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AUE1601 ASSIGNMENT 2022
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MODULE CODE: AUE1601DATE: 09 SEPTEMBER 2022
ASSIGNMENT 02
QUESTION 1
1.1 Financial assistance to a director to purchase shares
Ms Daisy one of the Eden Ltd’s director is given a loan.
For a loan to be granted the board must set all the conditions and restrictions in respect of financial
assistance set out in the Memorandum of Incorporation (MOI). Also ensure that granting financial
assistance set out in the Memorandum of Incorporation (MOI) will be satisfied.
Eden Ltd do satisfy the solvency test but not the liquidity test subsequently to granting a loan as the
assets exceed total liabilities by amount of R3 million, and current assets do not exceed current
liabilities, they are less by amount of R4 million.
The terms of which the financial assistance proposed to be given are unblemished and reasonable to
the company.
The board will not approve any financial assistance unless the particular provision of financial
assistance is:
In conformance to an employee share scheme that satisfies the requirements of section 97; or
In conformance to a special resolution of the shareholders adopted within the previous two years.
, The financial assistance which was granted to Ms Daisy will not be in conformance to an employee
share scheme.
In terms of section 64, for special resolution to be taken at a shareholders meeting, a shareholders
meeting may not begin until sufficient persons are present at the meeting to be exercised in respect
of at least one matter to be decided at the meeting.
In term of section 665, for a special resolution to be approved by shareholders, if must be supported
by at least 75% voting rights exercised on the resolution.
A notice of resolution must be sent to all shareholders within 10 business days.
The notice of resolution must indicate the summary of transactions, namely to provide financial
assistance to a director to acquire shares in the company.
2.
2.1 Since Eden Ltd is a public company it must appoint an audit committee annually according to
Companies Act. Pots (Pty) Ltd as a private company it is not required to appoint an audit committee
unless it’s Memorandum of Incorporation (MOI) states so.
2.2 Memorandum
To: Shareholders of Eden Ltd
From: Audit Committee
Date: 31 August 2022
Subject: Duties of an audit committee
On behalf of the audit committee I am honoured to present in details the duties of an audit committee
in terms of Companies Act as follows:
Duties of Audit Committee
• To nominate a registered auditor who in the opinion of audit committee is independent of the
company.
• To determine the fees to be compensated to the auditor, and the auditor’s terms of
engagement.
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