FBE2604 Latest exam pack questions and answers and summarized notes for exam preparation. Updated for 2024 exams . For assistance Whats-App.0.6.7..1.7.1..1.7.3.9 . All the best on your exams!!
1.1 A process used to ignore a company’s separate legal personality in order to
hold persons inside the company liable is called piercing the corporate veil.
1.2 A proprietary company is a company that is mainly used by professional
associations.
1.3 The company secretary is the principal administrative officer of the
company.
1.4 A certificate of incorporation is the sole registration document of a company.
1.5 A derivative suit is a lawsuit brought by a company shareholder against the
directors and management of the company for failure by management.
Question 2
2.1 The distinguishing characteristics of a public company are as follows:
• Shares may be offered to the public and are freely transferable: A public
company can offer its shares to the general public for investment and
ownership. These shares can be bought and sold freely in the market.
• This company can be listed on the JSE Limited: A public company has
the option to list its shares on the JSE Limited (Johannesburg Stock
Exchange) or any other recognized stock exchange. This provides the
opportunity for the shares to be traded publicly.
• Can be formed by 1 person: Unlike some other types of companies, a
public company can be formed with just one person as its founder or
shareholder. This allows for more flexibility in the formation of the
company.
• Must have at least 3 directors: A public company is required to have a
minimum of three directors on its board of directors. This ensures a
sufficient level of governance and decision-making within the company.
, • Obliged to hold annual general meetings: Public companies are required
by law to hold annual general meetings (AGMs) where shareholders
come together to discuss company matters, appoint or remove directors,
and approve important decisions.
• Obliged to appoint an auditor: Public companies are legally bound to
appoint an independent auditor to review and report on their financial
statements. This ensures transparency and accountability in the
company's financial reporting.
• Obliged to appoint a company secretary: A public company is required
to have a company secretary who is responsible for maintaining the
company's records, organizing meetings, and ensuring compliance with
legal and regulatory requirements.
• Obliged to appoint an audit committee: Public companies are mandated
to establish an audit committee consisting of independent directors. The
audit committee oversees the company's financial reporting processes,
internal controls, and the relationship with the external auditor.
2.2 According to the Companies Act 71 of 2008, the following matters must be
transacted at the annual general meeting of Hero Ltd:
• Adoption of the annual financial statements: The directors must present
the company's financial statements for the previous financial year to the
shareholders for adoption. Shareholders have the right to review and
question the financial statements before approving them.
• Appointment of auditors: The shareholders must consider and appoint
auditors for the upcoming financial year. The auditors must be approved
by the shareholders, and their appointment should be in line with the
requirements of the Companies Act.
• Election of directors: Shareholders may elect or re-elect directors during
the annual general meeting. The election process should be conducted
, according to the company's memorandum of incorporation and the
Companies Act.
• Payment of dividends: If the company has declared a dividend, the
shareholders must approve the payment of the dividend during the
annual general meeting.
• Appointment of the company secretary: The company must appoint a
company secretary, and this appointment can be done during the annual
general meeting. The company secretary's role is to ensure compliance
with relevant legislation and regulations.
• Any other matters referred to in the notice: The directors may include
additional matters in the notice of the annual general meeting. These
matters should be relevant to the company's operations and require
resolution or approval from the shareholders.
2.3 Section 61 of the Companies Act stipulates that at least the following
matters must be transacted at the AGM:
• election of directors to the extent required by the Companies Act or the
company’s Memorandum of Incorporation
• appointment of an auditor for the following financial year
• appointment of an audit committee
• presentation of the directors’ report
• presentation of audited financial statements for the immediately
preceding financial year
• presentation of an audit committee report
• any matter raised by shareholders
2.4 - Requirements for appointment of a proxy:
• The appointment must be in writing and signed by the shareholder.
• The appointment is valid for one year.
• The appointment may be for a specific period of time.
2.4 The Companies Act 71 of 2008 provides for three classes of shares:
preference shares, ordinary shares, and deferred shares.
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