NAME&SURNAME: MAGAELA KOKETJO

MODULE CODE: FBE2604

OCT/NOV EXAMINATION
QUESTION 1
1.1.A process used to ignore a company’s separate legal
personality in order to hold persons inside the company
personally liable.
Companies Act 71 of 2008 determines that no association of
persons formed for the purpose of the acquisition of gain will
be recognised as a legal person unless it is registered as a
company under this Act or formed in terms of another Act.
1.2.
1.2.1.Profit Company
- The goal of a profit company is to make a profit for its
shareholders.
- A private company may not issue its shares to the public and
its shares are not freely transferable.
1.2.2.The registration or incorporation of a company confers
legal personality upon the new entity,the new entity can enter
into contract in it’s own name and sue and be sued. Frank can
get into contract with his own names.
1.2.3.Section 15(2)(b) of the companies Act determines that a
company may include restrictions and conditions in its
memorandum of incorporation pertaining to the company’s
capacity.
-There must be a restriction or condition in the memorandum
of the incorporation of the particular company.
-A prohibition against amendment of the restriction or
condition must be included in the memorandum of
incorporation.
- The company’s name must be followed by RF to warn the
third parties of the the special restrictions or conditions.
1.2.4.- Companies are able to conclude any contract, whether it
falls inside or outside the scope of their business.
-As long as the person who is representing the company has the
authority to do so,any Act performed by him or her on behalf of
or in the name of the company will usually bind the company.
-if Timothy has the authority, anything he does in the name of
the company will bind the company.
1.2.5.- Ring-Fenced companies
- Personal liability companies
It will apply for transaction with Harrington,the third party
dealing with a company are deemed to be fully acquainted.
QUESTION 2
2.1
2.1.1.Rights that differs
-the right to vote
-the right to information
-the right to receive a dividend when one has been declared
-the right to share in the assets that are left upon the winding
up of a company after the company’s creditor have been paid.
2.1.2.A company is allowed to repurchase its shares.This is
considered a distribution, which means that the solvency and
liquidity test must be applied and passed.A company may make
distributions out of profits or share capital,as long as solvency
and liquidity are maintained.
2.2.Matters
-elections of directors to the extent required by the companies
Act or the company’s memorandum of incorporation.
-Appointment of an auditor for the following financial year
-Appointment of an audit committee
- Presentation of the directors’ report
- Presentation of audited financial statements for the
immediately preceding financial year
- Presentation of an audit committee report
- any matter raised by shareholders
2.3.
2.3.1.Executive directors
-A director who participate in the day to day management
functions of a company.
Non-executive directors
-A director who does not participate in the day to day
management of a company.
2.3.2.The court in Howard v Herrigel 1991(2) SA 660(A) held
that it is unhelpful or even misleading to classify company
directors as executive or non executive for purposes of
determining their duties to the company or when any specific
or affirmative action is required of them.
2.4.Grounds for the order
-Was present at a meeting and failed to vote against a
resolution despite the inability of the company to satisfy the
solvency and liquidity test.
-acted in a manner that is materially inconsistent with the
duties of a director,
-acted in way that had a result that was oppressive or unfairly
prejudicial to a shareholder or another director.
-acted in a way that had a result that the business of the
company,or a related person, was being or had been carried on
or conducted in an oppressive or unfairly manner.
- exercised his powers in a manner that was oppressive or
unfairly prejudicial to a shareholder or another director.
2.5.The business Judgement rule
Section 76(4) states that a director will be regarded as having
acted in the best interest of the company and with the
requirement degree of care,skill and diligence if the director,
- took reasonable steps to become informed about the matter
- had no material personal financial interest in the subject
matter of the decision nor knew of anybody else having a
financial interest in the matter, or else disclosed his interest,
and
- made or supported a decision in the belief that it was in the
best interest of the company
2.6.
- a person declared delinquent
- an unrehabilitated insolvent
- a person prohibited from being a director in terms of a public
regulation
- a person removed from an office of trust for misconduct
involving dishonesty
- a person convinced of fraud ,dishonesty, theft or a related
offence.
2.7.
- a shareholder/person entitled to be registered as a
shareholder
- a director
- a prescribed officer
- a registered trade union that represents employees, or
another representative of the employees,or
- any person who is granted leave by the court to do so.
QUESTION 3
3.1.Characteristics of a member ‘s interest
- A member’s interest may not be jointly held
- The aggregate of member ‘s interest must always be 100%
- A member’s interest in a close corporation is similar to a share
in a company
- A member ‘s interest is an incorporeal, movable thing
- A member’s interest is a person right to share in the close
corporation ‘s profit after payment to its creditors
3.2.The doctrine of constructive notice does not apply to close
corporations.This means that even if the association agreement
states otherwise,every member can conclude contracts on
behalf of the corporation. It does not matter whether or not
the transaction falls within the scope of the main business of
the corporation.