2022 OCTOBER EXAM SOLUTIONS - Entrepreneurial Law (MRL2601)
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Course
MRL2601 - Entrepreneurial Law (MRL2601)
Institution
University Of South Africa (Unisa)
QUESTION 1
1.1 Briefly explain to two prospective entrepreneurs, Thandeka and Mike, whether or not the requirements for the piercing of the corporate veil in terms of the Companies Act 71 of 2008 and the Close Corporations Act 69 of 1984 are identical. Refer to case law in your answer. (5)
1.2 Fr...
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MARK RECEIVED FOR ASSIGNMENT 01: …………………………………………..
MARK RECEIVED FOR ASSIGNMENT 02: …………………………………………..
, QUESTION 1
1.1 Briefly explain to two prospective entrepreneurs, Thandeka and Mike,
whether or not the requirements for the piercing of the corporate veil in
terms of the Companies Act 71 of 2008 and the Close Corporations Act 69
of 1984 are identical. Refer to case law in your answer. (5)
Piercing the corporate veil’ refers to those exceptional circumstances where the
court ignores the separate legal existence of the company and treats the
shareholders as if they were the owners of the assets and had conducted the
business of the company in their personal capacities OR attributes certain rights
or obligations of the shareholders to the company. The Companies Act 71 of
2008 follows the example of the Close Corporations Act by codifying the
general principle of piercing the corporate veil. Section 20(9) of the Companies
Act 71 of 2008 provides that if a court finds that the incorporation of a
company or any act by or use of a company constitutes an unconscionable
abuse of its juristic personality, the court may declare that the company will be
deemed not to be a juristic person in respect of rights, liabilities and obligations
relating to the abuse.
Section 65 of the Close Corporations Act [69 of 1984] provides as follows:
“Whenever a Court on application by an interested person, or in any proceedings
in which a corporation is involved, finds that the incorporation of, or any act by or
on behalf of, or any use of, that corporation, constitutes a gross abuse of the
juristic personality of the corporation as a separate entity, the Court may declare
that the corporation is to be deemed not to be a juristic person in respect of such
rights, obligations or liabilities of the corporation, or of such member or members
thereof, or of such other person or persons, as are specified in the declaration,
and the Court may give such further order or orders as it may deem fit in order to
give effect to such declaration.”
Therefore it can be said that the requirements for the piercing of the corporate
veil in terms of the Companies Act 71 of 2008 and the Close Corporations Act 69
of 1984 are identical.
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