EXAMINATION PACK
AUE 1601 Exam pack
PAST PAPER SOLUTIONS
2 | P a g e Greatminds tutorials Randburg
AUE 1601 +27
AUE 1601 Exam pack
MAY/JUNE 2018
Question One
1.1) Circumstances when an individual will be related to a juristic person include the following,
If the individual indirectly...
1.1) Circumstances when an individual will be related to a juristic person include the following,
If the individual indirectly controls the juristic person
If the individual directly controls the juristic person
Relationship between AAA and XYZ;
Mr Xolani (the marketing director of AAA Hospitals Ltd) has a son who owns XYZ Motors.
1.2)
Public Companies Private Companies
1 Listed on the Johnsonburg stock of Exchange Not listed
2 Minimum of three directors Minimum of one director
3 Ends with Ltd Ends with (Pty) Ltd
4 Mandated to appoint external auditors Not mandated but may appoint
5 Mandated to appoint a company’s secretary Not mandated but may appoint
Only one difference was enough for two marks
1.3)
Reckless trading means managing the business with gross negligence, with intent to defraud any person
or for any fraudulent purpose; or trade under insolvent circumstances.
Yes the purchase of vehicles will constitute reckless trading because the company is insolvent as its non-
current liabilities (110 000 000) are greater than its non-current assets (102 000 000).
1.4)
Must disclose the interests before the meeting
Must disclose to the meeting any material information relating to the matter
May disclose any observations relating to the matter if requested to do so by other directors
If present at the meeting, must leave the meeting immediately after making disclosures
Must not take part in the consideration of the matter (must not vote)
Must not execute any document on behalf of the company.
Must be regarded as present at the meeting even though he will be absent for the purpose of
determining whether sufficient directors are present to constitute the meeting.
1.5)
The purchase is illegal.
Reasons:
The company is not satisfying solvency and liquidity tests.
- The company is insolvent as its non-current liabilities (R110 000 000) are greater than its non-
current assets (R102 000 000).
- The company does not meet liquidity test as its current assets (R105 000 000) are less than
current liabilities (R112 000 000).
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