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BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
REPORT OF THE BOARD OF DIRECTORS IN TERMS OF REGULATION 31(7) AND 31(8) OF THE
COMPANIES REGULATIONS, 2011 (THE REGULATIONS) REGARDING THE CONVERSION OF THE
COMPANY’S SHARE CAPITAL TO NO PAR VALUE SHARES
1. INTRODUCTION
1.1 The Companies Act, No 71 of 2008, as amended (the Companies Act) does not allow for new par value shares or
shares with a nominal value. In terms of the Companies Act and the Companies Regulations, 2011 (the Regulations),
companies that already had par value shares may not increase its authorised share capital of par value shares.
1.2 Blue Label Telecoms Limited (BLT) may be required to raise capital from its shareholders to finance acquisitions and
the Board of BLT is thus of the view that it should increase its authorised ordinary share capital as only 125 490 959
shares in BLT’s authorised share capital remain unissued.
1.3 In order for BLT to increase its authorised share capital it is required in terms of the Companies Act to first convert its
par value shares into shares with no par value.
1.4 In terms of Regulation 31(6) of the Regulations, a company may amend its Memorandum of Incorporation (MOI) to
effect a conversion of its authorised and issued par value shares to shares with no par value via a resolution
proposed by the Board of Directors after the date on which the Companies Act came into effect and is approved by
special resolution adopted by the holders of shares of each such class of shares and a special resolution adopted by a
meeting of the members of the Company called for that purpose.
1.5 In terms of paragraph 41.1.2.8 of the MOI BLT may by a special resolution of shareholders convert par value shares
into shares of no par value.
1.6 BLT’s shareholders will at its 2017 annual general meeting be asked to pass a special resolution to convert BLT’s
authorised and issued ordinary shares of R0.000001 each into ordinary shares of no par value, on the basis that each
existing share will be converted into one no par value ordinary share.
1.7 Regulation 31(7) of the Regulations requires the Board of Directors of BLT to compile a report in respect of any
resolution to convert any par value shares into no par value shares and this document constitutes such report.
2. REPORT
2.1
In terms of Regulation 31(7) of the Regulations the report is required to, at a minimum:
2.1.1 state all information that may affect the value of BLT’s securities pursuant to the proposed conversion;
2.1.2 identify the class of holders of BLT’s securities affected by the proposed conversion;
2.1.3 describe the material effects that the proposed conversion will have on the rights of the holders of BLT
securities that are affected by the proposed conversion; and
2.1.4 evaluate any material adverse effects of the proposed arrangement against the compensation to those
persons receiving compensation as a result of the conversion.
2.2
Information that may affect the value of the securities affected by the conversion
2.2.1 The rights attaching to the shares after the conversion will be identical to the rights attaching to the shares
prior to the conversion. Accordingly, the Directors of BLT are of the opinion that the conversion will not affect
the value of shares.
2.2.2 Pertinent financial information in relation to BLT are detailed in the published financial statements of BLT for
the year ended 31 May 2017.
2.2.4 The securities affected by the proposed conversion are the authorised ordinary shares in the share capital of
BLT, being one billion authorised shares of R0.000001 each of which 874 509 041 shares have been issued,
there being no other securities in the capital of BLT.
2.3
Shareholders affected by the proposed conversion
Given that all shares will be converted from par value shares of R0.000001 into shares of no par value, shareholders
will be affected equally by the conversion and on the same terms and conditions.
2.4
Material effects that the proposed conversion will have on the rights of the holders of BLT securities
The rights attaching to BLT’s no par value shares will, upon their conversion from par value shares, be identical to the
rights currently attaching to BLT’s par value shares. Accordingly, the conversion will not have any material effects on
the rights of shareholders.
2.5
Evaluation of material adverse effects of the proposed conversion against compensation offered
The conversion will not have any material adverse effect on any of the BLT shareholders and no shareholders will
receive any compensation pursuant to the conversion.
Notice
of annual general meeting
continued