How often Directors: duties and liability is asked

Where it was asked

• Oct/Nov 202310 marks
• May/Jun 202233 marks
• May/Jun 20182 marks

The questions

1. Oct/Nov 2023, Q2.1.25 marks

   The Memorandum of Incorporation of Contempo (Pty) Ltd contains two provisions: first, that if the company issues new shares, those shares must be offered to the company's existing shareholders before anyone else; and second, that directors hold their office for life. Anthea is a director of Contempo (Pty) Ltd. The board of directors removes Anthea from her position as director. Considering clause 2 of Contempo (Pty) Ltd's Memorandum of Incorporation (which states that directors hold office for life), discuss whether Anthea can rely on this clause either to prevent her removal as director or to claim damages for her premature removal.

2. Oct/Nov 2023, Q2.35 marks

   Furniture Whole Sales (Pty) Ltd's main business is manufacturing and distributing furniture. Its Memorandum of Incorporation contains clauses providing that: any director of the company may conclude contracts on behalf of the company; the right of directors to enter into loan agreements on behalf of the company is limited to an amount of R1 million; and prior approval by the shareholders in a general meeting is required for loans exceeding R1 million. The company's financial director concludes a loan agreement for R5 million on behalf of the company, without any shareholders' meeting having been held to approve the loan. Advise the shareholders of Furniture Whole Sales (Pty) Ltd, in terms of the Companies Act 71 of 2008, whether this loan agreement is valid and enforceable against the company.

3. May/Jun 2022, Q2.15 marks

   John and Rina wish to incorporate a catering company together, to be named Delish (Pty) Ltd. Before the company is registered, John notices a delivery vehicle that would be ideal for use in their catering business. Without discussing them, simply list the different methods that could be used to conclude a contract that would bind Delish (Pty) Ltd once it is eventually registered.

4. May/Jun 2022, Q2.26 marks

   Abednego had been employed as a manager of The Joint CC before his employment was terminated. After being retrenched, he approached the Commission for Conciliation, Mediation and Arbitration (the CCMA) seeking severance pay. The trade union to which Abednego belongs cited The Joint CC as the respondent in its referral to the CCMA. During conciliation, Bongani Khumalo, the sole member of The Joint CC, indicated that The Joint CC was insolvent and that Abednego had in fact been dismissed for operational reasons. The commissioner then advised Abednego to refer an unfair dismissal dispute instead. After hearing the matter, the commissioner ordered The Joint CC to pay Abednego R250 000 for his unfair dismissal. It later emerged that The Joint CC had no assets, and that Bongani Khumalo had personally provided financial assistance to The Joint CC and held secured claims against it for repayment of those loans, repayment of which would render the close corporation completely insolvent. Abednego now intends to apply to the Labour Court for an order declaring that Bongani Khumalo, rather than The Joint CC, was his true employer, and that Khumalo (not the close corporation) must pay him the R250 000. With reference to relevant case law, indicate what statutory provision and/or common law principle in company law Abednego must rely on to hold Bongani Khumalo liable instead of the close corporation.

5. May/Jun 2022, Q2.36 marks

   Briefly set out the information that must be contained in a notice convening a meeting of a private company, in terms of the Companies Act 71 of 2008.