TELKOM SA SOC LTD
Shareholders are advised that at the annual general meeting of Telkom to be held on 26 August 2015 ("AGM"), the Board of the Company will propose that Special Resolution Number 4 (as set out on page 11 of the notice of AGM), be amended, by the deletion of the numbered paragraph 3 thereof, save for the wording "such authority to continue until the forthcoming Annual General Meeting of the company". Numbered paragraph 3 provides authority for the provision by the Company of financial assistance to directors to enable them to subscribe for or acquire shares to meet the Company's share ownership requirements for top management.
In its revised form, Special Resolution Number 4 will read as follows -
RESOLVED THAT, to the extent required by the Companies Act, the board may, subject to compliance with the requirements of the memorandum of incorporation, the Companies Act and the Listings Requirements, each as presently constituted and as amended from time to time, authorise the company to provide direct or indirect financial assistance by way of a loan, guarantee, the provision of security or otherwise, to:
1 any of its present or future subsidiaries and/or any other company or entity that is or becomes related or inter-related to the company for any purpose or in connection with any matter, including, but not limited to, the subscription of any option, or any securities issued or to be issued by the company or a related or inter-related company or entity, or for the purchase of any securities of the company or a related or inter-related company or entity;
2 any of the present or future directors or prescribed officers of the company or of a related or inter-related company or entity or to any other person who is or may be a participant in the Employee FSP, for the purpose of, or in connection with, the subscription for any securities, issued or to be issued by the company, or for the purchase of any securities of the company, where such financial assistance is provided in terms of such scheme,
such authority to continue until the forthcoming Annual General Meeting of the company."
The reason for the proposed amendments is that, after the posting of the notice of AGM, Telkom received a number of inputs from shareholders regarding the relevant resolution. Whereas shareholders appreciate that it is common for financial assistance to be provided by companies to directors and other employees to facilitate their participation in employee incentive schemes (such as the Employee FSP), there appears to be some contention with financial assistance provided to directors to enable them to purchase shares to meet share ownership requirements, particularly where such financial assistance takes the form of interest free loans.
Having given due consideration to these shareholder inputs, the fact that limited use has been made of such assistance to date and in order to provide more comfort to shareholders, the Board has decided to propose to shareholders at the AGM, limitation of the scope of the authority that would be conveyed by this resolution, in the manner set out above. The effect of such amendment will be that the Company will not have the authority to provide financial assistance to directors to enable them to meet the Company's share ownership requirements for top management.
To clarify, numbered paragraph 2 of Special Resolution Number 4, will be proposed in its current form, as it is imperative to the operation of the Employee FSP that approval be obtained from shareholders to the provision by the Company of financial assistance to participants in the Employee FSP, including executive directors, to the extent required in law. The role of an effective employee incentive scheme in the context of a listed company, to ensure the alignment of the interest of participants with those of shareholders and the retention of qualifying employees, is emphasised. It is also noted that the Employee FSP does not provide for any loans to be made to executives or other participants - there is no need for it as the employees are not required to pay any consideration for their awards or the shares subject to their awards.
In the notice of the AGM, shareholders who have not dematerialised their shares or who have dematerialised their shares with "own-name" registration were provided with instructions for the lodging of forms of proxy. Shareholders who have already submitted their proxy votes to the transfer secretaries (Computershare Investor Services Proprietary Limited), but who wish to change their vote in respect of Special Resolution Number 4, are requested to lodge replacement forms of proxy with the chairperson of the AGM (and such shareholders are requested to do so at least by 08:30 on 26 August 2015, which is 30 minutes prior to the time appointed for commencement of the AGM). (The form of proxy can be downloaded from the Company's website using the following link http://www.telkom.co.za/ir/apps_static/ir/pdf/financial/pdf/Telkom- Proxy.pdf)
Dematerialised shareholders without "own-name" registration who have already furnished their CSDP or broker with their instructions for voting at the AGM, but who wish to change their vote in respect of Special Resolution Number 4, are requested to urgently withdraw and thereafter replace their instructions for voting with their CSDP or broker, in order to allow the CSDP or broker time to take appropriate action for their revised votes to reflect.
Dematerialised shareholders without "own-name" registration who wish to attend the AGM are reminded that they are required to request that their CSDP or broker issue the necessary letter of representation to them to attend and vote at the AGM.
Pretoria
25 August 2015
Sponsor
The Standard Bank of South Africa Limited
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