Summary
Business law Test 1 Summary
- Course
- Institution
This is a comprehensive and detailed summary on test 1 for Lben3724. Quality stuff you can't afford to miss!!
[Show more]
Seller
Follow
anyiamgeorge19
Reviews received
Content preview
UNIT 1:Historical development:
- 1926: companies Act
- 1973: Companies Act
- 2004: DTI Policy Papers
- 2007: NEDLAC
- 2008: Companies Act Promulgated
- 1 May 2011: 2008 Companies Act came into force
Key objectives agreed at NEDLAC:
Objective Explanation
Simplification: 1. Co-structure = CC characteristics
- Formation 2. NPO’s: simple and easy to maintain
- Costs for formation & maintenance regime
3. Company Act shouldn’t deal with co-op’s
and partnerships
Flexibility: 1. Diversity of corporate structures
- Design 2. Retain distinction between listed and
- Organisation unlisted co’s
Key objectives agreed at NEDLAC:
Objective Explanation
Corporate efficiency: 1. Solvency & liquidity rather than capital
- Of co’s maintenance rule
- Of management 2. Clarification of broad structures & director
duties, responsibilities & liabilities
3. Minority shareholder protection
4. M&A regime streamlined to promote
business combinations
5. Business rescue to replace judicial mgm
Transparency: 1. Company law must provide for director
- Transparency accountability and stakeholder
- Corporate governance participation
2. All public announcements, information &
prospectuses must be true & correct
3. Protection of SH rights and protect
minority SH
4. Establish minimum accounting standards
AR
Predictable regulation: 1. Decriminalise sanctions
- Follow best practice internationally 2. Avoid regulatory arbitrage
3. Enforcement through appropriate bodies
& mechanisms
4. Balance adequate disclosure and over-
regulation
Purpose of the Companies Act:
- Promote development
- promote innovation
- promote investment
- Encourage entrepreneurship
- Encourage enterprise efficiency
- Create flexibility and simplicity
- Encourage productivity
- Encourage efficient and responsible management
- Balance the rights & obligations of shareholders and directors
- Enhance economic welfare
- Achieve economic and social benefits
- Balance rights and interests of stakeholders in BR
, Key concepts in the Companies Act:
1. Right of any person to form a company
2. Minimal requirements for the Act of incorporation
3. The only document that governs the company’s internal affairs is the MOI
4. The MOI must meet certain requirements and cannot change the unalterable provisions of the
Companies Act
5. Regulatory system for companies is as simple as possible. Companies with a wider social
impact are subject to greater regulation
6. Move away from capital maintenance to solvency and liquidity
7. Enlightened shareholder approach is adopted – maximum protection of shareholders,
consideration of stakeholders. Extended locus standi – not only SH may approach courts
8. Business rescue provisions to replace judicial management and move away from liquidation
9. There should not be an over-regulation of company business. Directors run the companies,
not judges and regulators
10. Partial codification of directors’ duties
11. Decriminalisation of sanctions – liable for losses incurred by company instead of prosecution
12. Prevention of reckless, grossly negligent & fraudulent trading
13. Piercing the corporate veil in an unconscionable abuse of the juristic personality of a company
14. All companies are deemed to have been incorporated under the 2008 Act.
Interpretation of the Companies Act:
- S5: general interpretation clause: Act must be interpreted and applied in a manner that gives
effect to the purposes of the Act set out in S7
- Courts must interpret the language of the Act to promote purpose
- Reinforced by S6:
Prohibits terms in MOI intended to circumvent an unalterable provision
Allows court to declare provision void
Types of companies:
- Profit companies:
Public company – limited
State-owned Company – SOC Ltd
Personal liability company – Incorporated
Private Company – Proprietary Limited
- Non-Profit – NPC
Influence of the common law on the Companies Act:
- SA Company law based on English Law
- Companies Act is not a codification of the Common law
- Where Act is silent, common law will apply
Influence of Constitution on Companies Act
See UFS slides
UNIT 2:
Why incorporate a company?
- Not necessary to conduct business
- Benefit: limited liability, legal personality and perpetual succession
- Considerations:
Who will be involved in the business
Extent of involvement
Capital required
Source of capital
Requirements of customers and clients
Strategic objectives of all involved
Tax issues
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller anyiamgeorge19. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.50. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82956 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now