-executive directors: the Proposed MOI provides that a quorum shall be a majority of the total number of directors (article 15.6.4); and

1.3.8

tied votes

article 20.5 of the Current MOI provides that the chairman of a directors’ meeting will have a second or casting vote: the Proposed MOI excludes the second or casting vote of the chairman (article 15.7.1).

Exclusions

The Proposed MOI excludes or departs from the provisions of the Current MOI of the Company in various aspects, either as a result of a direct conflict with the Companies Act and/or the Listings Requirements, or by virtue of the fact that such items unnecessarily duplicate the provisions of the Companies Act, and/or are no longer relevant or applicable to the Company.

Special resolution number 4: adoption of new share incentive scheme

Explanatory note to special resolution number 4

Background

The Company has reviewed its remuneration policy and long term incentive plan (“LTI”) in great detail and proposes introducing the Murray & Roberts Holdings Limited Forfeitable Share Plan (“FSP”). The JSE provided formal approval for the FSP.

Rationale for the introduction for the FSP

Best practice indicates a move away from the use of option-type plans only and the use thereof in conjunction with full share plans. Full share plans, like the FSP, are less leveraged and have less upside than option type plans, but provide more certain outcomes. Most importantly, share ownership by executives provides shareholder alignment which is essential for a long term incentive plan to succeed.

Furthermore, FSP instruments aid retention and provide more certainty as these instruments are less volatile than option type instruments. This instrument also supports the Company’s policy of attracting and retaining the key talent and expertise required for its business strategy.

Salient features for shareholder resolution

The remuneration & human resources committee (“remuneration committee”) may, in its discretion, call upon companies in the Group which employs an employee eligible to participate in the FSP and which will have an obligation to settle shares to such an employee (“Employer Companies”), to make recommendations to the remuneration committee as to which of their respective employees they recommend to incentivise, retain the services of or attract the services of, by the making of an award of forfeitable shares. Eligible employees include any person holding permanent salaried employment or office with any Employer Company, including any executive director, but excluding any non-executive director of the Group.

The remuneration committee will have the final authority to decide:

	which employees will participate in the FSP in respect of each award;
	the aggregate annual quantum of awards to be made to all employees as well as the quantum of FSP awards made in terms of the short term incentive (“STI”) policy as deferred STI;
	the vesting period and vesting date in respect of each award;
	the extent to which the award will be subject to the performance condition (if any), the terms of the performance condition and the performance period; and
	all other issues relating to the governance and administration of the FSP.

An award of forfeitable shares will be made based on an employee’s total fixed cost of employment (“TFCE”), grade, performance, retention and attraction requirements and market benchmarks. The shares are registered in the name of the employee on settlement subsequent to the award date, from which time the employee has all shareholder rights, subject to forfeiture and disposal restrictions. The rules of the FSP allow for settlement of the benefits by way of an acquisition of the required number of shares on the market, the use of shares held in treasury account, the use of shares held by The Murray & Roberts Trust, or an issue of shares.

The rules of the FSP allow for settlement of the benefits by way of an acquisition of the required number of shares on the market, the use of shares held in treasury account, the use of shares held by The Murray & Roberts Trust, or an issue of shares.

The employee will give no consideration for the grant or settlement of an award.

The maximum aggregate number of shares which may at any one time be allocated under the FSP, when added to the total number of shares allocated under the existing share plans shall not exceed 33 189 262 (thirty three million one hundred and eighty nine thousand two hundred and sixty two). The maximum number of shares which may be allocated to an individual in respect of all unvested awards may not exceed 2 223 681 (two million two hundred and twenty three thousand six hundred and eighty one), which represents 0,5% of the number of shares currently in issue. Shares allocated by way of awards under the FSP or shares allocated by way of awards under the existing Share Option Scheme, which are not subsequently settled to an employee as a result of the forfeiture thereof or which have lapsed without being exercised, will be excluded in calculating the Company limit. Likewise, shares purchased in the market in settlement of the FSP and the existing Share Option Scheme and shares purchased in the market by The Murray & Roberts Trust that are used to settle awards under the existing Share Option Scheme and the FSP, will be excluded in calculating the Company limit.

Vesting of the awards in all instances is subject to vesting conditions, such as continued employment, unless otherwise stated in the rules of the FSP.

It is the intention that awards of forfeitable shares in all instances, except awards made as deferred STI, be subject to the satisfaction of performance conditions measured over performance periods. Awards subject to performance conditions, or any other conditions imposed, will vest on the later of:

	the date on which the remuneration committee determines that the performance condition or any other conditions imposed have been satisfied; or
	the date or dates on which the employee has satisfied the vesting condition specified in the award letter.

The remuneration committee will set appropriate vesting periods, vesting conditions and performance conditions, as relevant, for each award.

10.

In very specific circumstances, on an ad-hoc basis, where it is necessary to retain critical talent, the remuneration committee may make awards only subject to vesting conditions with no performance conditions. These awards aimed at retention, however, will not form part of the annual awards.

11.

For the initial awards of forfeitable shares to be made in the first half of financial year 2013, the remuneration committee has approved the use of the following performance conditions:

	Return on Invested Capital Employed (“ROICE”) – 50% of the awards;
	Relative Total Shareholder Return (“TSR”) – 25% of the awards; and
	Free Cash Flow per Share (“FCF”) – 25% of the awards.

12.

For each of the above performance conditions, targets will be set for threshold and on-target performance with commensurate linear vesting levels.

13.

For further information on the proposed performance conditions to be adopted in the first allocation under the FSP, please refer to the Remuneration report.

14.

In order to facilitate any forfeiture thereof and secure the Company’s rights, forfeitable shares will be held by an escrow agent on behalf of the employee.

15.

Employees terminating employment due to resignation or dismissal on grounds of misconduct, poor performance or dishonest or fraudulent conduct or due to absconding, will be classified as bad leavers and will forfeit all unvested awards of forfeitable shares.

16.

Employees terminating employment due to death, retirement, retrenchment, ill-health, disability, injury or the sale of the Employer Company will be classified as good leavers and a portion of the award will vest on the date of termination of employment. This portion will reflect the number of months served since the award date to the date of termination of employment over the total number of months in the vesting period and the extent to which the performance conditions imposed have been met. The remainder of the awards will lapse.

17.

In the event of a change of control of the company occurring before the vesting date, a portion of the award will vest on the change of control date. The portion will reflect the period of time which has elapsed from the award date to the date of the change of control for awards not subject to performance conditions. For awards subject to performance conditions, the remuneration committee will calculate whether, and the extent to which, the performance condition has been satisfied by reference to the results reported by the Company in the previous financial year. The portion of the award which shall vest will be determined based on the extent to which the performance condition has been satisfied and the number of complete months served since the award date to the change of control date over the total number of months in the vesting period.

18.

If the Company undergoes a change of control pursuant to a transaction, the terms of which make provision for the FSP to continue to operate as set out in the FSP rules and the relevant award letter, irrespective of the change of control, clause 17 above will not apply. Also, if the participants’ rights under the FSP are to be replaced with awards in respect of shares in one or more other companies on a basis which is determined by an independent merchant bank or auditor to be fair and reasonable, clause 17 above will not apply.

19.

In the event of a variation in share capital as a result of a capitalisation issue, subdivision of shares, consolidation of shares, the Company entering into a scheme of arrangement, or the Company making distributions to shareholders, other than dividends paid in the ordinary course of business out of the then current year’s retained earnings, Participants shall continue to participate in the FSP. The remuneration committee may make such adjustment to the number of forfeitable shares comprised in an award, or take such other action to place participants in no worse a position than they were prior to the happening of the relevant event and to provide that the fair value of the award immediately after the event is materially the same as the fair value of the award immediately before the event. The issue of shares as consideration for an acquisition, and the issue of shares or a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to awards. Where the remuneration committee regards an adjustment as necessary, auditors, acting as experts and not as arbitrators, and whose decision shall be final and binding on all persons affected thereby, shall confirm to the Company in writing that these are calculated on a non-prejudicial basis. The auditors shall confirm in writing to the JSE whether those adjustments were calculated in accordance with the rules of the FSP, which confirmation must be provided at the time that the relevant adjustment is made. Any adjustments made will be reported in the Company’s annual financial statements in the year during which the adjustment is made, to the extent required by the Companies Act or the JSE Listings Requirements.

20.

In the event of a rights issue, a participant shall be entitled to participate in any rights issue in respect of his forfeitable shares.

21.

The provisions relating to:

	the category of persons who are eligible for participation in the FSP;
	the number of shares which may be utilised for purposes of the FSP;
	the individual limit entitlements under the FSP;
	the basis upon which awards are made;
	the amount (if any) payable upon the grant, settlement or vesting of an award;
	the voting, dividend, transfer and other rights attached to the awards, including those arising on a liquidation of the Company;
	the adjustment of awards in the event of a change of control of the Company or other corporate actions; and
	the procedure to be adopted in respect of the vesting of awards in the event of termination of employment

may not be amended without the prior approval of the JSE and by a resolution adopted with the support of at least 75% (seventy five percent) of the voting rights exercised on such resolution by the shareholders of the Company present or represented by proxy, in general meeting, excluding all the votes attached to unvested forfeitable shares held under the FSP and all shares owned by persons as a result of the vesting of forfeitable shares under the FSP and who are existing participants in the FSP. Only shares that may be impacted by the changes will be excluded from the said vote.

The rules of the FSP are available for inspection at the Company’s registered office from 1 October 2012 to 31 October 2012 at and after any adjourned meeting.

SPECIAL RESOLUTION NUMBER 5: AMENDMENT OF EXISTING SHARE INCENTIVE SCHEME

Explanatory note to special resolution number 5

The Company has reviewed its long term incentive plan (“LTI”) in great detail and propose introducing the Murray & Roberts Holdings Limited Forfeitable Share Plan (“FSP”). The Company has an existing Share Option Scheme (“Scheme”) operated through The Murray & Roberts Trust (“Trust”). The Scheme will be phased out and no more awards have been made in terms of the Scheme as from June 2012. Outstanding awards in terms of the Scheme will continue to vest in Participants after the prescribed Vesting Periods, subject to the meeting of performance conditions in most instances.

Rationale for the amendments to the Trust

As a result of the proposed introduction of the FSP it has become necessary to amend certain provisions of the Trust. In addition, enhancements to the drafting of the Scheme are proposed in line with Schedule 14 of the JSE Listings Requirements. The JSE provided formal approval of the amendments to the Scheme.

Principal amendments

The principal amendments are summarised as follows:

Clause 11 dealing with the funding of the Participation Costs incurred by or on behalf of the Trustees in the performance of their duties in order to give effect to the Scheme has been expanded to include loans or non-refundable contributions to be made to the Trust by Employer Companies in accordance with the provisions of sections 44(2) and 44(3) of the Companies Act of 71 of 2008 (“Act”).

Clause 12 has been amended to provide that the prior authority of the shareholders of the Company in general meeting shall be
required if the aggregate number of Shares which may be acquired by:

–	all Participants under the Scheme and the FSP is to exceed 33 189 262 Shares, or [14.1(b)]
–	any one Participant in terms of the Scheme and the FSP is to exceed 2 223 681 Shares.

A new clause 12.2 has been inserted to provide that the overall Scheme limit shall include new Shares allotted and issued by the Company and Shares held in treasury used, for purposes of Settlement in terms of the Scheme and the FSP.

A new clause 12.3 has been inserted to exclude from the overall Scheme limit Shares purchased in the market in Settlement of the Scheme and the FSP and Options granted or Offers made under the Scheme or awards under the FSP that lapse as a result of forfeiture thereof by Participants.

A new clause 12.5 has been inserted to comply with 14.3(a) and 14.3(b) of the JSE Listings Requirements and provides that in the event of:

–

a subdivision or consolidation of Shares, the Board shall, without requiring the approval of shareholders of the Company in general meeting, adjust the aggregate number of Shares, which may be utilised for purposes of the Scheme, and the number of Shares subject to existing Options and Offers under the Scheme; or

–

a capitalisation issue, special dividend, a rights issue or a reduction of capital by the Company, the Board shall, without requiring the approval of shareholders of the Company in a general meeting, adjust the maximum number of Shares which a Participant may receive in terms of the Scheme so as to ensure that Participants are given entitlement to the same proportion of the equity capital of the Company as that to which he was previously entitled prior to the occurrence of the relevant event.

A new clause 12.6 has been inserted to comply with 14.3(d) and 14.3(e) of the JSE Listings Requirements and provides that the Company’s auditors must confirm to the JSE in writing that any adjustments made in terms of clause 12.5 have been properly calculated on a reasonable and equitable basis, in accordance with the rules of the Scheme. Such written confirmation must be provided to the JSE at the time that any such adjustment is finalised. Any adjustment made in accordance with clause 12.5 must be reported on in the Company’s annual financial statements in the year during which the adjustments are made.

A new clause 12.7 has been inserted to comply with 14.3(c) of the JSE Listings Requirements and provides that the issue of equity securities for an acquisition, the issue of securities for cash and the issue of equity securities for a vendor consideration placing will not be regarded as a circumstance requiring adjustment in terms of clause 12.5.

Clause 14.1 has been amended to confirm the policy that the number of Options offered to an Eligible Employee is primarily based on the Employee’s TFCE, grade, performance, retention requirements and market benchmarks.

Clause 20.1.5 has been amended to provide that any adjustments made to the rights of Participants in the event of a Special Distribution or if the Company restructures its capital upon the occurrence of the events listed in clause 20.1, will be reported in the Company’s annual financial statements in the year during which the adjustments are made to the extent required by the Act or the JSE Listings Requirements.

In order to align the Scheme with the FSP which clauses dealing with Change of Control had been drafted to comply with best practice and corporate governance guidelines, the Change of Control definition has been amended to the effect that an acquisition of 50% (previously 35%) or more of the Company’s issued Shares or control of 50% (previously 35%) or more of the voting rights at meetings of the Company by a party (or parties acting in concert), who did not previously do so, are required to constitute a Change of Control. In addition clause 20.3 of the Scheme had been replaced with new clauses 20.3 to 20.9 as follows:

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Clause 20.3 provides that subject to clause 20.8, in the event of a Change of Control of the Company occurring before the Vesting Date which directly results in:

•	the Shares ceasing to be listed on the JSE; or
•	the Majority of Operations of the Company being merged with those of another company or companies; or
•	the Scheme being terminated;
	a portion of the Options held by a Participant will Vest on the Change of Control Date, or as soon as reasonably practicable thereafter. The portion of the Options which shall Vest will be calculated in accordance with clause 20.4 and 20.5.

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Clause 20.4 provides that in respect of the Options not subject to performance conditions, the portion of the Options which shall Vest will reflect the number of complete months served since the Option Date to the Change of Control Date, over the total number of months in the Vesting Period.

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Clause 20.5 provides that in respect of Options subjected to performance conditions, the Board will calculate whether, and the extent to which, the performance conditions have been satisfied by reference to the results reported by the Company at its previous financial year-end. The portion of the Options which shall Vest will be determined based on the extent to which the performance condition have been satisfied and the number of complete months served since the Option Date to the Change of Control Date over the total number of months in the Vesting Period.

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Clause 20.6 provides that to the extent that there is more than one Vesting Date and more than one Vesting Period in respect of a particular Option grant, the calculation set out in clause 20.4 and 20.5 should be carried out in respect of each Vesting Period.

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Clause 20.7 provides that the portion of the Option that does not Vest on the Change of Control Date will lapse.

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Clause 20.8 provides that if the Company undergoes a Change of Control pursuant to a transaction, the terms of which make provision for:

•	the Scheme to continue to operate as set out in the Deed and the relevant Option Letter, irrespective of the Change of Control; or
•	Participants’ rights under this Scheme to be replaced with awards in respect of shares in one or more other companies on a basis which is determined by an independent merchant bank or auditor to be fair and reasonable to the Participants, the provisions of clause 20.3 shall not apply.

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Clause 20.9 provides that if there is an internal reconstruction or other event which does not involve:

•	any Change of Control; or
•	any change in the ultimate Control of the Company; or
•	a Change of Control which does not result directly in an event specified in clauses 20.3.1, 20.3.2 or 20.3.3; or
•	if any other event happens which may affect the Options including the Shares ceasing to be listed on the JSE, the Options held by a Participant shall not Vest as a consequence of that event and shall continue to be governed by the rules of the Scheme. However, the Board may take such action as it considers appropriate to protect the interests of Participants following the occurrence of such event, including converting Options into awards in respect of shares in one or more other companies, provided the Participant is no worse off. The Board may also vary the performance conditions relating to Options.

Clause 26.1 has been amended to provide clarity that the provisions of the Scheme dealing with:

–	the definition of Eligible Employees and Participants;
–	the definition of Fair Market Value, Purchase Price or Exercise Price;
–	the maximum number of Shares which may be acquired for the purpose of or pursuant to the Scheme;
–	the maximum number of Shares which may be acquired by any Participant in terms of the Scheme;
–	the amount (if any) payable on acceptance of offers and exercise of Options, the basis for determining the price payable by Participants and the period after or during which such payment must be made, and the period in which payments, or loans to provide same (if any) may be paid;
–	the voting, dividend, transfer or other rights (including rights on liquidation of the Company) which may attach to any Option;
–	the basis on which offers are made;
–	the treatment of Options in instances of mergers, take-overs or corporate actions as set out in clause 20;
–	the provisions dealing with the rights (whether conditional or otherwise) in and to the Options of any Participants who leave the employment of the Group prior to Vesting or Exercise; or
–	the provisions of clause 26

may not be amended without the prior approval of the JSE and by ordinary resolution adopted with the support of at least 75% (seventy five percent) of shareholders of the Company present or represented by proxy, in general meeting, excluding all the votes attached to Shares owned by persons as a result of the exercise of Options under the Scheme and who are existing Participants in the Scheme. Only Shares which may be impacted by the amendments will be excluded from the said vote.

The rules of the Scheme contained in the Trust deed are available for inspection at the Company’s registered office from 1 October 2012 to 31 October 2012 at and after any adjourned meeting.