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 ...
question 1 11 briefly explain to two prospective entrepreneurs
whether or not the requirements for the piercing of the corporat
Written for
University of South Africa (Unisa)
MRL2601 - Entrepreneurial Law
All documents for this subject (197)
Seller
Follow
LLBExampacksAndTutorials
Reviews received
Content preview
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)
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. The wording of the section is a
combination of section 65 of the Close Corporations Act and the judgment in
Botha v Van Niekerk. It ignores the view expressed in Cape Pacific Ltd v Lubner
Controlling Investments (Pty) Ltd that described the test in Botha v van Niekerk
as too rigid. We do now know what test will be used and it remains to be seen
how the courts will decide what would constitute an unconscionable abuse and
to what extent they will use the existing case law dealing with the common-law
rule of piercing the corporate veil. It therefore seems that there are still no hard
and fast rules; no general discretion of the courts and that the fact of each case
will still have to be taken into consideration when deciding whether to pierce the
corporate veil.
1.2 Frank is an Information Technology (IT) specialist. He wishes to
incorporate a company for his business. He does not want to offer
any securities to the public.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LLBExampacksAndTutorials. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.69. You're not tied to anything after your purchase.
