| Tue 14 Sep 2010, 7:10 | | CZA - Coal of Africa Limited - Notice of General Meeting explanatory statement |
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CZA
CZA
CZA - Coal of Africa Limited - Notice of General Meeting, explanatory statement
and proxy form
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
JSE/ASX Share code: CZA
ISIN AU000000CZA6
("CoAL" or the "Company")
NOTICE OF GENERAL MEETING, EXPLANATORY STATEMENT AND PROXY FORM
Date of Meeting
14 October 2010
Time of Meeting
3.00 pm (WST)
Place of Meeting
The Park Business Centre
45 Ventnor Avenue
West Perth WA 6005
QUOTE
"This is an important document. Please read it carefully.
If you are unable to attend the General Meeting, please complete the Proxy Form
available on the Company`s website, www.coalofafrica.com, and return it in
accordance with the instructions set out on the Proxy Form.
TIME AND PLACE OF MEETING AND HOW TO VOTE
Venue
A General Meeting of the shareholders of Coal of Africa Limited will be held at:
The Park Business Centre Commencing at
45 Ventnor Avenue, West Perth 3.00 pm (WST)
Western Australia on 14 October 2010
How to Vote
You may vote by attending the meeting in person, by proxy or authorised
representative.
Voting in Person
To vote in person, attend the meeting on the date and at the place set out
above. The meeting will commence at 3.00pm (WST).
Voting by Proxy
To vote by proxy, please complete and sign the Proxy Form relating to this
Notice of General Meeting as soon as possible and either:
- send the Proxy Form by facsimile to the Company on facsimile number (08) 9322
6778 (International: +61 8 9322 6778); or
- deliver or post the Proxy Form to the principal office of the Company at Level
1, 173 Mounts Bay Road, Perth, Western Australia.
so that it is received by no later than 48 hours before the commencement of the
meeting.
NOTICE OF GENERAL MEETING
NOTICE IS HEREBY GIVEN that a General Meeting of the shareholders of CoAL of
Africa Limited ABN 98 008 905 388 ("the Company") will be held at The Park
Business Centre, 45 Ventnor Avenue, West Perth, Western Australia on 14 October
2010 at 3.00 pm (WST), for the purpose of transacting the following business
referred to in this Notice of General Meeting ("Notice").
The Explanatory Statement that accompanies and forms part of this Notice
("Explanatory Statement") describes the matters to be considered at this
meeting. Certain terms used in this Notice and the Explanatory Statement are
defined in the glossary at the end of the Explanatory Statement.
ORDINARY BUSINESS
RESOLUTION 1: ADOPTION OF CONSTITUTION
To consider and, if thought fit, to pass with or without amendment, the
following resolution as a special resolution:
"That, pursuant to section 136 of the Corporations Act 2001 (Cth), the
Constitution contained in the document submitted to this meeting and signed by
the Chair for identification purposes be approved and adopted as the
Constitution of the Company in substitution for the existing Constitution of the
Company subject to and with effect from admission of the Company`s shares to the
Official List of the UK Financial Services Authority and to trading on the Main
Market of the London Stock Exchange."
RESOLUTION 2: ADOPTION OF EMPLOYEE SHARE OPTION PLAN
To consider and, if thought fit, to pass with or without amendment the following
resolution as an ordinary resolution:
"That subject to and with effect from admission of the Company`s shares to the
Official List of the UK Financial Services Authority and to trading on the Main
Market of the London Stock Exchange:
(a) the Coal of Africa Limited Employee Share Option Plan (the "Plan"), the
principal features of which are summarised in Appendix 1 and the draft rules of
which have been produced to the Meeting and for the purposes of identification
only initialled by the Chair is adopted;
(b) the directors are authorised to do all acts and things necessary to carry
the Plan into effect including the making of any changes to the rules of the
Plan as may be necessary to obtain any approvals the directors consider
necessary or desirable to obtain and/or to comply with London Stock Exchange
requirements and/or institutional requirements; and
(c) pursuant to and in accordance with ASX Listing Rule 7.2, Exception 9 and for
all other purposes, the Company approves the issue of securities under the Plan,
as an exception to ASX Listing Rule 7.1.
The Company will disregard any votes cast on Resolution 2 by a Director of the
Company and any person associated with those persons. However, the Company need
not disregard a vote if it is cast by a person as proxy for a person who is
entitled to vote, in accordance with the directions on the proxy form, or it is
cast by the person chairing the meeting as proxy for a person who is entitled to
vote, in accordance with a direction on the proxy form to vote as the proxy
decides.
RESOLUTION 3 - INCREASE IN DIRECTORS` FEES
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
"That, pursuant to and in accordance with Listing Rule 10.17 and for all other
purposes, the maximum aggregate Directors` fees payable to non-executive
Directors be increased from $300,000 per annum to $1,000,000 per annum.
The Company will disregard any votes cast on Resolution 3 by a Director of the
Company and any associate of a Director. However, the Company need not
disregard a vote if it is cast by a person as proxy for a person who is entitled
to vote, in accordance with the directions on the proxy form or it is cast by
the person chairing the meeting as proxy for a person entitled to vote, in
accordance with a direction on a proxy form to vote as the proxy decides.
RESOLUTION 4 - GRANT OF OPTIONS TO DAVID MURRAY
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
"That, pursuant to and in accordance with section 208 of the Corporations Act
and Listing Rule 10.11 and for all other purposes, the Directors be and are
hereby authorised to grant and issue up to 2,500,000 Options for no
consideration, each Option having an exercise price equal to the volume weighted
average price of the Company`s shares 10 trading days prior to the issue date
and an expiry date 5 years from the date of issue, 1,000,000 of which will vest
12 months after the date of issue, 750,000 of which will vest 24 months after
the date of issue and the remaining 750,000 vesting 36 months from the date of
issue, to David Murray or his nominees, on the terms and conditions set out in
the Explanatory Statement (including Appendix 2 to the Explanatory Statement)."
The Company will in accordance with section 224 of the Corporations Act
disregard any votes cast on Resolution 4 by David Murray and any associate of
David Murray. However, the Company need not disregard a vote if:
(a) it is cast by a person as a proxy appointed by writing that specifies how
the proxy is to vote on the proposed resolution; and
(b) it is not cast on behalf of David Murray or an associate of David Murray.
RESOLUTION 5: RATIFICATION OF ISSUE OF SHARES
To consider and, if thought fit, to pass with or without amendment, the
following resolution as an ordinary resolution:
"That, for the purpose of Listing Rule 7.4 of the Listing Rules of the ASX and
for all other purposes, the Company ratifies the allotment and issue of
50,000,000 Shares at an issue price GBP1.10 each and on the terms and conditions
set out in the Explanatory Statement that forms part of this Notice."
The Company will disregard any votes cast on Resolution 5 by any of the persons
who participated in the issue the subject of Resolution 5 and any associate of
any of those persons. However, the Company need not disregard a vote if the
vote is cast by a person as proxy for a person who is entitled to vote, in
accordance with the directions on the proxy form or the vote is cast by the
person chairing the meeting as proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the proxy decides.
OTHER BUSINESS
To deal with any other business which may be brought forward in accordance with
the Constitution and the Corporations Act.
BY ORDER OF THE BOARD
Signed by:
Shannon Coates
Company Secretary
Dated: 24 August 2010
PROXIES
1. Votes at the General Meeting may be given personally or by proxy, attorney or
representative.
2. A member entitled to attend and vote is entitled to appoint not more than two
proxies to attend and vote on behalf of the member. A proxy need not be a member
of the Company, but must be a natural person (not a corporation). A proxy may
also be appointed by reference to an office held by the proxy (eg "the Company
Secretary").
3. Where more than one proxy is appointed, each proxy may be appointed to
represent a specified proportion of the member`s voting rights. If no such
proportion is specified, each proxy may exercise half of the member`s votes.
4. A proxy form is enclosed. A separate form must be used for each proxy. An
additional form can be obtained by writing to the Company at Level 1, 173 Mounts
Bay Road, Perth, Western Australia or by fax to +61 8 9322 6778. Alternatively,
you may photocopy the enclosed form.
5. A duly completed proxy form and (where applicable) any power of attorney or a
certified copy of the power of attorney must be received by the Company at its
registered office or the address or fax number set out below, not less than 48
hours before the time for commencement of the meeting. Please send by post to
Level 1, 173 Mounts Bay Road, Perth, Western Australia 6000 or by fax to +61 8
9322 6778.
6. The Company will accept proxy appointments by a corporate member executed in
accordance with either section 127(1) (not under seal) or section 127(2) (under
seal) of the Corporations Act.
7. For the purposes of section 1074E(2) of the Corporations Act 2001 and
regulation 7.11.37 of the Corporations Regulations 2001, the Company determines
that members holding ordinary Shares at the close of business (Perth time) on 12
October 2010 will be entitled to attend and vote at the General Meeting.
8. If the proxy form specifies a way in which the proxy is to vote on any of the
resolutions stated above, then the following applies:
(a) the proxy need not vote on a show of hands, but if the proxy does so, the
proxy must vote that way;
(b) if the proxy has 2 or more appointments that specify different ways to vote
on the resolution, the proxy must not vote on a show of hands;
(c) if the proxy is Chair, the proxy must vote on a poll and must vote that way;
and
(d) if the proxy is not the Chair, the proxy need not vote on a poll, but if the
proxy does so, the proxy must vote that way.
If a proxy is also a shareholder, the proxy can cast any votes the proxy holds
as a shareholder in anyway that the proxy sees fit.
9. The Explanatory Statement attached to this Notice forms part of this Notice.
Capitalised terms used in this Notice are defined in the Explanatory Statement.
EXPLANATORY STATEMENT
This Explanatory Statement is intended to provide shareholders with sufficient
information to assess the merits of the Resolutions contained in the preceding
Notice of General Meeting of the Company.
The Explanatory Statement and all attachments are important documents. They
should be read carefully. The Directors recommend shareholders read this
Explanatory Statement in full before making any decision in relation to the
Resolutions.
Capitalised terms used in the Notice and in this Explanatory Statement are
defined in the glossary at the end of this Explanatory Statement.
RESOLUTION 1 - ADOPTION OF CONSTITUTION
Resolution 1 asks shareholders to approve a special resolution to adopt a new
Constitution in substitution for the existing Constitution of the Company. As
announced on 29 October 2009, the Company intends to move from the AIM market
operated by the London Stock Exchange plc ("LSE") to a primary listing and
admission of its share capital to the Official List of the UK Financial Services
Authority ("FSA") and to trading on the LSE`s main market for listed securities
("Admission"). In seeking Admission, it is necessary for the Company to adopt a
new Constitution which is consistent with the listing rules of the FSA (the "UK
Listing Rules"). Should Resolution 1 be passed, the new Constitution will only
take effect from Admission, which is expected to take place in the latter half
of the 2010 calendar year.
The Company`s present Constitution was first adopted on 30 November 2004. The
new Constitution complies with the ASX Listing Rules and with the Corporations
Act and is consistent with constitutions for publicly listed companies in
Australia. As noted above, the new Constitution also complies with the UK
Listing Rules.
Copies of the current and proposed Constitution are available for perusal by
shareholders at the Company`s registered office or via the internet at
www.coalofafrica.com.
The Constitution proposed to be adopted is substantially similar to the present
Constitution but differs from the present Constitution in the following material
respects:
General
In general, the proposed Constitution updates the current Constitution, which
contains some references to the Corporations Act which are now out of date. As
noted above, the proposed Constitution is consistent with the UK Listing Rules.
Further, as the Company intends to delist from ASX, the proposed Constitution no
longer includes provisions in the current Constitution which were specific to
the ASX Listing Rules, including provisions dealing with restricted securities
and marketable parcels.
Incorporation of pre-emption rights for existing shareholders
A requirement of the UK Listing Rules is that a company`s constitution includes
pre-emption rights for shareholders for new issues of securities. Key
provisions provide:
1. that subject to specified exceptions, the Company may not allot Shares or
other securities to any person without first offering them to existing
shareholders pro rata to their existing holdings;
2. exceptions to the pre-emption rights would apply for bonus issues, issues for
non-cash consideration (eg: as part of the purchase price for an acquisition)
and for issues under shareholder approved employee share or options schemes;
3. a process by which offers of securities to existing shareholders must be made
and response dealt with; and
4. the ability to modify or disapply pre-emption rights for particular Share
issues by special resolution.
Fractional entitlements
The proposed Constitution contains provisions dealing with the right of the
Directors to sell fractional entitlements to Shares arising as a result of a
consolidation or sub-division of Shares. Under this provision, the Directors
may sell the Shares representing fractions to any person for the best price
reasonably obtainable and must distribute the net proceeds of sale amongst the
shareholders entitled to those fractions in due proportions. However, if the
value of a fractional entitlement to a Share is less than GBP3.00 (or such
lesser amount as determined by the Directors) and the Company has by ordinary
resolution given its consent, the net proceeds of sale of such a fractional
entitlement shall belong to the Company. The current Constitution does not
contain such a provision.
Proportional takeovers
The proposed Constitution contains provisions dealing with proportional takeover
bids for the Company`s Shares in accordance with the Corporations Act. The
current Constitution does not contain such a provision. The provisions are
designed to assist shareholders to receive proper value for their Shares if a
proportional takeover bid is made for the Company. Under the Corporations Act,
the provisions must be renewed every three years or they will cease to have
effect. The Corporations Act requires that the following information be
provided to shareholders when they are considering the inclusion of proportional
takeover provisions in a constitution.
1. Effect
A proportional takeover bid is one where the offer made to each shareholder is
only for a proportion of that shareholder`s Shares. If a proportional takeover
bid is made, Directors must hold a meeting of the shareholders of the class of
Shares being bid for to consider whether or not to approve the bid. A
resolution approving the bid must be voted on before the 14th day before the end
of the bid period. The resolution will be passed if more than 50% of votes in
the class the subject of the bid are cast in favour of the approval. The bidder
and its associates are not allowed to vote on the resolution. If no such
resolution is voted on by that deadline, a resolution approving the bid is taken
to have been passed.
If a resolution to approve the bid is rejected, binding acceptances or offers
are required to be rescinded, and all unaccepted offers and offers failing to
result in binding contracts are taken to have been withdrawn.
If the bid is approved or taken to have been approved, the transfers resulting
from the bid may be registered provided they comply with other provisions of the
Corporations Act and the Company`s Constitution. The proportional takeover
provisions do not apply to full takeover bids.
2. Reasons
Without the proportional takeover approval provisions, a proportional takeover
bid may enable control of the Company to pass without shareholders having the
opportunity to sell all their Shares to the bidder. Shareholders may be exposed
to the risk of being left as a minority in the Company and the risk of the
bidder being able to acquire control of the Company without payment of an
adequate control premium for their Shares.
The proposed proportional takeover provisions lessen this risk because they
allow shareholders to decide whether a proportional takeover bid is acceptable
and should be permitted to proceed.
3. No knowledge of any acquisition proposals
At the date of this Notice, no Director of the Company is aware of any proposal
by any person to acquire, or to increase the extent of, a substantial interest
in the Company.
4. Potential advantages and disadvantages
The Corporations Act requires that shareholders be given a statement of the
potential future advantages and disadvantages of the provisions. The Directors
of the Company consider that the proposed adoption of the proportional takeover
approval provisions has no potential advantages or potential disadvantages for
Directors because they remain free to make a recommendation on whether a
proportional takeover bid should be approved.
The potential advantages of the proposed proportional takeover provisions for
shareholders are:
(a) they give shareholders their say in determining by majority vote whether a
proportional takeover bid should proceed;
(b) they may assist shareholders in not being locked in as a relatively
powerless minority;
(c) they increase shareholders` bargaining power and may assist in ensuring that
any proportional bid is adequately priced; and
(d) knowing the view of the majority of shareholders assists each individual
shareholder in assessing the likely outcome of the proportional takeover bid and
whether to approve or reject that offer.
Some potential disadvantages to shareholders of the Company are:
(a) it is a hurdle and may discourage the making of proportional takeover bids
in respect of the Company;
(b) this hurdle may depress the Share price or deny shareholders an opportunity
of selling their Shares at a premium; and
(c) it may reduce the likelihood of a proportional takeover being successful.
However, the Directors do not perceive those or any other possible disadvantages
as justification for not adopting the proportional takeover provisions.
Number of Directors
The current Constitution does not specify a maximum number of Directors the
Company can have. The proposed Constitution sets a maximum number of 12
directors, though this number can be altered by the Company by ordinary
resolution.
Nomination of Directors for election
The proposed Constitution provides that no person (other than a Director seeking
re-election) shall be eligible for election to the office of Director unless
they or some shareholder intending to propose their nomination has, at least 30
business days before the meeting, left at the Company`s registered office a
notice of the nomination and a signed consent to act as a Director. The time
for notice under the current Constitution is 35 business days. In addition, the
current Constitution permits the Board to recommend the appointment of a
Director. There is no such power in the proposed Constitution.
Vacation of office by a Director
Under the proposed Constitution, a Director will automatically cease to be a
Director in the event he becomes bankrupt or makes any arrangement or
composition with creditors generally. The current Constitution does not provide
for this. In addition, under the proposed Constitution, a Director will
automatically cease to be a Director if he is absent for more than 6 months,
without permission of the Directors, from meetings of the Directors held during
that period. This period is 3 months under the current Constitution.
Too few Directors
If the number of Directors is reduced to below the number required for a quorum,
then under the current Constitution, the remaining Directors may only act to
appoint Directors up to the minimum number, convene a meeting of shareholders,
or in emergencies. The proposed Constitution permits the remaining Directors to
appoint Directors up to the minimum number and convene a meeting of
shareholders, but does not permit them to act in emergencies.
Alternate Directors
Under the proposed Constitution, alternate Directors are automatically entitled
to notice of Directors` meetings. Under the current Constitution, alternate
Directors are only entitled to notice if the appointing Director so requests.
Borrowings
The proposed Constitution imposes a limit on the amount the Directors may borrow
at any time, such limit being determined by reference to a formula set out in
the proposed Constitution. No such limit is imposed under the current
Constitution.
Company seal and execution of documents
The current Constitution provides that the Board must decide the manner in which
negotiable documents can be executed by the Company, and provides that the Board
may determine whether or not the Company has a common seal. The proposed
Constitution provides that the Company may execute a document by seal (including
details on the use of the seal), or without a seal if the document is signed by
two Directors or a Director and a Company Secretary.
Managing Director
Under the proposed Constitution, the Directors may only appoint one Director to
be Managing Director. There is no such limit under the current Constitution.
Directors` power of attorney
The proposed Constitution allows the Directors to appoint one or more people to
be the attorney for the Company, by power of attorney. The current Constitution
is silent on this.
Director interested in a matter
Under the current Constitution, a Director who has a material personal interest
in a matter may, subject to the Corporations Act, be counted in a quorum and may
vote at a Board meeting in relation to that matter. Under the proposed
Constitution, the interested Director must not be present and must not vote,
unless otherwise authorised by the Corporations Act.
Employee`s indemnity
The proposed Constitution provides that the Company shall indemnify an employee
of the Company against any liability incurred by the employee arising in
relation to his employment with the Company unless the liability arose by reason
of the employee`s dishonesty, negligence, default, or breach of duty or
trust.The current Constitution is silent on this.
Auditor`s indemnity
The current Constitution gives the Company discretion as to whether or not to
provide an indemnity to the auditor in respect of liability incurred as the
Company`s auditor. The proposed Constitution provides that the Company must
provide this indemnity to the auditor.
Notice of Directors` meetings
The proposed Constitution provides that at least 24 hours notice must be given
to Directors of a Directors` meeting, although the Directors may unanimously
agree to shorter notice. The current Constitution provides that reasonable
notice must be given.
Directors` meeting by instantaneous communication devices
Both the current and proposed Constitutions provide that a Directors` meeting
may be held by instantaneous communication devices. However, the proposed
Constitution further provides that a Director may not leave a Directors` meeting
by disconnecting their instantaneous communication device unless he has obtained
the express consent of the Chair of the meeting, and unless he has obtained such
consent, he shall be deemed to have been present and to have formed part of the
quorum for the meeting. The current Constitution is silent in this regard.
Chairing Board meetings
The proposed Constitution provides that where the Chair is not present within 10
minutes of the time of the meeting (the current Constitution provides for 15
minutes), the Directors present must elect one of their number to be the Chair
of the meeting. In addition, the proposed Constitution provides that the
Directors may elect a Vice-Chair for Board meetings. The current Constitution
is silent on this.
Under the current Constitution, in the case of an equality of votes, the Chair
shall have a casting vote unless only 2 Directors are entitled to vote on the
matter or the Chair is not entitled to vote. In this case, the matter is
decided in the negative. Under the proposed Constitution, the Chair has a
casting vote unless only 2 Directors are entitled to vote on the matter. In
such a case, the matter is not automatically decided in the negative.
Notification of general meetings
Under the proposed Constitution, if the Directors postpone or cancel a meeting
of shareholders, they must notify the shareholders. Under the current
Constitution, Directors are to notify ASX.
Quorum at general meetings
Under the proposed Constitution, if a quorum is not present 30 minutes (15
minutes under the current Constitution) after the time appointed for the
meeting, the meeting, if convened upon a requisition shall be dissolved, but in
any other case it shall stand adjourned sine die.
Chair of general meeting
Under the proposed Constitution, if the Company does not have a Chair, or the
Chair is not present at a general meeting (or is not present within 15 minutes
after the time appointed), the Directors shall elect one of their number to be
Chair, failing which the shareholders shall elect one of their number to be
Chair. Under the current Constitution, shareholders automatically have the
right to elect a Chair for the meeting in the event the Company does not have a
Chair or the Chair is not present when called.
Attendance at general meetings
In addition to shareholders, Directors and the Company`s auditor, the proposed
Constitution specifically provides that such person or persons as approved by
the Chair are entitled to attend a general meeting.
Chair`s powers at a general meeting
The current Constitution specifically sets out the powers of the Chair at a
general meeting of shareholders. The proposed Constitution is silent on this.
With respect to the Chair`s power to postpone a general meeting, the current
Constitution provides that the Chair may, and must if directed by ordinary
resolution of the meeting, postpone the meeting. The proposed Constitution
provides that the Chair may only postpone the meeting with the consent of the
general meeting, and must do so if directed by the general meeting. In
addition, the proposed Constitution provides that where a general meeting is
postponed for 30 days or more, notice of the resumption of the meeting shall be
given in the same manner as for the original general meeting, but otherwise it
is not necessary to give any notice of any adjournment. The current
Constitution is silent in this regard.
Proxies and attorneys
The current Constitution provides that the Board may require evidence that a
proxy and/or power of attorney has been validly executed. The proposed
Constitution simply provides that the proxy form/power of attorney must be
properly executed. The current Constitution also provides for shareholders to
make standing appointments, and provides details on the priority of receiving
votes in the event there are conflicting appointments of attorneys, or if there
are more than 2 current proxy appointments. The proposed Constitution is silent
on this.
Voting at general meetings
The current Constitution provides that if a shareholder has appointed 2 proxies,
neither of those proxies may vote on a show of hands. The proposed Constitution
provides that on a show of hands, every person present who is a shareholder or a
proxy has one vote. In the case of an equality of votes, the proposed
Constitution provides that the Chair shall not have a casting vote, therefore in
respect of a matter in which there is an equality of votes, the matter shall be
decided in the negative. Under the current Constitution, the Chair has a
casting vote, but in respect of a matter in which there is an equality of votes
and he is not entitled to vote, the matter shall be decided in the negative.
Company secretary
The current Constitution sets out in detail provisions regarding the appointment
of a company secretary, his terms and conditions of office, instances in which
he will automatically cease to be a secretary, and how he may be removed from
his position. The proposed Constitution provides that the secretary shall hold
office on such terms and conditions as the Directors determine.
Preference shares
Under the current Constitution, the Company may issue preference shares, such
preference shares to have the rights set out in the schedule to the current
Constitution unless otherwise approved by a special resolution of the Company.
Under the proposed Constitution, the Directors may, subject to the provisions of
section 254A of the Corporation Act, issue preference shares on the terms they
see fit, provided they have the same rights as holders of ordinary Shares to
receive notices, reports and audited accounts, and to attend general meetings.
Share certificates
The proposed Constitution states that the Company need not issue a certificate
in respect of a security where the non-issue is permitted by the Corporations
Act. The current Constitution states that the Company must not issue such a
certificate.
Partly paid Shares
With respect to notice of a call on a partly paid Share, the current
Constitution provides that the notice must be given within the time limits, and
in the form, required by the ASX Listing Rules. The proposed Constitution
provides that 15 business days notice of a call must be given, and sets out the
details which must be included in the notice.
In addition, under the current Constitution, the Directors may accept prepayment
of some or all of the amount unpaid on a Share above the sums actually called as
payment in advance of any further calls, agree to payment by the Company of
interest on that part of the prepayment which exceeds the aggregate amount
called at that time, and repay the sum or part of it. Under the proposed
Constitution, the Directors may accept prepayments of uncalled amounts on a
Share, and in such a case shall nominate whether the amount so paid is to be
treated as capital or a loan to the Company by the shareholder.
If the amount is nominated as capital, it shall be deemed to have been applied
in paying up (so far as it will extend) the unpaid balance of the total issue
price of the Share, but the dividend entitlement attaching to such Share shall
remain as it was prior to the payment so made until there is a call in respect
of the Share of an amount equal to or greater than the amount so paid. If the
amount is nominated to be a loan, it shall carry interest at a rate to be agreed
between the Directors and the shareholder, shall not be repayable unless the
Directors so determine, shall not confer on the shareholder any rights
attributable to subscribed capital, and shall, unless so repaid, be applied in
payment of calls on the Share as and when the same become due.
The current Constitution provides that on the hearing of an action for recovery
of a called amount, if it is proved that the minute books of the Company record
the Directors resolution to make the call, notice of the call is given in
accordance with the Constitution, and the person sued appears in the shareholder
register as the holder of the Share in respect of which the call was made, than
proof of these matters is conclusive proof of the debt. The proposed
Constitution is silent on this, but provides that the non-receipt of a notice of
any call by, or the accidental omission to give notice of a call to, a
shareholder does not invalidate the call.
Forfeiture of Shares
Under the current Constitution, where a shareholder has failed to pay a called
amount, the Directors may send a forfeiture notice to the shareholder requiring
payment by the date at least 14 days after the date of the notice. Under the
proposed Constitution, where a shareholder has failed to pay a called amount,
the Directors may send a forfeiture notice to the shareholder requiring payment
by the date ten Business Days from the date of the notice ("Payment Date"). If
payment is not made by the Payment Date, the relevant Shares will automatically
forfeit 10 Business Days from the Payment Date. In respect of a person whose
Share has been forfeited, the person remains liable to pay all amounts owing on
the Share, but the Directors may elect not to enforce payment. The proposed
Constitution does not expressly confer a right on the Directors not to enforce
payment.
Under the current Constitution, where a forfeited Share has been sold or
disposed of, the Directors must apply the net proceeds of the sale or disposal
to satisfy the amount unpaid on the Share, and subject to the terms of issue of
the Share, must then apply any surplus to the person who held the Share
immediately before forfeiture. The proposed Constitution does not state how the
funds must be used, and provides that the Company may receive the consideration
given for a forfeited Share on any sale or disposition of the Share and may
effect a transfer of the Share in favour of the person to whom the Share is sold
or disposed of and may do all such things as may be necessary or appropriate for
it to do or effect such transfer. Upon the execution of the transfer, the
transferee must be registered as the holder of the Share and is not bound to see
to the application of any money paid as consideration.
The current Constitution provides that if the Company grants a mortgage or
charge over uncalled capital, the Directors may delegate their power to make
calls to the person in whose favour the mortgage or charge is granted or a
trustee or agent for that person. The proposed Constitution is silent on this.
Liens
Both the current and proposed Constitution provide that the Company has a first
and paramount lien on every Share for all due and unpaid calls and instalments
due and unpaid in respect of that Share, and for all amounts the Company may be
called upon by law to pay in respect of any Shares. The proposed Constitution
additionally provides that the Company has a first and paramount lien on all the
Shares of a shareholder who obtains Shares pursuant to an employee incentive
scheme loan and to the extent such a loan remains.
Under the current Constitution, where the Company has a lien on a Share, the
Company must not sell the Share unless it has given notice to the holder of the
Share specifying a date, at least 10 business days after the date of the notice,
requiring payment of the amount which is due and payable and secured by the
lien, and the shareholder fails to pay within the required time. Under the
proposed Constitution, the amount of notice which must be given is not less than
14 days before the date of sale. The proposed Constitution expressly provides
that the Company`s lien on a Share is extinguished if a transfer of the Share is
registered without the Company giving notice of the claim to the transferee, and
also provides that the Directors may at any time exempt a Share wholly or in
part from the provisions in the Constitution regarding liens. The current
Constitution is silent on these matters.
Dividends
With respect to partly paid Shares and determining entitlements to dividends,
the current Constitution provides that if an amount was paid on a Share during
the period to which a dividend relates, the Board may resolve that only part of
the amount is taken into account as being paid on the Share, and an amount
credited on a partly paid Share without payment is not taken into account as
part of the amount being paid on a Share. The proposed Constitution is silent
in this regard.
Share plans
Under the proposed Constitution, the Directors may, subject to the Corporations
Act, establish in their absolute discretion a dividend reinvestment plan,
interest reinvestment plan and/or a dividend election plan. Under the current
Constitution, the Directors must first obtain the approval of shareholders in
general meeting before implementing such plans.
Transfer of Shares
With respect to the registration procedure for a transfer of Shares, the
proposed Constitution provides that the instrument of transfer must be executed
by or on behalf of both the transferor and the transferee (unless it is a
sufficient transfer of marketable securities within the meaning of the
Corporations Act), and on registration of transfer, the Company must cancel the
old certificate (if any). It further provides that the Company must retain
every instrument of transfer which is registered for such period as the
Directors determine, and where transfer is refused, the Directors must return to
the person who deposited it if demand is made within 12 months of the giving of
notice of refusal to register unless there has been an allegation of fraud
concerning the transfer. The current Constitution is silent on these matters.
Under the current Constitution, if a transfer is refused, the Company must give
the lodging party notice of the refusal and reasons for it within 5 days. The
proposed Constitution does not impose a time limit in these circumstances. The
current Constitution provides that the Company may assume that a power of
attorney that is lodged by a shareholder remains in force until the Company
receives express notice in writing of the revocation of the power of attorney,
or the death, dissolution or insolvency of the shareholder. The proposed
Constitution is silent on this.
Transmission of Shares
The current Constitution provides that a person may become entitled to Shares
because of the mental incapacity of a shareholder. The proposed Constitution is
silent on this.
Capitalisation of profits
Under the proposed Constitution, the Directors may from time to time capitalise
profits, and the capitalisation need not be accompanied by the issue of Shares.
Under the current Constitution, the Company may capitalise profits, reserves or
other amounts available for distribution to shareholders, and shareholders are
entitled to participate in a capital distribution in the same proportions in
which they are entitled to participate in dividends.
For the purposes of settling any difficulty that arises in regard to a
capitalisation of profits, the current Constitution provides that the Directors
may do anything they think appropriate and necessary to adjust the rights of
shareholders among themselves including fixing the value of specific assets,
making cash payments to shareholders on the basis of the value fixed for assets
or in place of fractional entitlements, disregarding fractional entitlements,
and vesting cash or specific assets in trustees. In this regard, the proposed
Constitution provides that the Directors shall do all things necessary and, in
particular, to the extent necessary to adjust the rights of the shareholders
among themselves may make cash payments in place of fractional entitlements to
Shares, and authorise any person to make, on behalf of shareholders entitled, an
agreement with the Company providing for the issue to them of Shares or the
payment up by the Company on their behalf of the amounts (or part of the
amounts) remaining unpaid on their existing Shares by the application of their
respective proportions of the sum resolved to be capitalised, and any such
agreement shall be binding on all shareholders concerned.
Conversion of Shares
The current Constitution provides that the Company may convert a Share into a
preference share, or a preference share into a Share, by resolution passed at a
meeting of shareholders. Under the proposed Constitution, the variation of
class rights requires the consent in writing of three quarters of the issued
Shares of that class, or by a special resolution passed at a separate meeting of
the holders of Shares in that class. In making such conversions, the current
Constitution permits Directors to do anything necessary to effect the
resolution, including making a cash payment or disregarding fractional
entitlements, vest fractional entitlements, or round up fractional entitlements.
The proposed Constitution is silent on this.
Reductions of capital
The current Constitution provides that the Company may reduce its share capital
in accordance with law. In addition to this right, the proposed Constitution
provides the Company may also reduce its share capital in any way that is not
otherwise authorised by law if the reduction is fair and reasonable to the
Company`s shareholders as a whole, does not prejudice the Company`s ability to
pay its creditors, and is approved by shareholders in accordance with section
256C of the Corporations Act.
Currency for payments
The current Constitution specifically provides that the Company may pay amounts
in the currency of a country other than Australia. The proposed Constitution is
silent on this.
Winding up
In a winding up of the Company, the current Constitution provides that in
determining shareholder entitlements, a partly paid Share is counted as a
fraction of a fully paid Share equal to the proportion which the amount paid on
it bears to the total issue price of the Share. Under the proposed
Constitution, shareholders are entitled based on their number of Shares held by
them, irrespective of the amount paid up or credited as paid up on the Shares.
Notice
Both the current and proposed Constitution permit the Company to give notice to
shareholders by serving the notice personally, by electronic means, facsimile,
or post. The proposed Constitution additionally permits the Company to give
notice in accordance with section 249J(3A) of the Corporations Act. Under the
current Constitution, overseas shareholders may notify the Company in writing of
an address in Australia to which notices may be sent. Under the proposed
Constitution, notices to overseas shareholders are to be sent by airmail,
facsimile or electronic means, or any other way that ensures it will be received
quickly.
Under the current Constitution, notice is taken to have been given and received,
if delivered personally or by fax or electronic message:
1. by 5.00 pm (local time in the place of receipt) on a business day, on that
day; or
2. after 5.00 pm (local time in the place of receipt) on a business day, or on a
day that is not a business day, on the next business day.
If sent by mail, it is taken to be given and received 1 business day after
posting. Under the proposed Constitution, where notice is served personally it
is taken to have been served when delivered. Where a notice is sent by post,
service of the notice shall be deemed to be effected by properly addressing,
prepaying and posting a letter containing the notice, and to have effected, on
the day after the date of its posting. Where a notice is sent by facsimile
transmission or electronic notification, service of the notice is deemed to be
effected by properly addressing and transmitting the facsimile transmission or
electronic notification and to have been served on the day of its transmission
except if transmitted on a day which is not a business day or is after 5.00 pm
(local time in the place of receipt) on a day which is a business day, in which
case it is taken to be served on the next business day.
The current Constitution provides that if a specified period must pass after a
notice is given before an action may be taken, neither the day on which the
notice is given nor the day on which the action is to be taken may be counted in
reckoning the period. The proposed Constitution is silent on this.
The proposed Constitution provides that notice may be given to a person entitled
to a Share in consequence of the death or bankruptcy of a shareholder. The
current Constitution is silent on this.
Under the current Constitution, if on 2 or more consecutive occasions notice is
served on a shareholder and is returned unclaimed or with an indication that the
shareholder is not known at the address to which it was sent, or the Directors
believe on other reasonable grounds that the shareholder is not at the address
shown in the register or notified to the Company, the Company may give effective
notice to that shareholder by exhibiting the notice at the Company`s registered
office for at least 48 hours. Under the proposed Constitution, where the
Company has a bona fide reason to believe that a shareholder is not at their
registered address and the Company has subsequently made an enquiry as to the
whereabouts of the shareholder which elicits no response or a response
indicating that the shareholder or their present whereabouts are unknown, all
future notices will be deemed to be given to such shareholder if the notice is
exhibited in the Company`s registered office for a period of 48 hours.
Directors` Recommendation
The Board recommends shareholders vote in favour of Resolution 1.
RESOLUTION 2 - ADOPTION OF EMPLOYEE SHARE OPTION PLAN
The Company is proposing to establish, conditional on Admission, a new employee
share option plan called the "Coal of Africa Limited Employee Share Option Plan"
(the "Plan"). A summary of the principal features of the Plan is set out in
Appendix 1 to this Explanatory Statement. Should Resolution 2 be passed, the new
Plan will only take effect from Admission.
The Company may extend the Plan to employees of the Company or any of its
subsidiaries who are resident or working overseas by establishing any
supplements or appendices to the Plan it considers appropriate to take advantage
of or comply with local laws and regulations. Overall limits on the
availability of Shares in the Plan will apply to any supplements or appendices.
ASX Listing Rule 7.1 broadly provides, subject to certain exceptions, that
shareholder approval is required for any issue of securities by a company listed
on ASX, where the securities proposed to be issued represent more than 15% of
the company`s securities then on issue. Shareholder approval is required if any
issue of Options to employees pursuant to the Plan is to fall within the
exception to the calculation of the 15% limit imposed by ASX Listing Rule 7.1 on
the number of securities which may be issued without shareholder approval.
Accordingly, shareholder approval is sought for the purposes of ASX Listing Rule
7.2 Exception 9(b) which provides that ASX Listing Rule 7.1 does not apply to an
issue of securities under an employee incentive scheme that has been approved by
the holders of ordinary securities within three years of the date of issue.
In accordance with ASX Listing Rule 7.2 Exception 9(b) the following information
is provided:
1. a summary of the terms of the Plan is set out in Appendix 1 to this
Explanatory Statement;
2. no securities have been issued under the Plan; and
3. a voting exclusion statement has been included for the purposes of Resolution
2.
Directors` Recommendation
The Board recommends shareholders vote in favour of Resolution 2.
RESOLUTION 3 - INCREASE IN DIRECTORS` FEES
Resolution 3 seeks shareholder approval for the purposes of Listing Rule 10.17
and for all other purposes, for the Company to be authorised to increase the
aggregate amount of fees paid to Directors by $700,000 from $300,000 per annum
to an aggregate amount of $1,000,000 per annum.
The Board considers that it is reasonable and appropriate at this time to seek
an increase in the remuneration pool for Non-Executive Directors for the
following reasons:
1. The maximum aggregate fees payable to Directors have not been increased since
5 June 2007. The number of non-executive Directors has increased from 6 to 8 in
that period.
2. The Company`s Broad Based Black Economic Empowerment partner, Firefly
Investments 163 Proprietary Limited has the right to nominate 2 persons to the
CoAL Board.
It is not intended to fully utilise the increased aggregate fees in the
immediate future.
The remuneration of each Director for the year ended 30 June 2009 is detailed in
the Company`s 2009 Annual Report.
Directors` Recommendation
The Board recommends shareholders vote in favour of Resolution 3.
RESOLUTION 4 - ISSUE OF OPTIONS TO DAVID MURRAY
Mr David Murray was recently appointed to the Board as Senior Independent Non-
Executive Director. Mr Murray holds a Bachelor of Science Degree (Civil
Engineering) from the University of Kwazulu-Natal University and a Post Graduate
Diploma in Mining Engineering from the University of Pretoria. He has also
completed the Advanced Executive Program from the University of South Africa.
From 1978 until 1999, Mr Murray worked for the Ingwe Coal Corporation (formerly
Trans-Natal Coal Corporation Limited). He progressed through various
operational, project and managerial positions and in 1993, was appointed
Managing Director of Trans-Natal. In 1999, Mr Murray was appointed Chief
Executive Officer of BHP Billiton Coal. In 2001, he moved to Australia after
being appointed CEO of BHP Billiton Mitsubishi Alliance, a position held till
2004.
In early 2005, Mr Murray moved to Melbourne to the global headquarters of BHP
Billiton Limited when he accepted the position as President of Metallurgical
Coal. With the decision made in early 2007 to merge the Energy Coal and Met
Coal business, Mr Murray became the President of the Coal Customer Sector Group.
After the decision in 2008 by BHP Billiton to separate the two coal businesses,
Mr Murray accepted the role as President of the Energy Coal Sector Group, a
position he held until he left BHP Billiton in December 2009.
The Company proposes to issue a total of 2,500,000 Options (each Option having
an exercise price equal to the volume weighted average price of the Company`s
Shares 10 trading days prior to the issue date and an expiry date 5 years from
the issue date, 1,000,000 of which will vest 12 months after the date of issue,
750,000 of which will vest 24 months after the date of issue and the remaining
750,000 vesting 36 months from the date of issue) to Mr David Murray or his
nominee(s).
The terms of the Options are set out in Appendix 2 to this Explanatory
Memorandum. The Options will not be issued under the Company`s employee share
option plan. The Company will not seek official quotation of the Options on
ASX.
This offer of Options was made by the Board to attract the services of Mr
Murray. The issue of Options encourages Mr Murray to have a greater involvement
in the achievement of the Company`s objectives and to provide an incentive to
strive to that end by participating in the future growth and prosperity of the
Company through share ownership. Under the Company`s current circumstances the
Directors consider (in the absence of Mr Murray) that the incentives intended
for Mr Murray represented by the issue of these Options is a cost effective and
efficient means for the Company to provide a reward and an incentive, as opposed
to alternative forms of incentive, such as the payment of additional cash
compensation that would be necessary for someone with the experience of Mr
Murray.
The number of Options to be issued to Mr Murray has been determined based upon a
consideration of:
- the remuneration of Mr Murray; and
- the Directors wish to ensure that the remuneration offered is competitive with
market standards.
The Directors have considered the proposed number of Options to be issued will
ensure that Mr Murray`s overall remunerations is in line with market standards.
The exercise price of the Options has not yet been set, such exercise price will
be the amount equal to the volume weighted average price of the Shares on ASX
for the 10 trading days prior to the date of issue of the Options.
The following amounts will need to be paid to the Company by Mr Murray or his
nominee if the Options are exercised, using assumed exercise prices of $1.35,
$1.50, $1.75 $2.00, and $2.50:
Exercise Price Amount to be paid
$1.35 $3,375,000
$1.50 $3,750,000
$1.75 $4,375,000
$2.00 $5,000,000
$2.50 $6,250,000
Related Party Transactions Generally
Chapter 2E of the Corporations Act prohibits a public company from giving a
financial benefit to a related party of the public company unless either:
1. the giving of the financial benefits falls within one of the nominated
exceptions to the provision; or
2. shareholder approval is obtained prior to the giving of the financial benefit
and the benefit is given within 15 months after obtaining such approval.
For the purposes of Chapter 2E of the Corporations Act, Mr Murray is considered
to be a related party of the Company.
Resolution 4 provides for the issue of Options to Mr Murray which is a financial
benefit which requires shareholder approval.
Current Holdings
Set out below are details of Mr Murray`s relevant interest in Shares of the
Company as at the date of this Notice:
Director Associate Number of Number of Options
Shares
Mr David NIL NIL NIL
Murray
INFORMATION REQUIREMENTS
For the purposes of Chapter 2E of the Corporations Act the following information
is provided.
The related parties to whom the proposed resolutions would permit the financial
benefit to be given:
Subject to shareholder approval, 2,500,000 Options will be issued to Mr Murray
or his nominees.
The nature of the financial benefit
The proposed financial benefit to be given is the issue of Options for no
consideration to Mr Murray as noted above.
Directors` recommendation
All the Directors were available to make a recommendation. For the reasons
noted above:
All of the Directors (other than Mr Murray) (who have no interest in the outcome
of Resolution 4) recommend that shareholders vote in favour of Resolution 4. Mr
Murray declines to make a recommendation about Resolution 4 as he has a material
personal interest in the outcome of that particular Resolution as it relates to
the proposed issue of Options to him or his nominee(s).
In making the recommendation, all of the Directors (other than Mr Murray) (who
have no interest in the outcome of Resolution 4) have taken into account the
guidelines for non executive director remuneration as set out in Box 8.2 of the
ASX Corporate Governance Council`s Corporate Governance Principles and
Recommendations (2nd edition) ("Principles"). Paragraph 2 of those guidelines
provides that non executive directors should not receive options. The Directors
(other than Mr Murray) (who have no interest in the outcome of Resolution 4)
consider the issue of Options to Mr Murray is appropriate and consider that the
issue of Options to Mr Murray is a necessary inducement to attract someone of
his experience.
Other information that is reasonably required by members to make a decision and
that is known to the Company or any of its Directors:
The proposed ordinary Resolution 4 would have the effect of giving power to the
Directors to issue a total of 2,500,000 Options on the terms and conditions as
set out in Appendix 2 to this Explanatory Statement and as otherwise mentioned
above.
The Company currently has 530,514,663 listed Shares and the following unlisted
Options on issue:
Number Exercise Price Expiry Date
9,074,998 $0.50 30 September 2011
250,000 $2.05 1 May 2012
7,000,000 $1.25 30 September 2012
1,000,000 $1.90 30 September 2012
600,000 $1.25 1 May 2012
5,000,000 $2.74 30 November 2014
912,500 $1.90 30 June 2014
If all Options issued as proposed above are exercised, and assuming all existing
Options on issue have been exercised, the effect would be to dilute the share
holding of existing shareholders by 0.45%. The market price of the Company`s
Shares during the period of the Options will normally determine whether or not
Mr Murray exercises the Options. At the time any Options are exercised and
Shares are issued pursuant to the exercise of the Options, the Company`s Shares
may be trading at a price which is higher than the exercise price of the
Options.
Mr Murray`s fees per annum (including superannuation) and the total financial
benefit to be received by him in this current period are set out below along
with the financial benefit that Mr Murray will receive as a result of the issue
of the Options the subject of Resolution 4 (using assumed share prices and
exercise prices of $1.35, $1.50, $1.75, $2.00 and $2.50):
Assumed Fees p.a. for Total Value of Total Financial Benefit
Exercise the current Options ($)
Price period ($)
($)
$1.35 GBP65,000 (A$ 0.8714 A$2,178,500
112,904)*
$1.50 GBP65,000 (A$ 0.9683 A$2,420,750
112,904)*
$1.75 GBP65,000 (A$ 1.129 A$2,822,500
112,904)*
$2.00 GBP65,000 1.291 A$3,227,500
(A$112,904)*
$2.50 GBP65,000 1.613 A$4,032,500
(A$112,904)*
*based on currency conversion at 23 August 2010: GBP0.57 = A$1.00
This proposed total remuneration package for the financial year of 2010/2011 is
considered by the Directors as being appropriate remuneration for Mr Murray in
light of his skill, experience, reputation and future duties in his role as Non
Executive Director of the Company.
Valuation of Options
The Company`s advisers have valued the Options to be issued to Mr Murray using
the Binomial Model. The value of an option calculated by the Binomial Model is
a function of a number of variables. The valuation of the Options has been
prepared using the following assumptions (using assumed share and exercise
prices of $1.35, $1.50, $1.75, $2.00 and $2.50):
Variable Input Input Input Input Input
Exercise $1.35 $1.50 $1.75 $2.00 $2.50
price
Share price $1.35 $1.50 $1.75 $2.00 $2.50
Risk Free 4.8% 4.8% 4.8% 4.8% 4.8%
Interest
Rate
Volatility 75% 75% 75% 75% 75%
Time (years 5 5 5 5 5
to expiry)
The Company`s advisers have calculated the value of each option based on the
following additional assumptions:
1. The date of valuation has been set at 23 August 2010 however the formal
valuation for IFRS purposes will need to be undertaken as at the day
shareholders approve the grant of the 2,500,000 Options;
2. The closing market price of the Company`s shares on 23 August 2010 was $1.33,
however valuations have been made assuming share and exercise prices at $1.35,
$1.50, $1.75, $2.00 and $2.50;
3. No discount has been applied.
Based on the assumptions, it is considered that the estimated average value of
the Options to be issued to Mr Murray is as follows.
Share and $1.35 $1.50 $1.75 $2.00 $2.50
Exercise
Price
Value per $0.8714 $0.9683 $1.129 $1.291 $1.613
Option
Any change in the variables applied in the calculations above between the date
of the valuation and the date the Options are issued would have an impact on
their value.
The following table gives details of the highest, lowest and latest price of the
Company`s Shares trading on ASX over the past 12 months ending on 24 August
2010:
Highest Dates of Lowest Dates ofLowest Latest
Closing Highest Closing Closing Price price
Price Closing Price
Price
$2.57 16 April $1.28 12 August 2010 $ 1.34
2010
Other Information
Under the Australian Equivalent of IFRS, the Company is required to expense the
value of the Options in its statement of financial performance for the current
financial year. Other than as disclosed in this Explanatory Memorandum, the
Directors do not consider that from an economic and commercial point of view,
there are any costs or detriments including opportunity costs or taxation
consequences for the Company or benefits foregone by the Company in issuing the
Options pursuant to Resolution 4.
Neither the Directors nor the Company are aware of other information that would
be reasonably required by shareholders to make a decision in relation to the
financial benefits contemplated by the proposed resolution.
Listing Rule 10.11:
Listing Rule 10.11 requires shareholder approval by ordinary resolution to any
issue by a listed company of securities to a related party. Accordingly,
Listing Rule 10.11 requires shareholders to approve the issue of Options to Mr
Murray.
For the purposes of Listing Rule 10.13, the following information is provided to
shareholders with respect to Resolution 1:
(a) the Options will be issued to Mr David Murray or to his nominee(s);
(b) the maximum number of Options to be issued is 2,500,000;
(c) the Options will be allotted and issued on a date which will be no later
than 1 month after the date of this General Meeting, unless otherwise extended
by way of ASX granting a waiver to the Listing Rules;
(d) the Options will be issued for no consideration;
(e) no funds will be raised by the issue of the Options; and
(f) the terms and conditions of the Options are set out in Appendix 2 to this
Explanatory Memorandum.
If approval is given for the issue of the Options under Listing Rule 10.11,
approval is not required under Listing Rule 7.1.
RESOLUTION 5 - RATIFICIATION OF ISSUE OF SHARES
On 17 June 2010, the Company announced a placement of 50,000,000 Shares to
institutional investors to raise ?55 million (before expenses) ("Placement").The
50,000,000 Shares placed represented approximately 10.4% of the Company`s
existing issued share capital.
J.P. Morgan Cazenove acted as Global Co-ordinator and Sole Bookrunner,
Macquarie First South Advisers (Proprietary) Limited as joint lead manager and
Evolution Securities Limited and Mirabaud Securities LLP as Co-Lead Managers to
the Placement.
The Company has and will use the net proceeds of the Placement to fund the
following:
- Makhado bulk sample - approximately US$7.5 million;
- Makhado Definitive Feasibility Study - approximately US$6.5 million;
- Potential acquisitions contiguous to CoAL existing assets or existing
inorganic growthopportunities - approximately US$15 million and U$20 million
respectively;
- Repay the existing JPMorgan Chase Bank, N.A. working capital facility - US$20
million; and
- General working capital.
Resolution 5 seeks that shareholders ratify the issue of 50,000,000 Shares
pursuant to ASX Listing Rule 7.4. Listing Rule 7.4 enables the shareholders of a
company to ratify an issue of securities provided that the issue does not fall
within one of the exceptions of Listing Rule 7.1 and does not breach the 15%
restriction contained in Listing Rule 7.1.
For the purpose of ASX Listing Rule 7.5, the following information is provided:
1. 50,000,000 Shares were issued;
2. the Shares were issued at an issue price of ?1.10 per Share;
3. the allottees of the Shares were sophisticated and institutional investors
who are clients of J.P. Morgan Cazenove, Macquarie First South Advisers
(Proprietary) Limited, Evolution Securities Limited and Mirabaud Securities LLP.
None of the allottees are related parties of the Company;
4. the Shares are ordinary fully paid shares in the capital of the Company and
rank equally in all respects with the existing ordinary fully paid shares issued
in the capital of the Company; and
5. the Company intends to use the net proceeds of the Placement to fund the
Makhado bulk sample, Makhado Definitive Feasibility Study and potential
acquisitions contiguous to CoAL existing assets or existing inorganic growth
opportunities, to repay the existing JPMorgan Chase Bank, N.A. working capital
facility and for general working capital .
Directors` Recommendation
The Board recommends shareholders vote in favour of Resolution 5
GLOSSARY
For the purposes of Resolutions 1 to 5 and the Explanatory Statement, the
following definitions apply:
"ASX" means ASX Limited, ABN 98 008 624 691, and, where the context permits, the
Australian Securities Exchange operated by ASX Limited;
"ASX Listing Rules" means the Listing Rules of ASX;
"Board" means the Board of Directors of the Company;
"Company" or "CoAL" means Coal of Africa Limited, ABN 98 008 905 388, a limited
liability company duly incorporated in Australia;
"Constitution" means the constitution of the Company;
"Corporations Act" means the Corporations Act 2001 (Cth);
"Directors" mean the directors of the Company;
"Notice" or "Notice of Meeting" means the notice of meeting which accompanies
this Explanatory Statement;
"Option" means an option to acquire a Share;
"Resolution" means a resolution proposed pursuant to the Notice;
"Shares" means the ordinary shares in the Company; and
"WST" means Australian Western Standard Time..
ANNEXURE A
SUMMARY OF KEY FEATURES OF THE "COAL OF AFRICA LIMITED EMPLOYEE SHARE OPTION
PLAN"
The Company has established, conditional on Admission, the Coal of Africa
Employee Share Option Plan (the "Plan"). A summary of the principal features of
the Plan is set out below.
1.1 Administration
The Plan will be administered by the Board or by a duly constituted committee of
the Board in accordance with its rules.
1.2 Eligible employees
The Board may select any employee or director of the Company or any associated
company to participate in the Plan. There are no individual limits on
participation in the Plan. The Board will take account of local market practice
in the relevant jurisdictions to ensure that awards are not excessive. The
Board will also consider the person`s seniority, position, length of service,
record of employment, potential contribution to the growth of the Company,
extent of existing participation in the Plan and any other matters the Board
considers relevant.
1.3 Grant of options
Options may be granted within the period of three months following the adoption
of the Plan on Admission and thereafter within 42 days following the preliminary
announcement of the annual or half yearly or, if relevant, quarterly, results of
the Company for any financial period; following the expiry of any restrictions
imposed on the Company, the announcement or coming into force of any amendments
to legislation affecting share option plans or at any other time if the Board in
its absolute discretion determines that the circumstances are sufficiently
exceptional to justify the grant of an option.
Options are granted over Shares. Options granted under the Plan are personal to
the option holder and may not be transferred except as set out below. Benefits
under the Plan will not be pensionable. No consideration is payable for the
grant of an option.
An eligible employee who is offered an option may nominate a nominee in whose
favour the eligible person wishes to renounce the offer of an option. The Board
may, in its absolute discretion accept or reject the nomination. This provision
is unusual and would not normally be included in the rules of an employee share
option plan being adopted by a UK listed entity. However, the purpose of this
provision is to ensure that participants in the Plan who will be based in
Australia and South Africa only for the foreseeable future, are able to benefit
from tax planning arrangements available in these jurisdictions. The
availability of these tax planning arrangements and the impact or benefits
available from them may vary according to each individual employee`s
circumstances.
1.4 Exercise price
The exercise price at which options may be exercised is determined by the Board
and will be not less than:
(a) at any time when the Shares are listed, the weighted average closing sale
price of a Share as derived from the Official List over the five dealing days
immediately preceding the date of grant of an option; or
(b) where there has been no trading in the Shares during the five days
immediately preceding the date of the grant of an option, the last sale price
recorded.
1.5 Limits
The Plan is subject to the following limits:
(a) no option may be granted if, as a result, the aggregate number of Shares
issued and issuable pursuant to options granted under the Plan, or under any
other employees` share plan adopted by the Company in general meeting would in
any period of ten years exceed 10 per cent of the issued ordinary share capital
of the Company from time to time; and
(b) no option may be granted if, as a result, the aggregate number of Shares
issued and issuable pursuant to options granted under the Plan or any other
company share option plan adopted by the Company in general meeting would in any
period of ten years exceed 5 per cent of the issued share capital of the Company
from time to time. The Plan permits options to be granted over newly issued
Shares.
Options granted before Admission and within the period of three months from
Admission will not count towards these limits.
1.6 Exercise of options
An option will normally be exercisable for a period of time determined by the
Board in its discretion which may run from on the date of grant and may end any
time up to the fifth anniversary of the date of grant. The exercise of an
option will be subject to the satisfaction of any performance targets which may
have been imposed by the Board. If the optionholder dies, or if the option
holder`s employment terminates by reason of total and permanent disablement,
redundancy or retirement his option will be exercisable for three months. The
Board has the discretion to reduce, waive or vary the performance condition. If
an optionholder ceases to be employed for any other reason his options will
lapse unless the Board determines otherwise.
1.7 Performance measures
Participants in the Plan for the foreseeable future will be based in Australia
and South Africa only. It is not market practice in either of these
jurisdictions to make the exercise of options and the vesting of awards
conditional on satisfaction of performance conditions. Instead the vesting of
awards is in tranches subject to continued employment. Although the Plan rules
permit the application of performance conditions to options, the Company does
not intend to apply performance conditions to options granted under the Plan.
However, the Board will keep the position under review and if in the future
performance conditions are imposed, the Board will carefully consider the most
appropriate performance measures based on current market practice, the
guidelines of the Investment Board of the Association of British Insurers and
the environment within which the Company operates.
1.8 Shares
Shares issued on the exercise of an option will rank pari passu with existing
Shares except for any rights attached to such Shares by reference to a record
date prior to the date of allotment. The Company will use its reasonable
endeavours to obtain admission to the Official List for any Shares so allotted.
1.9 Variation of share capital
On any variation of the share capital of the Company by way of capitalisation or
rights issue or by consolidation, sub-division or reduction of capital or
otherwise, the Board may make such adjustments as it considers appropriate to
the exercise price and/or the number comprised in an option, provided that there
is no increase in the aggregate exercise price. No such adjustment may be made
without the prior written confirmation from the Company`s auditors that it is in
their opinion fair and reasonable.
1.10 Amendments to the Plan
The Board may amend the Plan at any time in any respect but the rules of the
Plan relating to eligibility, limits on the number of Shares available under the
Plan, the basis for determining an eligible employee`s participation and for the
adjustment thereof in the event of a variation of capital and to amendment of
the Plan may not, however, be amended to the advantage of existing or future
optionholders without the prior approval of the Company in general meeting
except that the Board may:
(a) make any amendments necessary to take account of a change in legislation and
to obtain or maintain favourable taxation, exchange control or regulatory
treatment of the Company, any of its subsidiaries or any optionholder and
(b) make minor amendments to benefit the administration of the Plan.
No amendment may be made to alter to the material disadvantage of any option
holder any rights already acquired by him without the consent of option holders
holding options over at least 75 per cent of the Shares under option under the
Plan.)
APPENDIX 2
TERMS AND CONDITIONS OF CLASS C OPTIONS
1. Each Option shall entitle the holder the right to subscribe (in cash) for one
(1) fully paid ordinary share in the capital of the Company ("Shares").
2. The Options will expire at 5.00pm WST on the date that is 5 years from the
date of issue. Subject to Clause 3 and 7 hereof, options may be exercised at
any time prior to the expiry date and options not so exercised shall
automatically expire on the expiry date.
3. Subject to Clause 4, as to the Options:
(a) 1,000,000 Options will vest 12 months after the date of issue;
(b) 750,000 Options will vest 24 months after the date of issue; and
(c) 750,000 Options will vest 36 months after the date of issue.
4. In the event Mr Murray resigns or is removed as a director of the Company all
unvested Options shall automatically lapse save for that number of Options that
were due to vest in the year of resignation or removal will immediately vest
pro rated to the time already served in that year (for example, if Mr Murray
resigns 9 months after the date of issue, the number of Options that will vest
will be calculated as follows: 1,000,000 Options x (9 / 12)).
5. Each ordinary Share allotted as a result of the exercise of any option will,
subject to the Constitution of the Company, rank in all respects pari passu with
the existing ordinary fully paid shares in the capital of the Company on issue
at the date of allotment.
6. A registered owner of an option ("Option Holder") will not be entitled to
attend or vote at any meeting of the members of the Company unless they are, in
addition to being an Option Holder, a member of the Company.
7. Options are not transferable at any time prior to the expiry date.
8.Method of Exercise of Options
(a) The Company will provide to each Option Holder a notice that is to be
completed when exercising the options ("Notice of Exercise of Options").
Options may be exercised by the Option Holder completing the Notice of Exercise
of Options and forwarding the same to the Secretary of the Company to be
received prior to the expiry date. The Notice of Exercise of Options must state
the number of options exercised and the consequent number of ordinary shares in
the capital of the Company to be allotted; which number of options must be a
multiple of 2,500 if only part of the Option Holder`s total options are
exercised, or if the total number of options held by an Option Holder is less
than 2,500, then the total of all options held by that Option Holder must be
exercised.
(b) The Notice of Exercise of Options by an Option Holder must be accompanied by
payment in full for the relevant number of shares being subscribed, being an
amount equal to the volume weighted average price of the Company`s shares 10
trading days prior to the issue date.
(c)Subject to Clause 8(a) hereof, the exercise of less than all of an Option
Holder`s options will not prevent the Option Holder from exercising the whole or
any part of the balance of the Option Holder`s entitlement under the Option
Holder`s remaining options.
9. Within 14 days from the date the Option Holder properly exercises options
held by the Option Holder, the Company shall issue and allot to the Option
Holder that number of fully paid ordinary Shares in the capital of the Company
so subscribed for by the Option Holder.
10. If the Company is listed on the ASX, the Company will within three (3)
business days from the date of issue and allotment of Shares pursuant to the
exercise of an Option, apply to the ASX for, and use its best endeavours to
obtain, Official Quotation of all such shares, in accordance with the
Corporations Law and the Listing Rules of the ASX.
11. The Options will not be quoted.
12. In the event of a reconstruction (including consolidation, sub-division,
reduction or return) of the issued capital of the Company, all rights of the
option holder will be changed to the extent necessary to comply with the Listing
Rules applying to the reconstruction of capital, at the time of the
reconstruction.
13. There are no participating rights or entitlements inherent in the options to
participate in any new issues of capital which may be made or offered by the
Company to its shareholders from time to time prior to the expiry date unless
and until the options are exercised. The Company will ensure that during the
exercise period, the record date for the purposes of determining entitlements to
any new such issue, will be at least 9 business days after such new issues are
announced (or such other date if required under the Listing Rules of the ASX) in
order to afford the Option Holder an opportunity to exercise the options held by
the Option Holder.
14. There are no rights to change the exercise price or the number of underlying
ordinary shares if there is a pro-rata issue or bonus issue to the holders of
ordinary shares.
15. Notwithstanding Clause 3, all options may be exercised by the Option Holder:
(a) in the event a takeover bid (as defined in the Corporations Act) to acquire
any Shares becomes or is declared to be unconditional, irrespective of whether
the takeover bid extends to Shares issued and allotted after the date of the
takeover bid or not; or
(b) at any time after a Change of Control Event (meaning a shareholder, or group
of associated shareholders, being entitled to sufficient shares in the Company
to give it or them the ability, and that ability is successfully exercised, in a
general meeting, to replace all or a majority of the board of the Company has
occurred); or
(c) if a merger by way of scheme of arrangement under the Corporations Act has
been approved by the Court under section 411(4)(b) of the Corporations Act 2001.
UNQUOTE
Johannesburg
14 September 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
Date: 14/09/2010 07:10:02 Produced by the JSE SENS Department.
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