Exam (elaborations)
LML4806 EXAM PACK 2024/25
- Course
- LML4806 (LML4806)
- Institution
- University Of South Africa (Unisa)
LML4806 EXAM PACK 2024/25 QUESTIONS WITH RESPECTIVE ANSWERS FOR EXAM REVISON.
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lOMoAR cPSD| 47389193, lOMoAR cPSD| 47389193
LML4806 EXAM QUESTIONS AND ANSWERS
QUESTION 1 [27]
1.1 The board of directors of Scarrow Iron Ltd wants to convene the annual general
meeting of the company9s shareholders.
With reference to the Companies Act 71 of 2008, advise the board of directors on the
matters that must, at a minimum, be dealt with at the annual general meeting. (7)
(Your answer must not exceed half a page)
1.2 Thandeka, a shareholder of Scarrow Iron Ltd, has received written notification
from the company that the annual general meeting of the company would be held in
ten days9 time. The notice does not inform the shareholders of the purpose of the
meeting.
With reference to the relevant provisions of the Companies Act 71 of
2008 and the facts provided, discuss whether the notice of the shareholders9
meeting given in the above scenario is valid. (7)
(Your answer must not exceed one page)
1.3 The Memorandum of Incorporation of Educat Group Ltd states that the main
business of the company is the development, acquisition and management of
independent schools and tertiary education institutions. The board of directors of
Educat Group Ltd concludes a contract to purchase a luxury yacht on behalf of the
company from Exclusive Yachts (Pty) Ltd.
, lOMoAR cPSD| 47389193
1.3.1 With reference to the relevant provisions of the Companies Act 71 of 2008 and
the facts provided, advise the board of directors whether the purchase of a luxury
yacht is a valid transaction that can be legally enforced by Exclusive Yachts (Pty)
Ltd. (5)
(Your answer must not exceed one page)
1.3.2 Explain what the doctrine of constructive notice entails and identify the two
circumstances in which this doctrine would be applicable to a company under the
Companies Act 71 of 2008. (8)
QUESTION 2 [23]
You are a legal advisor of Fisher Technology Ltd (8the company9). The company9s
Memorandum of Incorporation has not changed the default position in terms of the
Companies Act 71 of 2008 regarding the provision of financial assistance or
regarding the declaration and payment of dividends.
The company has shown a significant increase in profits. The board of directors
would, therefore, like to propose a final dividend of R5.50 per share which will be
paid out to the company9s ordinary shareholders.
The board of directors would also like to lend Gareth, the chief executive officer of
the company, an amount of R10 million, interest-free and on condition that he repays
such loan within 30 years. The company will not be taking any security from Gareth
for the loan.
, lOMoAR cPSD| 47389193
2.1 With reference to the relevant provisions of the Companies Act 71 of 2008,
discuss the formalities that must be followed before the dividend proposed by the
board of directors may be declared and paid. (8)
(Your answer must not exceed one page)
2.2 Outline the requirements of the Companies Act 71 of 2008 that must be complied
with in order for the company to provide financial assistance to Gareth. (12)
(Your answer must not exceed two pages)
2.3 Advise the board of directors whether the loan of R10 million may validly be given
to Gareth. (3)
(Your answer must not exceed half a page)
QUESTION 3 [10]
Lexie is a director of Spice Galore Ltd. Spice Galore Ltd needed to appoint a new
marketing agent to market and advertise its products in Gauteng. At a meeting of the
board of directors, Lexie persuaded the board to appoint Premium Marketing CC by
convincing the board that this corporation would be ideal for this task. However,
Lexie did not disclose to the board the fact that her husband, Vishal, had a
substantial member9s interest in Premium Marketing CC. She also did not disclose
to the board the fact that Premium Marketing CC did not have the necessary
capacity and experience to market diverse products for a large company such as
Spice Galore Ltd. Premium Marketing CC was appointed as the new marketing
agent for Spice Galore Ltd, but a few months later it became clear that Spice Galore
Ltd had suffered substantial losses in Gauteng because its products were not being
advertised effectively. A number of shareholders of Spice Galore Ltd are upset by the
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