Reghard Groenewald
69724822
Company Law Exam
LML4806
1
, Question 1
1.1)
Unless the memorandum of incorporation specifies otherwise, JP Textiles Ltd may
arrange for a shareholders meeting to be conducted by electronic transmission in
accordance with section 63(2) of the Companies Act of 71 of 2008. This suggests that,
barring a prohibition in its memorandum of incorporation, JP Textiles Ltd. may convene
its annual general meeting of shareholders by video conference.
JP Textiles Ltd. may organise a meeting via electronic communication as long as the
notice of the meeting notifies shareholders of the opportunity to participate via
electronic communication. This is contingent on each participant being able to engage
in the meeting with a reasonable level of effectiveness and being able to interact with
each other concurrently without the need for an intermediary.
It must be emphasised that allowing shareholders to vote and attend meetings virtually
would motivate them to become more involved in the business's operations. Allowing
a business to limit electronic meetings in its memorandum of incorporation, if it so
desires, preserves flexibility. Unless the corporation decides differently, access to the
electronic communication must be paid for by the shareholder (or proxy). 1
1.2.1) A group of companies is defined as two or more companies that are related or
interrelated. A company is related to another if it is a subsidiary of another company
or if it directly or indirectly controls another company (or its operations). If a Company
is able to directly or indirectly exercise or control the exercise of the voting rights in
another Company whether through a shareholders' agreement or otherwise, or if a
Company , alone or in conjunction with any related or interrelated person, is able to
appoint or elect or control the appointment or election of directors of Company B, who
hold the majority of votes at the company's board meetings, then that company
controls the other Company (or its business).Since the controlling company has the
ability to materially influence the policy of the controlled company.2
1
Section 63(2) of the Companies Act of 71 of 2008.
2 Section 1 and 2 of the Companies Act 71 of 2008; Unisa,’Company Law:Only Study Guide for
LML4806,’(University of South Africa 2017)38-39
2
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