SEMESTER 1 2024 UNISA
LML4806 COMPANY LAW
ASSIGNMENT 1
DETAILED MEMO WITH BIBLIOGRAPHY AND/OR FOOTNOTES.
DUE DATE: - 15 MARCH 2024
UNIQUE NUMBER: - 784139
, 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
Section 45: Provides exceptions to the prohibition, allowing financial assistance if
certain requirements are met, such as a special resolution of shareholders.2
1
Companies Act 71 of 2008.
2
Companies Act 71 of 2008.
