LML4806 EXAM PACK AND SUMMARISED NOTES.
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LML4806 – COMPANY LAW
MAY/JUNE 2020
QUESTION 1
1.1. Section 61(8) states that the following matters must be discussed at an
annual general meeting:1
a. Presentation of director’s report, audited financial statements for
immediately pre...
1.1. Section 61(8) states that the following matters must be discussed at an
annual general meeting:1
a. Presentation of director’s report, audited financial statements for
immediately preceding financial year and audited committee report
b. Election of directors to the extend required by the Act or the company’s
Memorandum of Incorporation
c. Appointment of auditor for ensuing financial year and appointment of
audit committee and
d. Any matters raised by shareholders, with or without advance notice to
the company.
1.2. In terms of s62 of the Companies Act a public company should issue a notice
of a meeting within 15 business days before date of meeting. Also provisions
of MOI may prescribe longer minimum notice. The notice must be in writing
and including date, time, place and the record date if set. It should include a
general purpose of the meeting.2
In instances where a company has failed to give notice or if there has been a
defect in giving of the notice, it may proceed if persons entitled to voting rights
in respect of any item on the meeting agenda is present at the meeting (in
person or proxy) and votes to approve the ratification of the defective notice.3
If material defect relates only to one or more particular matters, any such
matter may be taken off the agenda and notice will remain valid for remaining
matters, shareholder who is present at a meeting is deemed to have received
or waived notice of the meeting.4
1
Companies Act 71 of 2008 section 61(8).
2
Companies Act 71 of 2008 section 62(8).
3
Cassim HI The law of Business Structures (JUTA 2012).
4
Cassim HI The law of Business Structures (JUTA 2012).
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, Scarrow Iron Ltd is a public company: Therefore section 62(1)(a) will apply
which stipulates that a public company must deliver notice within 15 business
days before the meeting begin and the MOI of the company can prescribe a
longer or shorter period.
Scarrow Ltd’s notice does not inform the shareholders of the purpose of the
meeting, the notice will remain valid only if the persons entitled to vote are
present at the meeting, acknowledge actual receipt of notice and votes to
approve the ratification of the defective notice.
1.3.
1.3.1. In terms of section 19(1)(b) of the companies Act, a company has the legal
capacity and the powers of a natural person, except to the extent that a juristic
person in incapable of exercising any such power, or the company’s
Memorandum of Incorporation provides otherwise.5
Therefore, the capacity of a company is no longer limited by its main or
ancillary objects or business. A transaction is not void merely because it is
prohibited or restricted in terms of its Memorandum of Incorporation.
The fact that the MOI of Educat Group Ltd states that the main business of
the company is the development, acquisition and management of
independent schools and tertiary education institutions is irrelevant.
Therefore, the contract for the yatch is valid and can be enforceable.
1.3.2. Doctrine of constructive notice:
The doctrine of constructive notice provides that third parties dealing with the
company are deemed to be fully acquainted with the contents of the public
documents of the company. Section 19(4) of the Act partly abolishes this
doctrine. Thus, third parties contracting with the company will no longer be
5
Companies Act 71 of 2008 section 19(1)(b).
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deemed to have had notice of the contents of the public documents of a
company merely because they have been filed with the Commission or are
accessible for inspection at the office of the company. But, section 19(5) of
the Act provides for two exceptions:
Firstly, a person is deemed to have knowledge of any provision of a
company’s MOI in terms of section 15(2)(b) of (c), relating to any restrictive or
procedural requirement impeding the amendment of any specific provision of
the MOI or prohibiting its amendment. This is subject to the condition that the
company’s name includes the letters “RF” and the Notice of Incorporation
contains a prominent statement drawing attention to such a provision, as
required by section 13(3).6
The second exception applies to a personal liability company. This means that
a person is regarded as having received notice and having knowledge of the
effect of section 19(3) on a personal-liability company.
QUESTION 2
2.1. Formalities that Fisher Technology Ltd have to follow before the dividend
proposed by the board of directors may be declared and paid:
A dividend is a form of a distribution in terms of section 1 of the Companies
Act. This is so because a distribution can be defined as a direct or indirect
transfer by a company of money or other property of the company, other than
its own shares, to or for the benefit of its own shareholders or those of another
company within the same group of companies and it can be in the form of a
dividend. It is regulated in terms of section 46 of the companies Act which
stipulates that a distribution may be made in the following circumstances:7
The board of directors must authorise the distribution, unless it is made in
terms of an existing legal obligation of the company or a court or the board of
the company, by resolution, has authorised the distribution. It must also
6
Companies Act 71 of 2008 section 13(3).
7
Companies Act 71 of 2008 section 46.
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