Summary
Summary notes
- Course
- Business Entities
- Institution
- University Of The Witwatersrand (wits)
Summary of 8 pages for the course Business Entities at wits
[Show more]
Content preview
Business Entities Notes 2020Lecture: The Constitution of a company (MOI)
Section 15: The Memorandum of Incorporation and Company rules
Definition s1: sets out rights, duties and responsibilities of shareholders, directors and
others within and in relation to a company, and other matters contemplated in s 15.
The MOI is the Founding document for a formation of a company.
The MOI can be tailored made or you can use a template. Thus allows for flexibility.
Flexibility: the act allows a large degree of flexibility with regard to the content of the MOI.
Consistency: The MOI must be consistent with the act, and provisions that aren’t will be
void.
Provisions: the MOI may deal with the following;
i. Deal with a matter that is not addressed in the act
ii. Alter the effect of any alterable provisions in the act
iii. Contain any special conditions applicable to the company
iv. Prohibit the amendment of any provision contained therein
The corporate constitution binds the parties in their capacity as functionaries of the
company. Must be subordinate to the companies act.
Legal status
→ Section 15(6) determines the binding nature of the constitution of the company (i.e. the
MOI and the company rules).
Binding from its effective date but only on an interim basis until it is put to a vote at the
next general meeting.
If ratified binding permanently. If not then it lapses/ has no effect. (MCQ).
1|Page
, Business Entities Notes 2020
Lecture: The Constitution of a company (MOI)
The Lapse doesn’t affect validity of anything done during the interim period. Those
contracts entered into will still be valid. (MCQ).
Within 5 days after meeting and vote the Co must file with Commission a notice of
ratification or non-ratification.
If not ratified, Board of directors may not make a substantially similar rule within the
ensuing 12 months.
NB! The corporate constitution binds the parties in their capacity as functionaries of the
company. (See Table Below)
→ Creates a legal relationship between the company and the following;
i. The shareholders
ii. The directors and prescribed officers
iii. The members of the audit committee and members of any
committee of the board
→ In their capacities as functionaries of the company:
→ 2 outstanding features:
1. Unalterable provisions-mandatory. Aimed at protecting shareholders, creditors, etc.
May not be altered in any Companies MOI.
Unalterable provisions of the Act may be made more onerous (not less) under
the MOI (higher standards, longer periods of time etc than would generally
apply).
Therefore a co cant contract out of such provisions of the Act.
Anti-avoidance provisions allows the court to declare any provision of the MOI or
rules (transactions, resolution, agreement, etc) to be meant to defeat or reduce
2|Page
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller youtuners. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
57413 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now