MCL5901 Assignment 02 2024

COMPANY LAW 1
MCL5901
Year module - 2024
ASSIGNMENT 02

MERCANTILE LAW
 MCL5901 Assignment 02 2024

TABLE OF CONTENTS

1 GENERAL INSTRUCTIONS ......................................................................................................... 3

2 ASSIGNMENT 02 QUESTIONS……………………………………………………………………….…3

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 MCL5901 Assignment 02 2024

1 GENERAL INSTRUCTIONS

• There are TWO (2) assignments in this module. Both assignments are compulsory
and contribute to your year mark. If you do not submit both Assignment 01 and
Assignment 02 before the relevant date, your registration will be cancelled, and you will
not be admitted to the examination in MCL5901.
• The due for Assignment 02 is 12 August 2024 at 16h00.
• The unique number for Assignment 02 is 692055.
• Note that you will only be able to submit your Assignments 02 from 24 July 2024.
• No resubmissions will be permitted. Please ensure that you submit the correct document.
• Your answer should not exceed FIVE (5) typed pages (A4 single line spacing, font size
12) or EIGHT (8) handwritten pages (excluding the Bibliography). If you exceed the page
limitation, you will be penalised.
• References to sources must be provided by means of footnotes or in text references and
a Bibliography must be included.
• The assignments are individual assignments and must be completed without the
assistance of other students or external parties.
• Please read paragraph 9.5 of Tutorial Letter 101/0/2024 for information on the
general approach to answering your assignments, use of footnotes, referencing
techniques and Bibliography.
• Also refer to paragraph 12 of Tutorial Letter 101/0/2024 for important information
regarding academic dishonesty (plagiarism and cheating).

2 ASSIGNMENT 02 QUESTIONS

Simphiwe is a non-executive director and chairperson of Metsi South Africa SOC Ltd, which
supplies water to all South African provinces. The board of directors of Metsi South Africa SOC
Ltd is looking to appoint a supplier of pipes to enable the entity to effectively provide water to all
the provinces. The board votes against appointing Crystal Clear (Pty) Ltd as its supplier
because it has concerns about the quality and durability of the pipes manufactured by Crystal
Clear (Pty) Ltd. One of the directors of Crystal Clear (Pty) Ltd is Simphiwe’s nephew. Despite
the board voting against appointing Crystal Clear (Pty) Ltd as its supplier, Simphiwe signs a
contract on behalf of Metsi South Africa SOC Ltd appointing Crystal Clear (Pty) Ltd as Metsi
South Africa SOC Ltd’s supplier of pipes. Crystal Clear (Pty) Ltd installs defective pipes in many
provinces, which erode after a few weeks. This results in large parts of South Africa being
without a reliable water supply for several months. Simphiwe subsequently resigns as a non-
executive director and chairperson of Metsi South Africa SOC Ltd. Eighteen months later, the
Organisation Against Corruption in South Africa NPC (OACSA) brings an application to court to
declare Simphiwe a delinquent director. Simphiwe argues that OACSA does not have locus
standi to bring the application to declare him delinquent. He argues further that the application is
not valid as he is no longer a director of Metsi South Africa SOC Ltd because he resigned more

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 MCL5901 Assignment 02 2024

than a year ago. With reference to the Companies Act 71 of 2008 and relevant case law, advise
OACSA on the following matters:

1.1 Whether it has locus standi to bring a delinquency application against Simphiwe. (10)

1.2 Whether it may bring a delinquency application against Simphiwe even though he is no
longer a director of Metsi South Africa SOC Ltd. (5)

1.3 The relevant grounds on which OACSA may rely to declare Simphiwe a delinquent
director, assuming that a court were to permit it to bring a delinquency application against
Simphiwe. Provide reasons for your answer. (10)
[25]

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