MTN GROUP LIMITED - MTN Zakhele Futhi Scheme

MTN Zakhele Futhi Scheme

 MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code MTN)
(ISIN: ZAE000042164)
(“MTN” or “the Group”)


MTN Zakhele Futhi scheme

On 22 August 2016, MTN Group Limited (“MTN”) announced the details of
its 2016 Black Economic Empowerment (“BEE”)    ownership transaction
(the “2016 MTN BEE Transaction”), in terms of which: (i) MTN Zakhele
Futhi (RF) Ltd (“MTN Zakhele Futhi”) issued ordinary shares to
qualifying members of the Black public; and (ii) MTN Zakhele Futhi
acquired   MTN  ordinary   shares,   at   a  discount,   constituting
approximately 4% of the issued share capital of MTN (using a
combination of notional vendor finance from MTN and third-party
preference share funding).
The MTN board of directors (“MTN Board”) passed a resolution approving
certain proposed voluntary amendments to the 2016 MTN BEE Transaction.
MTN has either already implemented or is in the process of finalising
the implementation of these voluntary amendments, in order to enhance
the MTN Zakhele Futhi BEE scheme, and to further strengthen the
governance and oversight of the MTN Zakhele Futhi board of directors
(“MTN Zakhele Futhi Board”) and its interaction with MTN, as follows
(the “Amendments”):

  (i)   The annual general meeting (“AGM”) of MTN Zakhele Futhi will
        be held before the MTN AGM so that the MTN Zakhele Futhi Board
        can seek guidance from MTN Zakhele Futhi shareholders as to
        how resolutions at the MTN AGM should be voted. An MTN
        representative will attend MTN Zakhele Futhi AGMs to answer
        questions relating to MTN and the proposed MTN resolutions,
        if asked. Similar arrangements will be put in place with
        respect to MTN extraordinary general meetings (if any).

  (ii) MTN’s veto with respect to the declaration of dividends by
        MTN Zakhele Futhi has been removed and replaced with a ratio-
        based dividends test for dividend declarations.

  (iii) MTN will engage with the MTN Zakhele Futhi Board (as it does
        with other substantial shareholders) with respect to MTN’s
        financial results, strategy and other operational issues.
        This is usually done on a bi-annual basis when MTN’s audited
        financial statements are released.

  (iv) The MTN Zakhele Futhi Board can appoint the Board chairperson
        from among its members (who accordingly need not be an MTN
        director, as was previously required).

  (v) Certain MTN Zakhele Futhi Board decisions used to require the
        approval of at least one of the MTN appointed directors. These
        veto rights have been removed.

  (vi) MTN, rather than directly appointing its nominees to the MTN
        Zakhele Futhi Board, would instead be entitled to propose
        such nominees to the MTN Zakhele Futhi Board for them to be
        appointed, if acceptable to the MTN Zakhele Futhi Board. Such
        directors would then stand for election by the MTN Zakhele
        Futhi shareholders at the next AGM, and thereafter would
        retire by rotation, as with the other MTN Zakhele Futhi
        directors.

  (vii) Previously at least one of the two MTN directors had to be
        present at MTN Zakhele Futhi Board meetings for a quorum to
        be constituted. The MTN director quorum requirement has been
        removed.

In addition to the above Amendments, the MTN Zakhele Futhi Board has
the right to nominate one of its members for appointment to the MTN
Board. Any such appointment will be subject to successful completion
of the usual MTN Board appointment and approval processes.
Based on confirmation from MTN and its legal advisers as well as the
pro forma financial effects of the Amendments reported on by MTN’s
joint auditors (as required by the JSE Limited (“JSE”) Guidance
Letter: Amending Transaction terms as approved by shareholders dated
8 May 2012), MTN is comfortable that the Amendments, while they are
significant from an empowerment perspective, (i) do not conflict with
the 2016 MTN BEE Transaction as approved by MTN shareholders on 7
October 2016, and (ii) are not material to the MTN shareholders, as
the Amendments do not materially alter the economics of the 2016 MTN
BEE Transaction as approved by MTN shareholders on 7 October 2016.
The JSE issued a no objection letter, and accordingly, the Amendments
are not being referred back to MTN shareholders for approval.


Fairland
07 November 2019

Lead sponsor
JP Morgan Equities (SA) Proprietary Limited

Joint sponsor
Tamela Holdings Proprietary Limited

Date: 07/11/2019 08:32:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.