Exam (elaborations)
Company Law (LML4806) Exam Memos from Oct/Nov 2015 – Oct/Nov 2019
- Institution
- University Of South Africa (Unisa)
Company Law (LML4806) past exam questions and answers from Oct/Nov 2015 – Oct/Nov 2019
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COMPANY LAW (LML4806) EXAM MEMOS FROM OCT/NOV 2015 – OCT/NOV 2019OCT/NOV 2019
Question 1 [20]
1.1 ABC (Pty) Ltd (‘the company’) has five shareholders, each of whom holds 20% of the
voting rights in the company. All of them are also directors of the company. The
Memorandum of Incorporation (‘MOI’) of the company has not changed the default
position in terms of the Companies Act 71 of 2008 regarding the quorum requirements for
a shareholders’ meeting. It has also not changed the default position regarding the
threshold required to pass ordinary resolutions.
The company held a board meeting at which four directors were present. Some of the
decisions taken by the board of directors related to matters that were required to be
referred to the shareholders for approval by an ordinary resolution. Without issuing a
notice of a shareholders’ meeting, the board meeting proceeded to consider the proposed
ordinary resolutions. All the directors who were present at the meeting voted on the
proposed ordinary resolutions in their capacity as shareholders.
Simphiwe, a director and shareholder of the company who was not present at that
meeting, objects to the passing of the ordinary resolutions at the meeting in this manner.
He argues that (i) the voting on the ordinary resolutions was invalid as no notice of a
shareholders’ meeting was properly given, (ii) the quorum requirements for a
shareholders’ meeting were not satisfied, and (iii) the threshold required for the approval
of the ordinary resolutions was not satisfied.
With reference to the relevant provisions of the Companies Act 71 of 2008 and the facts,
advise Simphiwe whether his arguments have any merit and whether the ordinary
resolutions were validly passed at the meeting. (15)
If every shareholder of a company (other than a state-owned company) is also a director of
the company, any matter that is required to be referred by the board to the shareholders
for decision may be dealt with in terms of s 57(4) of the Companies Act 71 of 2008. The
effect of this section is that a matter may be referred by the board to the shareholders
without notice or compliance with any internal formalities. However, this is subject to the
MOI which may provide otherwise.
Therefore, since all the shareholders of ABC (Pty) Ltd are directors of the company, s 57(4)
of the Companies Act would be applicable, unless the MOI provides otherwise.
Section 57(4) requires the following:
Every person must be present at the board meeting when the matter was referred to
them in their capacity as shareholders.
A sufficient number of persons must be present in their capacity as shareholders to
satisfy the quorum requirements as set out in s 64 of the Companies Act.
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