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Exam (elaborations) MRL 2601 Entrepreneurial Law. Questions with verified solutions
This document consist of exam questions on MRL 2601 with complete solutions
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MRL2601 EXAM QUESTIONS WITHVERIFIED SOLUTIONS
Who may bring a statutory derivative action ito S165 CA - a shareholder
a director
a registered trade union representing an employee or a person/body representing
employees
anyone who is granted leave by the court to do so
prescribed officers
Grounds for the application of statutory derivative action - -cpy failed to take steps
required
-cpy appointed a person/committee who is not independent.
-cpy accepted an inadequate report
-cpy served a refusal notice
Duties of the audit committee - -nominate and appoint a registered/independent auditor
-determine fees to be paid to auditor and auditor's terms of engagement.
-pre-approve any proposed agreement with the auditor to provide non-audit services
-consider whether/not auditors independence may have been prejudiced.
-prepare a report to be incl in annual financial statements
Duties of the audit committee
(ACRONYM: Nana Finds Practising Independence Problematic) - -nominate and
appoint a registered/independent auditor
-determine fees to be paid to auditor and auditor's terms of engagement.
-pre-approve any proposed agreement with the auditor to provide non-audit services
-consider whether/not auditors independence may have been prejudiced.
-prepare a report to be incl in annual financial statements
ACRONYM:
NANA- Nominate and appoint
FINDS- fees/terms of engagement
PRACTISING- Pre-approve
INDEPENDENCE-Independence
,PROBLEMATIC-Prepare report
Three cases that has to do with the common law rule of lifting the corporate veil - Botha
v Van Niekerk:
The corporate veil will only be pierced when the seller suffered "unscionable injustice"
In Cape Pacific V Lubner Controlling Investements:
- fraud, dishonesty and improper conduct will be justifiable to pierce the corporate veil.
- A balance must be struck between the need to persevere the legal personality of the
company and the policy considerations in favor of piercing the corporate veil
Hulse-Reutter v Godde
- there must be evidence of the abuse of the distinction between the legal personality of
the company and the person controlling it with a motive to gain a unfair advantage.
-
What does piercing the corporate veil refer to: - 1. the exceptional circumstances in
which the court disregards the separate legal personality of the company and treat the
shareholders as if they are the owners of the assets and as if they were conducting
business in their own personal capacity
or
2. when the court attributes certain right or obligations of the shareholders to the
company
is a CC bound to a contract when one of its members acted in a manner exceeding their
powers? - -members of a cc acts as agents of a cc
-doctrine of constructive notice does not apply to CCs. Third parties therefore have no
knowledge regarding the content of the CCs registered documents
-in general CCs are bound to any contract concluded with an outside member-
regardless of whether or not the transaction falls within the scope of the CCs main
business.
-CC can escape liability if a third party knew, or reasonably ought to know that a
member concluded a contract without the authority to do so.
- in the case of J&K Timbers v GL & S Furniture Enterprises CC- a member is a a agent
even though no authority, expressly or implied, has been conferred upon him by the CC,
and corporation is bound to the related act, unless the third party knew or reasonably
ought to know.
, Factors the court will consider when considering whether a company should change
their name and refer to case law - Peregrine Group (Pty) Ltd & Others v Peregrine
Holdings Ltd and Others
The court considered the following factors:
1. the date of the registration of the respective companies.
2.nature of the business activities of the respective companies.
3. similarity in the names and whether it will cause confusion.
4.client bases of the respective companies
5. likelihood that members of the public will be confused in the dealings with the
respective companies.
Factors the court will consider when considering whether a company should change
their name and refer to case law - Peregrine Group v Peregrine Holdings
The court considered the following factors:
1. the date of the registration of the respective companies.
2.nature of the business activities of the respective companies.
3. similarity in the names and whether it will cause confusion.
4.client bases of the respective companies
5. likelihood that members of the public will be confused in the dealings with the
respective companies.
What happens if a member of a cc dies - -member of a cc may bequeath his or her
interest to a legatee ito a will.
-transfer of the members interest can only be done after consent of the other members
of the cc was obtained.
should the members not consent, then the executor may:
1. sell the member's interest back to the cc
2. sell the member's interest to one of the remaining members.
3. sell the member's interest to a third party, subject to the other members pre-emptive
right to purchase member's interest.
Money value of member's interest will thereafter be transferred to the legatee.
Requirements for the regsitration of a external/foreign/domesticated company - 1. the
board of directors must register the business as a "external company" within 20 days of
starting to conduct business activities/ np activities with the CIPC
2. they must lodge a CoR20.1 form with the CIPC
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