Accounting Law for Students, Lawyers and Legal Firms
QUESTION 1 50 marks PART 1 20 marks Snazzy-Sewing Ltd is a textile company that
operates all over South Africa. The company secretary of Snazzy-Sewing Ltd has
recently resigned, and the following candidates are being considered for appointment: •
Nylon (Pty) Ltd, a company specialising in p...
PART 1
(a) Notice Period for Resignation of a Company Secretary
According to the Companies Act 71 of 2008, a company secretary must provide written
notice of resignation to the board of directors (section 86(5)). Th e notice should
generally be given in accordance with the terms stipulated in the service agreement or,
where no notice period is specified, reasonable notice should be provided. The Act
requires that such notice should be effective regardless of the contents of the
company’s Memorandum of Incorporation (MOI).
(b) Eligibility of Candidates for Appointment as Company Secretary
1. Nylon (Pty) Ltd: Eligible as it is a company that specializes in providing company
secretarial services. Both Mr. Denim and Mr. Jeans meet the knowledge and
experience requirements.
2. Mr. Suede: Ineligible, as a non-resident of South Africa, he cannot be appointed
company secretary according to Section 86(4)(a) of the Companies Act, which
requires a company secretary to be a South African resident.
3. Mrs. Silk: Ineligible, as she has been declared delinquent from being appointed as a
director, which disqualifies her from holding other positions, including that of a
company secretary (Section 69(8)).
4. Miss Corduroy: Ineligible, due to her role as the auditor, which is a conflict of
interest as auditors cannot hold the office of company secretary simultaneously as
per ethical standards in auditing.
(c) Directors’ Response on Appointment and Duties of a Company Secretary
The directors of Snazzy-Sewing Ltd are mandated under the Companies Act to appoint
a company secretary unless exempted under prescribed thresholds (Section 86(1)). The
duties of a company secretary include:
• Ensuring compliance with the Companies Act an d other applicable legislation.
• Maintaining statutory registers and records.
• Providing guidance to the board on matters of governance and compliance.
• Assisting in the preparation of board meetings and resolutions.
• Safeguarding the integrity of the governan ce framework.
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