Zama Clothing — Legal Structure and Shareholders’ Agreement
The company will be incorporated with an authorised share capital of 1,000 ordinary shares. The initial share allocation will be structured as follows:
Section 21 · Business Plan
Legal Structure and Shareholders’ Agreement
The company will be incorporated with an authorised share capital of 1,000 ordinary shares. The initial share allocation will be structured as follows:
21.1 Share Capital Structure
The company will be incorporated with an authorised share capital of 1,000 ordinary shares. The initial share allocation will be structured as follows:
| Shareholder Class | Shares | Ownership % | Investment (R) |
|---|---|---|---|
| Founding Directors (BEE) | 510 | 51% | 10,000,000 |
| Strategic Equity Partner | 390 | 39% | 14,000,000 |
| Employee Share Trust (ESOP) | 50 | 5% | Reserved |
| Unallocated (Future Rounds) | 50 | 5% | Reserved |
21.2 Key Terms of Shareholders’ Agreement
The Shareholders’ Agreement will incorporate the following key provisions to protect all parties and ensure effective governance:
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Board Composition: Five directors with nomination rights as described in Section 18.1. Quorum requires at least one investor-nominated director.
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Reserved Matters: Certain decisions will require supermajority (75%) approval, including capital expenditure above R2 million, new borrowings above R5 million, changes to business strategy, related-party transactions, and appointment of the CEO.
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Pre-emptive Rights: Existing shareholders have pro-rata pre-emptive rights on any new share issuance.
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Tag-Along and Drag-Along: Standard tag-along rights protect minority shareholders; drag-along provisions enable a clean exit where 75%+ of shareholders agree to a sale.
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Dividend Policy: Dividends payable from Year 3, subject to maintaining minimum cash reserves of R3 million and DSCR above 1.5x.
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Anti-Dilution: Weighted-average anti-dilution protection for the strategic equity partner in the event of a down-round.
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Non-Compete: Founding directors subject to 2-year non-compete clause within the South African apparel manufacturing sector.
21.3 Intellectual Property
All intellectual property developed within the business, including brand names, trademarks, product designs, patterns, technical specifications, customer databases, and proprietary manufacturing processes, will be owned exclusively by Zama Clothing Manufacturers (Pty) Ltd. The Zama trademark will be registered with CIPC upon incorporation, and key designs will be protected through registered design applications.
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