Fundamentals Level Skills Module

Corporate and Business Law (Botswana)

Tuesday 7 June 2011

Time allowed Reading and planning: Writing:

15 minutes 3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

The Botswana Institute of Accountants

Paper F4 (BWA)

ALL TEN questions are compulsory and MUST be attempted 1 In relation to the Botswana Legal System, discuss the rules used by the Botswana courts in the interpretation of statutes. (10 marks)

In relation to the law of contract: (a) discuss specific performance as a remedy for breach of contract and cite instances in which the court would refrain from granting an order for specific performance; (6 marks) (b) describe various methods for the enforcement of an order for specific performance. (4 marks) (10 marks)

In relation to the law of partnership, discuss the various ways in which a partnership may be terminated. (10 marks)

In relation to the law of companies: (a) explain the doctrine of ultra vires; (b) explain how the doctrine of ultra vires has been reformed in the Companies Act 2003. (5 marks) (5 marks) (10 marks)

In relation to the law of companies, explain and distinguish between ordinary shares and preference shares. (10 marks)

In relation to the law of employment, discuss the main duties of an employer. (10 marks)

In relation to company law, explain the rules relating to the appointment, duties and powers of a company secretary. (10 marks)

Lebogang owns a shoe retail store in Gaborone. She regularly receives consignments of shoes from Takutaku Wholesalers. In the last six months of 2010, Lebogang had been in negotiations with Takutaku about the price of the shoes supplied to her. Takutaku wished to increase prices by 10% to account for increased costs of materials. Lebogang had been negotiating for only a 5% increment. In February 2011, Takutaku sent a letter to Lebogang stating as follows: We have considered your position. We are prepared to offer you the usual shoe consignment at a compromise increment of 75% unless we hear otherwise. In March 2011, Takutaku sent a consignment of shoes to Lebogang. The unit price on each pair of shoes supplied had been increased by 75%. Lebogang did not reply to Takutaku. In September 2011, Takutaku sent Lebogang a letter of demand claiming payment for the March 2011 consignment. Lebogang then responded as follows: You will be well aware that negotiations between us were inconclusive. Whilst your company advocated a 10% increment, I had maintained that a 5% increase was the maximum that I was prepared to accept. I am not liable to you on the new price. Takutaku disagrees with the position that Lebogang has taken and wishes to sue Lebogang for the amount due on the consignment of shoes delivered in March 2011. Required: Advise Takutaku. (10 marks)

Kagiso is chairman of the board of directors of Kwacha Supermarket, a limited liability company running a chain of stores in Botswana. Kagiso holds 60% of the shares in Kwacha Supermarket. Kwacha Supermarket entered into a contract with Tlhapi (Pty) Limited for the supply of frozen fish. At the time of conclusion of the contract, Kagiso was managing director of Tlhapi (Pty) Limited. Kwacha Supermarket paid for the supply of the frozen fish. The other directors of Kwacha Supermarket later discovered Kagisos involvement in the transaction, and now wish to rescind the contract with Tlhapi (Pty) Limited. Required: Advise Tlhapi (Pty) Limited if the contract is enforceable against Kwacha Supermarket, discussing the provisions of the Companies Act, 2003 dealing with directors interests in a transaction to which the company is a party. (10 marks)

[P.T.O.

10 Thapelo is a computer technician. He has worked for several years at a leading IT firm and now wishes to go into business for himself, offering IT solutions to businesses. Initially, Thapelo intended to go into the business as a single entrepreneur. However, he anticipates that his brother Kago will join him in the business when he completes his schooling in a years time. As Kago will have no money to buy into the business, Thapelo is interested in a corporate form that will allow Kago to borrow money from the business entity for the purpose of acquiring an interest in it. Thapelo also wishes that the business entity should be one capable of continuing in existence in the event that either he or Kago leave it. Thapelo is also concerned that he shall not be able to meet the rigorous statutory management and accounting requirements facing a business entity subsequent to incorporation. Since he will eventually be in business with his sibling, Thapelo would prefer an informal arrangement that will allow him and Kago to spend more time working and building the business and less time in management meetings. Thapelo comes to you for advice on the best corporate form for his enterprise. Required: (a) Advise Thapelo regarding the distinguishing characteristics of the corporate form most suited to his proposed business undertaking. (6 marks) (b) Explain the advantages and disadvantages of the proposed corporate form in comparison to other incorporated entities. (4 marks) (10 marks)

End of Question Paper