Exam (elaborations)
LML4806 Assignment 1 (Complete Answers) Semester 1 - Due: March 2024
- Course
- LPL4805
- Institution
- University Of South Africa (Unisa)
LML4806 Assignment 1 (Complete Answers) Semester 1 - Due: March 2024
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LML4806ASSIGNMENT 1 (SEMESTER 1)
DUE DATE: March 2024
Written Assignment Submission Guidelines:
Please ensure that your assignment is submitted electronically through the myUnisa platform no later than
March 2024. Kindly note that fax or email submissions will not be accepted.
NB: Assignment submitted to the lecturer(s) through email will not be considered.
QUESTION: 1
Mandla is both a director and shareholder of Cargo Logistics Ltd. He wants to buy more shares in
Cargo Logistics Ltd but does not have enough money to do so. He offers to rent out a warehouse
to Cargo Logistics Ltd. Cargo Logistics Ltd agrees to pay R1.2 million per annum as rent for the
warehouse. Mandla then uses part of the money to purchase 10 000 shares in Cargo Logistics Ltd.
With reference to the relevant case law, statutory provisions and the facts provided in the above
scenario, discuss whether Cargo Logistics Ltd has provided financial assistance for the purchase
of its securities. (6) 4
Answer:
In this scenario, Mandla, a director and shareholder of Cargo Logistics Ltd, desires to acquire more
shares in the company but lacks the necessary funds. To address this, he proposes to rent out a
warehouse to Cargo Logistics Ltd, with an agreed annual rent of R1.2 million. Subsequently, Mandla
utilizes a portion of the rental income to purchase 10,000 shares in Cargo Logistics Ltd.
The pertinent issue here revolves around whether Cargo Logistics Ltd has provided financial
assistance for the purchase of its securities, which is regulated by statutory provisions and case law.
Financial assistance, in this context, typically refers to a company directly or indirectly providing
funds or resources to facilitate the acquisition of its own shares.
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