MRL2601/ Entrepreneurial Law assignment o2 Answers 2023-sem 01
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Course
MRL2601 - ENTREPRENEURIAL LAW (MRL2601)
Institution
University Of South Africa (Unisa)
Book
New Entrepreneurial Law
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MRL2601/ ENTREPRENEURAL LAW ASSIGNMENT 02 FOR SEMESTER 01 2023
NAME: (YOUR NAME & SURNAME)
STUDENT NUMBER: (YOUR STUDENT NUMBER)
MODULE CODE: MRL2601
SUBJECT: ENTREPRENEURAL LAW
ASSIGNMENT NUMBER: 02
QUESTION 1
, With reference to the relevant legislation and case law, indicate what Themba would
have to prove in order to hold Tendai Munyai liable:
The separate juristic or legal personality of a company can be ignored in certain
circumstances. It is referred to as the lifting or piercing the corporate veil. The common-
law principle of the lifting or piercing of the corporate veil developed in case law. There
are not strict rules when a court will lift the corporate veil. However, the following
principles have developed in case law:
Botha v Van Niekerk & another 1983 (3) SA 513: A party must have suffered an
“unconscionable injustice” before the court could lift the veil.
Cape Pacific v Lubner Controlling Investments (Pty) Ltd and others 1995 (4) SA
790 (A): The court confirmed that it has no general discretion simply to disregard a
company’s separate legal personality. The court held that the separate legal personality
of a company should not be easily ignored.
However, circumstances do exist for example fraud, dishonesty or other improper
conduct where it would be justifiable to pierce the corporate veil.
The court held further that Botha v Van Niekerk was too rigid. The court indicated that it
would adopt a more flexible approach namely of taking all the facts of each case into
consideration when determining if the veil should be pierced. A balance must be struck
between the need to persevere the separate legal identity of the company against policy
considerations in favour of piercing the corporate veil. The veil could also be pierced in
relation to a specific transaction.
Hülse-Reutter v Gödde 2001 (4) SA 1336 (SCA): The court agreed that it has no
general discretion simply to disregard a company’s separate legal personality. The
corporate veil would only be lifted if there was evidence of misuse or abuse of the
distinction between the company and those who control it and this has enabled those
who control the company to gain an unfair advantage.
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