MRL2601 May/Jun 2018 exam paper — questions

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Every question, by topic

  1. Question 1 · Incorporation and the MOI · 2 marks

    Identify the INCORRECT statement concerning the implications of the principle of separate legal personality.Show the full question

  2. Question 1.1 · Incorporation and the MOI · 6 marks

    Although the principle of disregarding a company's separate juristic personality has now been codified in the Companies Act 71 of 2008, the case law developed under the common-law doctrine of piercing the corporate veil will still guide the courts in applying this statutory principle. Name three cases in which the courts explained the common-law grounds on which they may be prepared to disregard a company's separate corporate personality, and briefly explain, for each case, what those grounds were.Show the full question

  3. Question 1.2 · Incorporation and the MOI · 2 marks

    Explain whether or not Old Castle (Pty) Ltd is able to list its shares on the Johannesburg Stock Exchange Ltd.Show the full question

  4. Question 1.3.1 · Incorporation and the MOI · 5 marks

    Mbali and Sasha want to incorporate a company through which they will carry on a real estate business, buying residential stands for development and resale. Before their company is incorporated, Mbali and Sasha learn that The ProperT Development Bank is selling new stands and residential land in a highly sought-after area at discounted prices. They are concerned that if they wait until after their company is registered, they will miss out on these lucrative contracts with The ProperT Development Bank. Identify the methods available to Mbali and Sasha for securing the contracts with The ProperT Development Bank for their proposed business.Show the full question

  5. Question 1.3.2 · Incorporation and the MOI · 2 marks

    Explain to Mbali and Sasha which of the available methods would be the most appropriate for securing the contracts with The ProperT Development Bank in these circumstances, and provide a reason for your answer.Show the full question

  6. Question 1.4 · Incorporation and the MOI · 5 marks

    Sasha believes that any person can be appointed as a company director and that no person is subject to any additional requirements before being appointed as a director. With reference to the Companies Act 71 of 2008, explain whether or not Sasha's view is correct.Show the full question

  7. Question 2 · Directors: duties and liability · 2 marks

    Select the case that explains the different types of authority that a director representing a company can possibly have.Show the full question

  8. Question 2.1 · Close corporations · 5 marks

    EatsAmor CC's founding statement records that its principal business is 'catering and cookie sales'. Under the close corporation's association agreement, only one member, Tumelo, is authorised to enter into contracts on behalf of the close corporation. Despite this, Seymore, another member of EatsAmor CC, concludes a contract on the corporation's behalf to purchase a racehorse, believing it would benefit the close corporation to keep the horse and enter it in races. The horse performs poorly in its first race, and the other members of EatsAmor CC then reject the contract as invalid. Explain whether or not EatsAmor CC is bound by the contract that Seymore concluded for the purchase of the racehorse.Show the full question

  9. Question 2.2 · Close corporations · 5 marks

    Victoria, a newly appointed director of The Hyde (Pty) Ltd, approaches you for legal advice. She has heard that the Companies Act 71 of 2008 has increased the potential liability of company directors, and as a director she is concerned that she could be held liable for non-compliance with the Act's provisions through various remedies. With reference to the relevant sections of the Companies Act 71 of 2008, identify the remedies that can be used against directors who have abused their positions.Show the full question

  10. Question 2.3.1 · Close corporations · 1 mark

    Chisa Ltd issued partly paid-up shares to its shareholders at an issue price of R100 per share. The shareholders have only paid R75 per share issued, leaving them owing the company R25 per share. The company now wishes to write off this outstanding part of the issue price, namely the R25 per share owed by each shareholder. State the term used in the Companies Act 71 of 2008 to describe the transaction proposed in this scenario.Show the full question

  11. Question 2.3.2 · Close corporations · 5 marks

    Continuing with the Chisa Ltd scenario, in which shareholders still owe R25 per share of the R100 issue price after paying only R75, and the company wishes to write off this outstanding R25 per share owed by each shareholder, advise the directors of Chisa Ltd on the requirements of the Companies Act 71 of 2008 that must be complied with before the company may write off the shareholders' outstanding debt as proposed.Show the full question

  12. Question 2.4 · Close corporations · 4 marks

    Clause 9.2 of the Memorandum of Incorporation of Tea Garden (Pty) Ltd provides that where a shareholder is to be represented by proxy at a meeting, the form appointing the proxy must be deposited at the company's registered office no later than 48 hours before the scheduled time of the general meeting, failing which the proxy will be invalid. With reference to the provisions of the Companies Act 71 of 2008 and relevant case law, advise the shareholders of Tea Garden (Pty) Ltd whether Clause 9.2 is valid.Show the full question

  13. Question 3 · Incorporation and the MOI · 2 marks

    Identify the INCORRECT statement regarding the requirements that must be satisfied before third parties dealing with a ring-fenced company are required to acquaint themselves with the restrictive conditions applicable to that company.Show the full question

  14. Question 3.1.1 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. Advise Mothibi, chairman of Wit Deep Ltd, on when and by whom the company's first company secretary must be appointed.Show the full question

  15. Question 3.1.2 · Governance, auditors and committees · 3 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. Advise Mothibi on what requirements Corporate Services (Pty) Ltd must meet in order to be appointed as the company secretary of Wit Deep Ltd.Show the full question

  16. Question 3.2.1 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. Advise Mothibi, as chairman of Wit Deep Ltd, on the circumstances in which Wit Deep Ltd would be required to appoint a Social and Ethics Committee in terms of the Companies Act 71 of 2008.Show the full question

  17. Question 3.2.2 · Governance, auditors and committees · 5 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. Outline any five main functions that the Social and Ethics Committee of Wit Deep Ltd must perform.Show the full question

  18. Question 3.3.1 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. State whether the following is true or false, giving a reason: the law regulating South African companies and close corporations is codified completely in the Companies Act 71 of 2008.Show the full question

  19. Question 3.3.2 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. State whether the following is true or false, giving a reason: profit companies are obliged to include in their Memorandum of Incorporation a statement indicating what their principal business is, and this serves as a restriction on their capacity.Show the full question

  20. Question 3.3.3 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. State whether the following is true or false, giving a reason: a change in membership in a close corporation or a company does not influence the continued existence of the enterprise.Show the full question

  21. Question 3.3.4 · Governance, auditors and committees · 2 marks

    Wit Deep Ltd is a company that was incorporated 30 days ago and has not yet appointed a company secretary. Mothibi, the chairman of the board of directors, has been approached by Corporate Services (Pty) Ltd, which has offered to provide corporate secretarial and administrative services to Wit Deep Ltd. For the statements numbered 3.3, indicate whether each is true or false and give a reason for the answer, noting that no marks will be awarded if no reason is provided. State whether the following is true or false, giving a reason: a member of a close corporation will be liable for a breach of his or her duty of care and skill irrespective of whether or not the corporation suffered a financial loss.Show the full question

  22. Question 4 · Company law concepts and terminology · 2 marks

    Identify which one of the following is NOT a characteristic of a non-profit company.Show the full question

  23. Question 5 · Close corporations · 2 marks

    Choose the CORRECT statement: the maximum number of members that EatsAmor CC may have is—Show the full question

  24. Question 6 · Close corporations · 2 marks

    Identify the INCORRECT statement regarding close corporations.Show the full question

  25. Question 7 · Close corporations · 2 marks

    Identify the only constitutive document required for the registration of a close corporation.Show the full question

  26. Question 8 · Shares, dividends and distributions · 2 marks

    Choose the CORRECT statement regarding circumstances in which a resolution by the board of directors to issue shares must be approved by a special resolution of the shareholders.Show the full question

  27. Question 9 · Shares, dividends and distributions · 2 marks

    Choose the CORRECT statement regarding the Companies Act 71 of 2008.Show the full question

  28. Question 10 · Governance, auditors and committees · 2 marks

    Choose the CORRECT statement regarding the rotation requirement for auditors in section 92 of the Companies Act 71 of 2008.Show the full question