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LMLst Semester's Assignment 1 Q&A
- Institution
- University Of South Africa (Unisa)
LML4606 2023 1st Semester's Assignment 1 Q&A
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NAME AND SURNAME :STUDENT NO :
COURSE CODE : LML4806
ASSIGNMENT NO : 01
UNIQUE NUMBER : 702485
, QUESTION 1
Question: 1
Musa, Amos, Sipho and Jimmy are directors of Khubo Limited. Jimmy was
appointed as an executive director of Khubo Limited three years ago under a
five-year contract of employment with the company. Musa has expressed his
concerns to the board of directors that for the past two financial years Jimmy
has been failing to ensure the timely preparation and submission of the
company’s annual financial statements, and that Jimmy omitted to sign the
annual financial statements for the previous financial year as the authorised
director, as required. Musa has also informed the board of directors that, after
joining Khubo Limited, Jimmy was removed as chairperson of the board of
trustees of the JF Pension Fund after he forged some documents and
withdrew R2 million from the JF Pension Fund’s bank account for his personal
use. Advise Jimmy on the following:
1.1 Whether under the circumstances of this case the board of directors of
Khubo Limited will have valid grounds to remove him (Jimmy) as a director
of the company. (6)
1.2 The procedure that the board of directors must follow and the rights that
Jimmy has in terms of the Companies Act 71 of 2008 should the board of
directors decide to remove him as a director. (8)
ANSWERS
1.1 The legal principle in issue in this question relates to the removal of directors,
section 71 of the Companies Act 71 of 2008 is relevant (hereinafter referred to
as the Companies Act).
In terms of section 71(3) of the Companies Act, a director may be removed by
the board of directors if:1
he has become ineligible or disqualified to be a director
1
Section 71 (3) of the Companies Act no 71 of 2008.
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