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LML4806 ASSIGNMENT 1 MEMO - SEMESTER 1 - 2024 - UNISA – DUE DATE: - 15 MARCH 2024 (DETAILED REFERENCES)

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  • Course
  • Company Law (LML4806)
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  • University Of South Africa (Unisa)
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  • Companies and Other Business Structures in South Africa

LML4806 ASSIGNMENT 1 MEMO - SEMESTER 1 - 2024 - UNISA – DUE DATE: - 15 MARCH 2024 (DETAILED REFERENCES) QUESTION 1 Mandla is both a director and shareholder of Cargo Logistics Ltd. He wants to buy more shares in Cargo Logistics Ltd but does not have enough money to do so. He offers to rent o...

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  • January 29, 2024
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COMPANY LAW


LML4806
ASSIGNMENT 1
DUE DATE: - 15 MARCH 2024
UNIQUE NUMBER: - 784139
SEMESTER 1 2024
UNISA




INCLUDES FOOTNOTES AND/OR
BIBLIOGRAPHY



PREVIEW AVAILABLE ON PAGE 1.



THE LAW TUTOR



Disclaimer
Extreme care has been used by our Tutors to draft this document,
however the contents are provided “as is” without any representations
or warranties, express or implied. This document is to be used for
comparison, research, and reference purposes ONLY. No part of this
document may be reproduced, resold, or transmitted in any form or by
any means without prior written permission from the Author. – THE
LAW TUTOR

, QUESTION 1



Mandla is both a director and shareholder of Cargo Logistics Ltd. He wants to
buy more shares in Cargo Logistics Ltd but does not have enough money to do
so. He offers to rent out a warehouse to Cargo Logistics Ltd. Cargo Logistics
Ltd agrees to pay R1.2 million per annum as rent for the warehouse. Mandla then
uses part of the money to purchase 10 000 shares in Cargo Logistics Ltd. With
reference to the relevant case law, statutory provisions and the facts provided
in the above scenario, discuss whether Cargo Logistics Ltd has provided
financial assistance for the purchase of its securities.



In the scenario described, the transaction involving Mandla, Cargo Logistics
Ltd, and the rental of a warehouse raises questions about whether Cargo
Logistics Ltd has provided financial assistance for the purchase of its
securities. The issue revolves around the concept of financial assistance,
particularly in the context of share acquisitions.



The Companies Act, statutory provisions, and relevant case law come into play.



1. Companies Act Provisions: -



Section 44(2): This section prohibits a company from providing financial
assistance for the purpose of or in connection with the purchase of its own shares,
or the shares of its holding company.1



Section 45: Provides exceptions to the prohibition, allowing financial assistance if
certain requirements are met, such as a special resolution of shareholders.2


1
Companies Act 71 of 2008.
2
Companies Act 71 of 2008.

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