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LML4806
COMPANY LAW
ASSIGNMENT 1 MEMO
SEMESTER 1 – 2024 - UNISA
UNIQUE NUMBER: - 784139
DUE DATE: - 15 MARCH 2024
Includes Footnotes and/or Bibliography.
ASSIGNMENT PREVIEW
SEE PAGE 1
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, 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.
In the scenario described, the transaction involving Mandla, Cargo Logistics Ltd,
and the rental of a warehouse raises questions about whether Cargo Logistics Ltd
has provided financial assistance for the purchase of its securities. The issue
revolves around the concept of financial assistance, particularly in the context of
share acquisitions.
The Companies Act, statutory provisions, and relevant case law come into play.
1. Companies Act Provisions: -
Section 44(2): This section prohibits a company from providing financial assistance
for the purpose of or in connection with the purchase of its own shares, or the shares
of its holding company.1
1
Companies Act 71 of 2008.
