No Boardroom, No Debate: RESOLVING THE TENSION BETWEEN ROUND-ROBIN RESOLUTIONS AND COMPANY LAW DEMOCRATIC PRINCIPLES

• Jurisdiction: South Africa
• DOI: 10.10520/ejc-btclq_v16_n1_a2
• Author: Matthew Blumberg SC,Matt Williams
• Pages: 1-6
• Date: 01 March 2025
• Published date: 01 March 2025
• Published By: Siber Ink

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© Juta and Company (Pty) Ltd

No Boardroom, No Debate:

RESOLVING THE TENSION BETWEEN ROUND-ROBIN

RESOLUTIONS AND COMPANY LAW DEMOCRATIC

PRINCIPLES

MATTHEW BLUMBERG SC AND MATT WILLIAMS*

ABSTRACT

The primary decision-making organ of a company is its board of directors.

The board functions based on majority rule, but only once the minority has

had an opportunity of ventilating their views. This is the basic democratic

principle of our company law. Board decisions are normally made at board

meetings, where the minority has a forum to ventilate their view. But board

decisions can also be made through round-robin resolutions, where there is

no meeting. Without a meeting, the minority has no forum to ventilate their

views. There is therefore a measure of tension between (non-unanimous)

round-robin resolutions and the basic democratic principle. In this article, we

consider — following a recent High Court judgment on the topic — how this

tension is to be resolved. We describe the basic democratic principle and

demonstrate that it is also ref‌l ected in the provisions of the Companies Act71

of 2008. We then explore the tension between (non-unanimous) round-robin

decision-making and the basic democratic principle. We conclude — as did

the court in the aforementioned judgment — that any potential tension is

reconciled through the requirement of proper notice. In this way, round-robin

resolutions strike a balance — between pragmatism and eff‌i ciency, on the one

hand, and adherence to the democratic principle, on the other.

Introduction

As already observed in previous editions of this publication, the Compa-

nies Act 71 of 2008 recognises the board of directors as the primary deci-

sion-making organ of a company. Section66(1) provides that the board has

the authority to exercise all the powers and perform any of the functions of

the company. The board exercises this authority as a collective body. The

board’s decisions are arrived at based on majority rule, but only once the

minority has had an opportunity of ventilating their views to persuade the

majority.

In Transcash, Seligson AJ described this as the ‘basic democratic prin-

ciple of our company law’.1

The board’s decisions are expressed in resolutions, which are presented

at board meetings as set out in section 73, where a majority of the votes

cast on a resolution is suff‌i cient to approve the resolution. However, there

1

Transcash SWD (Pty) Ltd v Smith 1994 (2) SA 295 (C) at 305F–G.

* Members, Cape Bar.

2025 16(1) BTCLQ 1

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