Exam (elaborations)
LML4806 Latest Exam Pack with Current Exam Answers, Semester 2 2023.
- Course
- Institution
Top quality exam pack with past exam papers from 2012 till 2023. All you need to get distinction!!!
[Show more]
2 reviews
By: Jontypj • 4 weeks ago
By: tarynskippers • 1 month ago
Seller
Follow
drgeeelectronic
Reviews received
Content preview
LML4806EXAM
Company Law Exam Pack Semester 2 2023
Terms of use
By making use of this document you agree to:
Use this document as a guide for learning,
comparison and reference purpose,
Not to duplicate, reproduce and/or misrepresent the
contents of this document as your own work,
Fully accept the consequences should you plagiarise
or misuse this document.
Disclaimer
Extreme care has been used to create this document, however the contents are provided as is without any representations or
warranties, express or implied. The author assumes no liability as a result of reliance and use of the contents of this
document. This document is to be used for comparison, research and reference purposes ONLY. No part of this document
may be reproduced, resold or transmitted in any form or by any means.
LML4806 Latest Exam Pack with
Current
Exam Answers, Semester 2 2023.
Exam Date: 3 November 2023
COMPANY LAW
EXAM OCTOBER 2022 SEMESTER 2
Bibliography included.
,QUESTION 1
1.1 Discuss the relevant section of the Companies Act 71 of 2008 that appears to be a
codification of the common-law Turquand rule and highlight the similarities and the differences
between the provisions of that particular section and the common-law Turquand rule. (10)
In terms of the common law Turquand rule, if the person acting on behalf of the company has
the authority to do so, but this is subject to an internal formality, such as approval by the board,
an outsider contracting with the company in good faith is entitled to assume that this internal
requirement has been complied with. Based on this, the company will be bound by the contract
even if the internal formality has not been complied with. A third party acting in good faith is
under no duty to enquire whether the company has complied with its internal formalities and
procedural requirements.
The basis of the Turquand rule is that bona fide third parties should not be prejudiced by a
company’s failure to comply with its own internal procedures and formal requirements.
The Turquand rule was formulated to keep an outsider’s duty to inquire into the affairs of the
company within reasonable bounds. To trigger the protection provided by the Turquand rule,
there must have been an internal requirement present. The practical effect of the Turquand rule
is that it prevents a company from escaping liability under an otherwise valid contract solely on
the grounds that some internal formality or procedure was not complied with. Proof by the
company that it has failed to fulfil its own internal formalities is not a sufficient basis for escaping
liability under the contract.
The formulation of the Turquand rule is regulated by Section 20(7) of Companies Act 71 of 2008
(the Act). Section 20(7) of the Act provides that a person dealing with a company in good faith,
other than a director, prescribed officer or shareholder of the company, is entitled to presume
that the company, in making any decision in the exercise of its powers, has complied with all
the formal and procedural requirements in terms of the Act, its Memorandum of Incorporation
and any rules of the company unless, in the circumstances, the person knew or ‘reasonably
ought to have known’ of any failure by the company to comply with any such requirement. This
provision applies to internal procedures and formalities even if they are prescribed by the Act.
, The fact that the internal formality is contained in a statute should make no difference to the
application of the section. Section 20(7) of the Act also applies to all of the company’s formal
and procedural requirements in terms of the company’s Memorandum of Incorporation or rules.
However, it does not replace the Turquand rule, in the sense that section 20(8) provides that
subsection (7) must be interpreted concurrently with, and not in substitution for, any relevant
common law principle relating to the presumed validity of the actions of a company. The
exceptions to the application of the statutory rule are not expressed in exactly the same way as
the common law exceptions: section 20(7) determines that the rule will not apply if the third
party knew or reasonably ought to have known that the internal requirement had not been
complied with.
1.2 David is a non-executive director and chairperson of Free State Airlines SOC Ltd, a
company that operates commercial flights between Johannesburg and Bloemfontein. David is
also one of the major shareholders of Aerial Lease (Pty) Ltd, an aircraft leasing company. In a
meeting chaired by David, and by a resolution proposed and supported by David, the board of
directors of Free State Airlines SOC Ltd decides to lease three commercial aircrafts from Aerial
Lease (Pty) Ltd. David does not inform the other directors of Free State Airlines SOC Ltd about
his existing shareholding in Aerial Lease (Pty) Ltd. The entire board of directors of Free State
Airlines SOC Ltd considers and approves the relevant lease agreement with Aerial Lease (Pty)
Ltd. However, the other directors of Free State Airlines SOC Ltd subsequently become aware
of David’s shareholding in Aerial Lease (Pty) Ltd and they now want to retract the lease
agreement.
With reference to the relevant provisions of the Companies Act 71 of 2008, advise the board of
directors of Free State Airlines SOC Ltd on the following matters:
1.2.1 Whether David has breached any specific duty that he owes to Free State Airlines SOC
Ltd by not informing the board of directors about his shareholding in Aerial Lease (Pty) Ltd. (10)
Directors have a fiduciary duty not to use confidential information for personal purposes and
such use would amount in a breach of fiduciary duties. Some of these include:
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 drgeeelectronic. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.54. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
72042 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now