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UNIVERSITY EXAMINATIONS

May/June 2023

FBE2604

Forms of Business Enterprise

80 Marks
Duration four hours

First examiner: Prof M Bekink

Second examiner: Prof J Geldenhuys
PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY BEFORE ANSWERING THE EXAMINATION
QUESTIONS.
This paper consists of 11 (ELEVEN) pages.

1. The examination question paper counts 80 marks.

2. It consists of four questions. Answer ALL of the questions.

3. The duration of the examination on the timetable is four hours.

4. In addition to the duration of the examination indicated on the timetable, you are given 30 minutes
to FINALISE the uploading of your exam file. Your exam file must be uploaded via the myExams
platform on 25 May 2023 BEFORE 18:45 (South African Standard Time).

5 This is an open-book examination. You may consult your prescribed study material during the
examination.

6. This examination is proctored via the Invigilator App. You are required to activate (or log in to) the
Invigilator app between 14:00 and 14:45 (South African Standard Time).

The QR code is below:

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6.1 Please note: If a student is found to have been outside the invigilator app for a total of 10 minutes
during their examination session, they will be considered to have violated Unisa's examination rules
and their marks will be withheld.

6.2 You only have 15 minutes after the due time to submit your script on the Invigilator App

6.3 You will have 48 hours from the date of their examination to upload their invigilator results from
the Invigilator App. Failure to do so will result in students deemed not to have utilised the invigilation
or proctoring tools.

7. The uploading of your exam file on the myExams platform must be finalised within 30 minutes of
the scheduled (timetabled) end of the exam.

7.1 When ready to submit, open the Take-Home (Assignment) assessment again and click on the Add
Submission button.

7.2. Note the file requirements such as:

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a. File size limit.

b. Number of files that can be submitted.
c. File formats allowed.

7.3. Check the acknowledgment checkbox and upload your answers document and then click on the Save
changes button.

7.4. Review your submission information regarding the status and click on your submission file link to check
if it's correct.

7.5. If you need to resubmit a file, you can click on the Edit Submission button. Note: You will need to delete
any existing files.
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7.6 Use proper PDF conversion software to create the final file for upload. Free PDF conversion software
is available on the Internet.
7.7 Add your student number and the module code in the file name. That will assist you to select the
correct document to upload during submission.
7.8 You are advised to preview your submission (answer script) to ensure legibility and that the correct
answer script file has been uploaded.

8. The cover page for your take-home exam must include your name, student number and the module
code.

9. It is preferred that your portfolio or take-home exam is typed. However, handwritten submissions
will also be accepted. If the take-home exam is typed, the maximum length is EIGHT (8) pages (which
includes the cover page and the bibliography). If the take-home exam is handwritten, the maximum
length is TEN (10) pages (which includes the cover page and the bibliography).

10. Whether your answers are typed or handwritten, your submission on the myExams platform must
be made in the form of one PDF document.

10.1 The exam answer file that you submit must not be password protected or uploaded as a “read only”
file.

10.2 Your examination answer file will not be marked if:

10.2.1 you send your examination answer file via email.

10.2.2 you submit the incorrect examination answer file.
10.2.3 you submit your exam answer file on an unofficial examination platform (including the invigilator
cellphone application).
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10.2.4 you submit your examination answer file in the incorrect file format.
10.2.5 you submit a password-protected document.
10.2.6 you submit your examination answer file late.

10.3 The mark awarded for an incomplete examination answer file submission will be your final mark.
You will not be allowed to resubmit after the scheduled closing date and time of the exam.

10.4 The mark awarded for an illegible examination answer file submission will be your final mark. You
will not be allowed to resubmit after the scheduled closing date and time of the exam.

11. If your answers are typed, ensure that the following requirements are adhered to. Items 10.3-10.6
applies to written assignments as well.

11.1 The text must be typed in Arial font, size 12 with single line spacing within the paragraph, and double
line spacing after the paragraph.

11.2 The text must be justified.

11.3 All of the pages must be numbered in the right-hand corner at the bottom of the page.

11.4 All margins must be 2.5cm, but the left margin must be 3cm.

11.5 South African English and not American English should be used. For example, the correct spelling is
“Labour” and not “Labor”.

11.6 Do not use abbreviations or SMS language.

11.7 All quotes that are two lines long (or less), must form part of the main text, be written in italics, and
be bracketed by quotation marks. Where a quotation is longer than two lines, it must be typed in a
separate paragraph in italics in size 11 font and must be indented by 1 cm. No quotation marks are
required when the quotations stand alone. Use quotations very sparingly. In this take-home exam,
a maximum of 5% of the text may be quoted.

12. When answering the take-home exam questions, remember that an open-book exam is a test at a
higher level than the usual type of exam, where memory is tested as much as insight. In an open-
book exam, you need not memorise any information. You are expected to prove that you can use
information, rather than merely repeat it. In brief, what is being tested is factual knowledge,
understanding and the correct application thereof, not memory skills. For this reason, you do not
earn marks by merely detailing a list of all the information that you think might be relevant to a
particular question. This gives no indication that you know what statutory or other provisions are
applicable in a specific context. You are expected to identify precisely what information applies, and
then explain why you think so.

12.1 Also, because you have the guide available when answering questions, we do not give marks for
direct quotations from the guide. You are therefore assessed on your level of understanding of the
legal principles by looking at how well you applied the principles to the questions.

12.2 PLEASE DO NOT CUT AND PASTE ANSWERS FROM THE STUDY GUIDE (OR ANY OTHER SOURCE).

12. The arguments that you make must be logical, well-structured and substantiated by all of the
relevant legal principles. You are given two and a half hours to complete the take-home exam. Use
the time given wisely.
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13.1 Ensure that you give reasons for each answer. Substantiate your answers by referring to ALL of the
relevant authorities, e.g. sections from relevant legislation and/or court cases in the text or in your
footnotes.

13.2 You are required to have read and summarised the prescribed cases yourself. The summaries in the
Study Guide are not sufficient for this exam. When using case law to support your answer, please
include complete references to the relevant cases in your footnotes. This means that you must not
only include the name of the case but also the exact page and section and/or paragraph where the
information can be found. The same applies to articles and books used.

13.3 A number of students lose marks because they do not approach problem-type questions correctly.
When answering such questions, it is important to first clarify for yourself the area of work where
the answer must be sought. Once you have done this, set out the relevant legal principles. Deal only
with those principles that relate to the given facts. Next, apply these principles to the facts. This is
where most of the students lose marks - they set out the law in some detail, but then do not illustrate
how it applies to the factual situation they have been asked to solve. Finally, state your conclusion.

14. By ticking the Honour Pledge, you confirm that you have read (i) the University’s Policy on Copyright
Infringement and Plagiarism and the Student Disciplinary Code, which are both available on
myUnisa: www.unisa.ac.za/unisarules, and (ii) the information relating to student values and
plagiarism that is found at https://www.unisa.ac.za/sites/myunisa/default/Study-@-Unisa/Student-
values-and-rules.

14.1 Students suspected of dishonest conduct during the examination will be subjected to disciplinary
processes. UNISA has zero tolerance for plagiarism and/or any other forms of academic dishonesty.

PLEASE NOTE:

If you experience challenges with the Invigilator app, please send a WhatsApp message to the technical
helpdesk on 073 505 8273. Do not contact the lecturers.

For all other exam-related challenges, you may contact the SCSC on 080 000 1870 or e-mail
Examenquiries@unisa.ac.za or refer to Get-Help for the list of additional contact numbers.
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QUESTION 1

1.1 A ……………………. company is a company that is mainly used by professional

associations. (1)

1.2 A/an ……………director is a person appointed to the board of directors of a

company as a substitute for a particular elected director of that company. (1)

1.3 A …………….. is the document issued by the Companies and Intellectual

Commission when all the formalities for registration are in order. (1)

1.4 The ……………………. date is the date on which a company determines the
identity of the shareholders and their shareholding for purposes of establishing
who is entitled to shareholder rights. (1)

1.5 A …………………. is a lawsuit brought by a company shareholder against the

directors, and management of the company for failure by management. (1)

1.6 A business approach that contributes to sustainable development by delivering

economic, social and environmental benefits for all stakeholders is called
…………………………………………… (1)

1.7 The person who is appointed to represent a shareholder at a meeting is referred

to as a ………………… (1)

1.8 A ………………is a document issued by the company acknowledging that it is

indebted to the holder in the amount stated therein. (1)

1.9 The substance of a/an ………………. provision may not be altered in the
Memorandum of Incorporation of a company. (1)

1.10 The number of persons required to be present at the shareholder’s meeting for
the meeting to begin is called a ……………… (1)

TOTAL QUESTION 1: 10 marks

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QUESTION 2

2.1 Frances, Joanne and Sophy live in Soweto. Frances is a social worker and
knows that a lot of the school going pupils in their area do not have access to
the internet. They wish to incorporate a company that will provide free internet
at an Internet Cafe for school children in order for them to do their school
projects. Briefly advise them on the most appropriate type of company to
incorporate for this purpose. In your answer also indicate the distinguishing
characteristics of such a company.
(8)

2.2 Frances sees an office space that will be perfect for their Internet Cafe. Advise
Frances on the formal requirements that must be complied with to conclude a
contract on behalf of the yet-to-be formed company in terms of the Companies
Act 71 of 2008.
(4)

2.3 List the information that must be contained in Frances, Joanne and Sophy’s
company’s Memorandum of Incorporation.
(4)

2.4 Sophy has been tasked with choosing a name for the Internet Cafe. She has
heard that there are certain restrictions applicable to company names in terms
of the Companies Act 71 of 2008. Explain to her why these restrictions have
been introduced.
(4)

TOTAL QUESTION 2: 20 marks

QUESTION 3

3.1 The Memorandum of Incorporation of Solar for All (Pty) Ltd provides that the
board of directors, or any person authorised by the board, has the power to
conclude contracts on behalf of the company. In addition, it determines that any
transaction exceeding R200 000 must first be authorised by the company in a
general meeting by way of an ordinary resolution. Tshepo, one of the directors,
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is authorised by the board of directors to act on behalf of Solar for All (Pty) Ltd.
Tshepo concludes a contract with Bongani for the purchase of solar panels to
the value of R300 000, without the authorisation of the company in a general
meeting. Bongani knows about the provision in the Memorandum of
Incorporation which requires prior authorisation of any transaction exceeding
R200 000 by the company because he had dealt with the company before.
However, as this has never been a problem with previous transactions, Bongani
assumes that the approval of the general meeting has been obtained. Explain
whether Solar for All (Pty) Ltd is bound by the contract concluded by Tshepo.
(5)

3.2 Mike and Jack each currently holds 50% of the shares in Solar for All (Pty) Ltd.
In an effort to raise more capital they decide to authorise the issue of more
shares. Mike, who founded Solar for All (Pty) Ltd, wants to issue the newly
authorised shares to his nephew, Samson. However, Jack is concerned that
the new issue of shares will dilute his existing shareholding. Explain to Jack the
mechanism that is provided for in the Companies Act 71 of 2008 that is aimed
at avoiding the dilution of shareholding of the existing shareholders.
(7)

3.3 Lexar Ltd wishes to decrease its issued share capital through a repurchase of
shares. Advise the directors of Lexar Ltd on the requirements that they must
comply with before they may proceed with the transaction.

(5)

3.4 The Companies Act 71 of 2008 requires certain companies to appoint a social
and ethics committee. List the duties of a social and ethics committee in terms
of the Companies Act 71 of 2008. (4)

3.5 Briefly explain the operation of the majority rule principle in company law.

(5)

3.6 Thandeka is a director of Security Solutions (Pty) Ltd. The company has
developed a new security programme aimed at protecting computers against
potential hacking. Thandeka sells the programme to Secure Future (Pty) Ltd at
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a lucrative fee. The board of directors of Security Solutons (Pty) Ltd becomes
aware of Thandeka’s sale and is very upset about it.

3.6.1 Security Solutions (Pty) Ltd intends to apply to court for an order declaring
Thandeka delinquent. Advise the board of directors of Security Solutions (Pty)
Ltd on the grounds on which a delinquency order may be obtained in terms of
the Companies Act 71 of 2008.
(6)

3.6.2 Advise Security Solutions (Pty) Ltd on the potential orders that a court may
make if Thandeka is declared delinquent in terms of the Companies Act 71 of
2008.
(3)

3.7 Vasti has been appointed as auditor of Hubert Ltd. In order to prepare the audit
report, Vasti has requested certain company documents from Zack, the
financial director of Hubert Ltd. Zack refuses to furnish Vasti with these
documents. Advise Vasti on her legal rights, as auditor, under the Companies
Act 71 of 2008.
(5)

TOTAL QUESTION 3: 40 marks

QUESTION 4

4.1 Following their graduation from university, Joan and Susan wish to buy an
existing close corporation for their new business. They intend to make some
changes to the close corporation. Advise Joan and Susan on whether the
following changes they propose to make to the close corporation are
permissible and give reasons for your advice:

4.1.1 Increasing the number of members to twelve members (1)

4.1.2 Making the members’ interest of the close corporation out of 200%. (1)

4.1.3 Allowing two of their friends to jointly hold 15% of the members’ interest since
they have insufficient funds to acquire the member’s interest individually. (1)

4.1.4 Allowing Joan’s sister Cathy, who is a minor, to become a member. (2)
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4.2 Briefly explain to Joan and Susan the circumstances in which the members of a
close corporation may be held liable for the debt of the close corporation in terms
of the Close Corporations Act 69 of 1984.
(5)

TOTAL QUESTION 4: 10 marks

TOTAL: 80 marks
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UNISA 2023