Exam (elaborations)
LML4806 Assignment 1 2024
- Course
- Institution
- Book
This comprehensive document has detailed analysis, it provides valuable insights and explanations for students seeking to deepen their understanding.
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Company Law - Corporate Insolvency - Full lecture notes, textbook readings, further readings
-
Company Law - Corporate Contracting & Constitution - Full lecture notes, textbook readings, further readings
-
Company Law - Director's Duties & Corporate Management - Full lecture notes, textbook readings, further readings
Seller
Follow
GeniusGears
Reviews received
Content preview
LML4806Semester 1
Assignment 1 2024
, Question 1
Relevant Statutory Provisions:
Companies Act, 2008 (Act No. 71 of 2008) - Section 44:
Section 44 of the Companies Act governs financial assistance to be provided by a
company for the acquisition of its own shares or the shares of its holding company.
On account of this section, financial assistance is allowed in cases provided it does
not violate the provisions relating to MOI and only if it meets certain conditions,
including special resolution by the board, fairness, and reasonableness, or
compliance with the solvency and liquidity tests.
Relevant Case Law:
Lipschitz NO v UDC Bank Ltd 1979 (1) SA 789 (A):
In this case, the court gave guidance on what financial assistance consists of. It held
that financial assistance encompasses each act by which the resources of a
company have been used to enable a person to acquire shares in the company. It
can take the form of loans, guarantees, or any other kind of financial arrangement.
Trevor v Whitworth 1887 12 App Cas 409:
It laid down that a company is not allowed to provide financial assistance where it
would have the effect of reducing the capital of the company.
Application to the Facts:
In the facts:
Mandla is a director and shareholder in Cargo Logistics Ltd, a company. Mandla lets
a warehouse to the company for R1.2 million per annum. He uses part of the rent
received to buy 10,000 shares in Cargo Logistics Ltd.
What should be taken into account to arrive at a conclusion as to whether this is a
case of financial assistance in the following respect:
Nature of Transaction:
Cargo Logistics Ltd is payable for rent as regards making available a warehouse.
This will be an entirely valid commercial transaction if payment on rent is based on
reasonable regard to its market value for such a warehouse.
Utilisation of Funds by Mandla:
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 GeniusGears. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.71. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
82871 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now