Question: 1
Barbara is a business rescue practitioner of Thirsty Elephants (Pty) Ltd, a company that is under
business rescue. She convenes a meeting of the creditors of Thirsty Elephants (Pty) Ltd to
discuss and vote on the business rescue plan. The business rescue plan contains ample
provi...
QUALITY ANSWERS FOR ASSIGNMENT 2 LML4806 2024
COMPANY LAW
MODULE CODE: LML4806
ASSIGNMENT 02 (2024)
QUESTION 1
In terms of section 153(1)(a)(ii) of the Companies Act 71 of 2008 if a business rescue
plan has been rejected the business rescue practitioner may advise the meeting that the
company will apply to a court to set aside the result of the vote on the grounds that it
was inappropriate. In terms of section 153(7) (1) of the Companies Act, in such an
application a court may order the vote on the business rescue plan to be set aside if the
court is satisfied that it is reasonable and just to do so.
The court will have regard to the following factors:
• The interests represented by the person who voted against the proposed business
rescue plan
• The provision, if any, made in the proposed business rescue with respect to the
interests of that person and
• A fair and reasonable estimate of the return to that person if the company were to be
liquidated.
In the case of First Rand Bank Ltd v KJ Foods CC which is prescribed. In First Rand
Bank Ltd v KJ Foods CC the Supreme Court of Appeal held that the vote would be set
aside on the grounds that its result was inappropriate if it is reasonable and just to do
so. The court held that this is a single enquiry and a value judgment made after
consideration of all the facts and circumstances. The Supreme Court of Appeal held
further that the effect of a court setting aside the result of the vote is that the business
rescue plan is adopted by operation of law. This is because the Companies Act does
not envisage another round of voting on the business rescue plan.
, QUESTION 2
2.1 The is a fundamental transaction associated with the acquisition and merger of
another company liability and assets and since Catalyst holding Ltd is a public listed
company that means that this is a regulated transaction and this is an affected
transaction and merger and acquisition regulations will apply.
2.2 • In terms of section 2(1)(c) of the Companies Act 71 of 2008, a juristic person is
related to another juristic person if either of them directly or indirectly controls the
other or the business of the other, as determined in accordance with subsection 2;
• If either is a subsidiary of the other; or
• A person directly or indirectly controls each of them or the business of each of them,
as determined in accordance with subsection (2).
In terms sections 1 and 2 of the Companies Act, one company is related to another
company if:
• one company directly or indirectly controls another company (or its
business), or
• one company is a subsidiary of another company.
Paragraph 8.4.1.4 of the prescribed textbook states that a person controls a
company if that person, together with any related or inter-related person–
• is directly or indirectly able to exercise or control the exercise of a majority
of the voting rights associated with securities of that company, whether
pursuant to a shareholder agreement or otherwise, or
• has the right to appoint or elect, or control the appointment or election of,
directors of that company who control a majority of the votes at a meeting
of the board.
In this case, Catalyst holdings Ltd together with Tyrex Properties Ltd are related.
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