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Section 157 of The Companies Act No. 17 of 2015: Director’s long-term service contracts: requirement of members’ approval

    

(1) This section applies to a contract under which the employment of a personas a director of company is guaranteed—
(a) with the company; or
(b) if the person is the director of a holding company — within the group that comprises the company and its subsidiaries,
for a period exceeding, or that could exceed, two years.
(2) A company may not enter into such a contract unless it has been approved—
(a) by resolution of the members of the company; and
(b) in the case of a director of a holding company, by a resolution of the members of that company.
(3) The guaranteed term of a director's employment is—
(a) the period (if any) during which the director’s employment—
(i) is to continue, or could be continued, otherwise than at the instance of the company, whether under the original contract or under a new contract entered into under it; and
(ii) cannot be terminated by the company by notice, or can be so terminated only in specified circumstances; or
(b) in the case of employment that can be terminated by the company by notice — the period of notice required to be given,
or, in the case of employment having a period within paragraph (a) and a period
within paragraph (b), the aggregate of those periods.
(4) If, more than six months before the end of the guaranteed term of a director's employment, the company enters into a further service contract, otherwise than in accordance with a right conferred, by or under the original contract, on the other party to it, this section applies as if there were added to the guaranteed term of the new contract the unexpired period of the guaranteed term of the original contract.
(5) A resolution approving a contract to which this section applies may not be passed unless a memorandum setting out the proposed contract is made available to members—
(a) in the case of a written resolution – by being sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to member; or
(b) in the case of a resolution at a meeting – by being made available for inspection by members of the company both—
(i) at the company's registered office for not less than fourteen days ending with the date of the meeting; and (ii) at the meeting itself.
(6) An approval is not required to be given under this section by the members of a body corporate that—
(a) is not a company registered under this Act; or
(b) is a wholly-owned subsidiary of another body corporate.
(7) In this section, "employment" means any employment under a director'sservice contract.
(8) If a company agrees to a provision in the contract in contravention of thissection—
(a) the contract is void to the extent of the contravention; and
(b) the contract is taken to include a term entitling the company to terminate it at any time by giving reasonable notice.

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Disclaimer: This document is not to be taken as legal advise.

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