In terms of section 163 of the Companies Act, a shareholder or a director may
bring an application for the court to provide relief against oppressive or
unfairly prejudicial conduct by the company. A derivative action is a lawsuit
brought by a corporation shareholder against the directors, manag...
MRL2601 OCTOBER EXAM 2022 WITH 100% ANSWERS
MRL2601
Question 1
In terms of section 163 of the Companies Act, a shareholder or a director may
bring an application for the court to provide relief against oppressive or
unfairly prejudicial conduct by the company. A derivative action is a lawsuit
brought by a corporation shareholder against the directors, management
and/or other shareholders of the corporation for a failure by management (In
effect, the suing shareholder claims to be acting on behalf of the corporation,
because the directors and management are failing to exercise their authority
for the benefit of the company and all of its shareholders.) Section 165 of the
Companies Act 71 of 2008 is applicable. Zingapi is a shareholder and may
institute the action. Specific steps must be taken to institute an action in terms
of section 165. The procedure provides for the appointment of an independent
and impartial person or committee by the company to investigate the demand
and report back to the board
He must in writing request the company to institute legal action to protect its
interests. If the claim is not frivolous or made without merit, an independent
person or committee must be appointed to investigate the claim, and to report
on whether the action should proceed. The derivative action is the best
because the shareholder will be acting on behalf of the company and since
she could not afford to pay the legal costs the company will pay its costs as
juristic person.
Question 2
Section 58 of the Companies Act 71 of 2008 determines that a proxy can be
appointed. The appointment must be in writing and will be valid for one year,
or for a specified period of time. The same person may be appointed as a
proxy for more than one shareholder. The proxy can delegate the authority to
act on the shareholder’s behalf to someone else. A copy of the appointment
instrument must be available/ presented at the meeting. A shareholder can
cancel a proxy in writing or withdraw the appointment in writing.
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Members of a CC are not ordinarily held liable for the liabilities and obligations
of the CC as the CC is treated as being independent of its members. As with a
company, the members would not be liable for the liabilities and/or other
obligations of the CC unless a member has signed as surety, guarantor or
indemnitor for such debts and/or obligations of the CC. However, in certain
circumstances members are deemed to be personally liable for the liabilities
and obligations of the CC, if a member disregards their duties, commits acts
of gross negligence in the carrying on of the business of the CC and/or
abuses the separate juristic personality of the CC.
Section 63 of the Close Corporations Act, which provides for the liability of
members and certain other persons for debts of the close corporation.1
Section 64 of the Close Corporations Act makes provision for the liability of
those persons, usually, but not always members who were knowingly a party
to the carrying on of the business of the corporation in a reckless or fraudulent
manner.1 Section 65 grants the court certain powers and more specifically it
gives the court the power to pierce the corporate veil in certain defined
circumstances.2
In Haygro Catering BK v Van der Merwe en Andere, the court held the
members of a close corporation personally liable for the corporation's debts
on the strength of section 65 of the Close Corporations Act. 3 According to the
judgment in the Haygro case it was a gross abuse of the juristic personality of
the corporation not to use its name anywhere in the business and not to give
any indication that the business was in fact owned by the corporation. The
section is wide enough to include every member of the close corporation to be
held personally liable for the debt.
In order to hold Tendai Munyai personally liable to pay him the amount of
R250 000, Themba will have to prove the following:
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