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LML4806 Company Law summary 2021
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LML4806 Company Law summary 2021
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lOMoARcPSD|7704021Company Law
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INDEX
INDEX................................................................................................................................2
GENERAL MEETINGS......................................................................................................6
1. Kinds of member meetings......................................................................................6
a. Class meetings.....................................................................................................6
b. General meetings.................................................................................................6
c. Annual General Meeting......................................................................................6
2. Voting rights.............................................................................................................6
a. Equal voting rights...............................................................................................6
b. Exceptions to equal voting rights........................................................................7
c. Pender v Lushington............................................................................................7
3. Voting procedures....................................................................................................7
a. Voting procedures................................................................................................7
b. Voting agreements................................................................................................7
4. Resolutions..............................................................................................................7
a. Simple majority...................................................................................................8
b. Special resolutions...............................................................................................8
c. Special resolution – requirements........................................................................8
d. Special resolution – notice...................................................................................8
e. Special resolution – proof....................................................................................9
f. Special resolution – registration..........................................................................9
g. Special resolution - creating authority.................................................................9
5. Unanimous assent....................................................................................................9
a. General rule.........................................................................................................9
b. In re Duomatic Ltd...............................................................................................9
c. Gholke and Schneider v Westies Minerale (Edms) Bpk.....................................10
DIRECTORS: GENERAL.................................................................................................11
1. Directors and the Board of Directors.....................................................................11
2. Legal position of directors and board of directors.................................................11
a. Definition of director.........................................................................................11
b. Directors - Various legal positions....................................................................11
c. S v Marks...........................................................................................................12
d. Ross & Co v Coleman........................................................................................12
3. Appointment of directors.......................................................................................13
a. Appointment & Acceptance...............................................................................13
b. Power to appoint................................................................................................13
c. Vacancies...........................................................................................................13
d. Director’s consent to act....................................................................................13
e. Offence: Publication of directors’ names..........................................................14
f. Irregular appointment........................................................................................14
4. Types of directors...................................................................................................14
a. Alternate directors.............................................................................................14
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LML406-T
Company Law
b.
De facto directors..............................................................................................14
c.
Re Hydrodam (Corby) Ltd.................................................................................15
d.
Executive & Non-executive directors.................................................................15
5. Qualifications for the office of director.................................................................15
a. Share qualification.............................................................................................15
b. Statutory disqualification (S 218)......................................................................16
c. Disqualification by order of court (S 219).........................................................16
6. Removal of directors, resignation and retirement..................................................16
a. Removal by ordinary Resolution........................................................................16
b. Special notice and representations....................................................................16
c. Compensation or damages................................................................................17
d. Removal ito Articles...........................................................................................17
e. Frustrating removal...........................................................................................17
f. Filling a vacancy...............................................................................................17
g. Swerdlow v Cohen.............................................................................................17
h. Nourse v Farmers’ Co-operative Co Ltd...........................................................17
7. Winding-up: Effect on directors............................................................................18
8. Registers concerning directors and officers...........................................................18
DIRECTORS: RIGHTS & DUTIES.................................................................................19
1. Rights, Powers and duties of directors..................................................................19
a. Rights & Duties.................................................................................................19
b. Management......................................................................................................19
c. Confidentiality...................................................................................................19
d. Remuneration.....................................................................................................19
e. Access to company records...............................................................................20
f. Right to discharge duties....................................................................................20
g. Brown v Nanco (Pty) Ltd...................................................................................20
2. Fiduciary duties.....................................................................................................20
a. Statutory and common law duties......................................................................20
b. The fiduciary relationship..................................................................................20
c. Protection against exploitation..........................................................................21
d. Basis of liability for breach of fiduciary duty....................................................21
e. Typical breaches of director’s fiduciary duties..................................................21
f. No fiduciary duty towards individual members................................................22
g. West Mercia Safetywear Ltd (in liq) v Dodd......................................................22
h. Regal (Hastings) Ltd Gulliver...........................................................................22
i. Cook v Deeks.....................................................................................................23
j. Robinson v Randfontein Estates Gold Mining Co Ltd.......................................23
k. Industrial Development Consultants Ltd v Cooley............................................23
l. Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd...................23
m. Sibex Construction (SA) (Pty) Ltd v Injectaseal CC..........................................24
n. Fulham Football Club Ltd v Cabra Estates plc.................................................24
3. Duty to act with care and skill...............................................................................24
a. Meaning of “care” and “skill”...........................................................................24
b. Basis of liability for breach of duty...................................................................24
c. In re City Equitable Fire Insurance Co Ltd.......................................................24
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d. Fisheries Development of SA Ltd v Jorgensen; Fisheries Development
Corporation of SA Ltd v AWJ Investments (Pty) Ltd.................................................25
DIRECTORS: STATUTORY RESTRICTIONS & PERSONAL LIABILITY.................26
1. Restrictions on directors........................................................................................26
a. Restrictions........................................................................................................26
b. Loans to directors..............................................................................................26
c. Novick v Comair Holdings.................................................................................27
2. Contracts between directors and their company....................................................28
a. Statutory provisions and common law rules......................................................28
b. Avoidance of voidability....................................................................................28
c. Statutory provisions for disclosure....................................................................28
d. Failure to disclose.............................................................................................28
e. Time for disclosure.............................................................................................29
f. Manner of disclosure.........................................................................................29
g. Recording a disclosure.......................................................................................29
h. Aberdeen Rail Co v Blaikie Bros.......................................................................29
3. Indemnity of directors and relief by the court.......................................................29
a. Statutory provisions...........................................................................................29
b. Limitation on indemnity.....................................................................................29
c. Insurance by company.......................................................................................30
d. Indemnity against costs of litigation..................................................................30
e. S 248 Relief by the Court...................................................................................30
f. Barlows Manufacturing Co Ltd v RN Barrie (Pty) Ltd.....................................30
4. Personal liability towards others............................................................................30
a. Statutory provisions...........................................................................................30
b. Personal liability...............................................................................................30
c. Section 424-Fraudulant conduct of business.....................................................30
d. Duties towards creditors....................................................................................31
e. Delictual liability...............................................................................................31
f. Gordon and Rennie v Standard Merchant Bank................................................31
g. Ex parte Lebowa Development Corporation Ltd...............................................31
h. Philotex (Pty) Ltd v Standard Merchant Bank...................................................31
5. Corporate governance and director’s duties..........................................................32
OTHER OFFICE-BEARERS............................................................................................33
1. Employees..............................................................................................................33
2. Company Secretary................................................................................................33
a. Statutory provisions...........................................................................................33
b. Appointment & Duties.......................................................................................33
c. Relationship towards company..........................................................................34
d. In re Maidstone Buildings Provisions Ltd.........................................................34
e. Panorama Developments (Guilford) Ltd v Fidelis Furnishing Fabrics Ltd......34
3. Managers................................................................................................................34
a. Manager – statutory definition..........................................................................34
b. Characteristics, rights & duties of manager.....................................................35
c. Managing director.............................................................................................35
d. Moresby White v Rangeland Ltd........................................................................35
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