Business enterprise law mini assessment 1 question and answer (my submission)
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Course
Business enterprise law
Institution
Business Enterprise Law
This document contains a mini assessment with answers for some of the units in business enterprise law . This was my submission in which I got a mark of 100%
Boozie Beverages manufactures and sells an array of bottled, ready-to-drink alcoholic beverages.
The company is facing intense competition from other companies in the same business. Because of
this, Boozie Beverages decided to explore other opportunities in the alcoholic beverage sector.
Bongani, the managing director of Boozie Beverages, negotiates with Drinks-for-Fun Ltd on behalf
of Boozie Beverages to acquire the exclusive rights to manufacture and sell “Candy Fantasia”, a
well-known ready-to-drink alcoholic beverage. However, Boozie Beverages has difficulty raising the
capital required to conclude the contract. Bongani tells his friend Squirellina, who is involved in a
similar business, about his negotiations with Drinks-for-Fun Ltd and Boozie Beverages’ problem.
Squirellina then manages to acquire the executive rights to manufacture and sell Candy Fantasia”:
One month later, Bongani resigns as managing director of Boozie Beverages and joins Squirellina as
a partner in their new business.
section 1 of the Companies Act defines a director as a member of a board of the company, as
contemplated in section 66, or an alternative director of a company and includes any person
occupying the position of a director or alternate director by whatever name designated. Bongani,
who occupies the position of director, is in breach of the duties set out in section 76(3) of the
Companies Act 71 of 2008 which provides that a director is under a fiduciary duty and that they must
act with a certain degree of care, skill and diligence, and also the duty set out in section 76(2) of the
Act which provides for the duty to avoid personal benefits and harming the company.
According to section 76(3) of the Companies Act, directors have a fiduciary duty to act with care,
skill, and diligence. The CyberScene Ltd case established that a director breaches this duty if they use
confidential information to advance the interest of a rival concern to benefit their own business
whilst prejudicing the interests of his own company, or if they sabotage the company's contractual
opportunities for personal gain. In this case, Bongani breached his fiduciary duty by sharing
confidential information about his company's negotiations with another company with his friend
Squirrelina, who is also in competition with his company. Additionally, Bongani's partnership with
Squirrelina indicates that he shared confidential information for his own personal benefit, further
violating his duty as a director.
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