Exam (elaborations)
MRL2601 MAY/JUNE EXAMINATION 2023 (ANSWERS)
- Institution
- University Of South Africa (Unisa)
MRL2601 MAY/JUNE EXAMINATION 2023. ANSWERS
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FULL NAMES:STUDENT NUMBER:
MODULE CODE: MRL2601
MODULE NAME: ENTREPRENEURIAL LAW
MAY/JUNE EXAMINATION 2023
, QUESTION 1
1.1 The legal consequences of recognizing a company's separate legal personality
are as follows:
a) Limited Liability: One of the key consequences is that the shareholders' liability is
generally limited to the amount they have invested in the company's shares. This
means that the personal assets of the shareholders are protected from the company's
debts and obligations. The company is treated as a separate legal entity, distinct from
its shareholders.
b) Perpetual Succession: The company, as a separate legal entity, has perpetual
succession. This means that the company's existence is not affected by the death,
retirement, or insolvency of its shareholders or directors. It can continue to operate
and enter into contracts in its own name.
c) Ability to Own Property and Sue/Liable to be Sued: A company can own property in
its own name, enter into contracts, and sue or be sued in its own capacity. The
company's assets and liabilities are separate from those of its shareholders.
d) Separate Management and Control: The company is managed and controlled by its
directors, who owe fiduciary duties to the company. The shareholders have limited
involvement in the day-to-day management unless they are also directors. The
directors act on behalf of the company and their actions bind the company.
e) Transferability of Shares: The shares of a company are freely transferable, subject
to any restrictions imposed by the company's constitution. Shareholders can buy, sell,
or transfer their shares without affecting the company's legal existence.
1.2 The Companies Act 71 of 2008 provides for the following types of companies:
a) Private Companies: These are companies that do not issue shares to the public
and restrict the transferability of their shares. They are identified by the abbreviation
"Proprietary Limited" (Pty) at the end of their name.
b) Public Companies: These are companies that offer their shares to the public and
are subject to more extensive regulatory requirements. They are identified by the
abbreviation "Limited" (Ltd) at the end of their name.
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