Shareholders of thermal coal producer Thungela Resources – Just Share, Aeon Investment Management and Fossil Free South Africa – have instituted litigation in the Gauteng High Court seeking an order that the company has breached shareholder rights and its legal obligations by refusing to circulate and table shareholder-proposed resolutions.

In a December 8 media release, Just Share says that, in 2023, 2024 and 2025, the applicants exercised their rights as shareholders to file shareholder resolutions with Thungela on climate change-related issues.

Just Share posits that they did so in accordance with the Companies Act provision that “any two shareholders of a company may propose a resolution concerning any matter in respect of which they are each entitled to exercise voting rights”, and “may require that the resolution be submitted to shareholders for consideration at the next shareholders meeting”.

Just Share argues that all three resolutions were proposed as nonbinding, and all aspects of their filing complied with the relevant provisions of the Companies Act (Sections 65(3) and 65(4)) and with Thungela’s memorandum of incorporation.

On all three occasions, Just Share alleges, Thungela refused to circulate and table these resolutions for a shareholders’ vote at its AGM, stating that Thungela denies that the applicants have any legal right to propose the resolutions and that it has indicated that it will refuse all such resolutions in future.

“In other words, despite the right accorded to shareholders to propose resolutions, Thungela’s board of directors has unilaterally determined to refuse to allow the company’s shareholders to consider and vote on these resolutions,” says Just Share.

The applicants assert that the Thungela board had no unilateral power to block the proposed resolutions.

“On the contrary, Section 65(5) of the Companies Act is explicit that if the board wishes to object to a proposed shareholder resolution, it is required to seek the leave of a court to bar that resolution from being considered at a shareholders meeting.”

The applicants’ case also asserts that this dispute is in violation of Constitutional rights, including the rights to freedom of expression (Section 16) and association (Section 18).

They posit that the opportunity to propose, circulate, table and vote on shareholder resolutions allows shareholders to exchange information and ideas both before and during shareholder meetings, and to organise around shared values and goals through the discussion of, and voting on, resolutions.

“By refusing to table the resolutions, Thungela is denying its shareholders the ability to exercise these Constitutional rights,” argues Just Share.

Further, Just Share says Thungela’s operations have a significant impact on the environment, including through greenhouse-gas emissions that contribute to the climate crisis.

“This is a matter of significant shareholder concern, and broader public interest, and [relates to] the Section 24 Constitutional right to an environment not harmful to health or wellbeing.

“Shareholder-proposed resolutions on ESG issues, including climate change, can promote good corporate governance and accountability on environmental issues. As a result, a binding decision on this far-reaching issue is essential,” argues Just Share in the release.

Before approaching the High Court, Just Share explains that the applicants first tried to resolve this dispute through the Companies and Intellectual Property Commission (CIPC), the entity established to enforce Companies Act compliance.

A year after Just Share lodged its complaint against Thungela with the CIPC, that entity issued its report, together with a notice of referral to the Companies Tribunal for alternative dispute resolution, it notes.

Only when this alternative dispute resolution process also did not resolve the dispute, did the applicants decide to proceed to litigation.

“Given Thungela’s persistent refusal to table the applicants’ resolutions, the litigation argues that appropriate declaratory relief is necessary: to provide proper guidance; to protect the applicants’ rights as set out in the Companies Act and their Constitutional rights; and to rectify the harm caused by Thungela’s repeated contraventions of its legal obligations,” says Just Share.

It argues that this is also a legal question of broader public importance that will provide guidance for similar disputes arising between other shareholders and companies.

Just Share says this clarity should also assist the CIPC in its future investigations of similar contraventions.

Just Share notes that Thungela has until December 15 to file a notice of opposition to the High Court application.

Thungela, meanwhile, has told Mining Weekly that it is aware of the litigation initiated by certain minority shareholders and that, despite invitations extended by the company to engage meaningfully and directly on the issues, these shareholders have “generally declined to participate”.

“Thungela believes the proceedings are based on a misinterpretation and misapplication of the law. The company will submit its responding papers in due course,” says Thungela.