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Exam (elaborations)

LML4806 EXAM PACK 2024/25

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LML4806 EXAM PACK 2024/25 QUESTIONS WITH RESPECTIVE ANSWERS FOR EXAM REVISON.

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  • October 11, 2024
  • 70
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
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lOMoAR cPSD| 47389193

, lOMoAR cPSD| 47389193




LML4806 EXAM QUESTIONS AND ANSWERS

QUESTION 1 [27]

1.1 The board of directors of Scarrow Iron Ltd wants to convene the annual general

meeting of the company9s shareholders.

With reference to the Companies Act 71 of 2008, advise the board of directors on the

matters that must, at a minimum, be dealt with at the annual general meeting. (7)

(Your answer must not exceed half a page)

1.2 Thandeka, a shareholder of Scarrow Iron Ltd, has received written notification

from the company that the annual general meeting of the company would be held in

ten days9 time. The notice does not inform the shareholders of the purpose of the

meeting.

With reference to the relevant provisions of the Companies Act 71 of

2008 and the facts provided, discuss whether the notice of the shareholders9

meeting given in the above scenario is valid. (7)

(Your answer must not exceed one page)

1.3 The Memorandum of Incorporation of Educat Group Ltd states that the main

business of the company is the development, acquisition and management of

independent schools and tertiary education institutions. The board of directors of

Educat Group Ltd concludes a contract to purchase a luxury yacht on behalf of the

company from Exclusive Yachts (Pty) Ltd.

, lOMoAR cPSD| 47389193




1.3.1 With reference to the relevant provisions of the Companies Act 71 of 2008 and

the facts provided, advise the board of directors whether the purchase of a luxury

yacht is a valid transaction that can be legally enforced by Exclusive Yachts (Pty)

Ltd. (5)

(Your answer must not exceed one page)

1.3.2 Explain what the doctrine of constructive notice entails and identify the two

circumstances in which this doctrine would be applicable to a company under the

Companies Act 71 of 2008. (8)




QUESTION 2 [23]

You are a legal advisor of Fisher Technology Ltd (8the company9). The company9s

Memorandum of Incorporation has not changed the default position in terms of the

Companies Act 71 of 2008 regarding the provision of financial assistance or

regarding the declaration and payment of dividends.

The company has shown a significant increase in profits. The board of directors

would, therefore, like to propose a final dividend of R5.50 per share which will be

paid out to the company9s ordinary shareholders.

The board of directors would also like to lend Gareth, the chief executive officer of

the company, an amount of R10 million, interest-free and on condition that he repays

such loan within 30 years. The company will not be taking any security from Gareth

for the loan.

, lOMoAR cPSD| 47389193




2.1 With reference to the relevant provisions of the Companies Act 71 of 2008,

discuss the formalities that must be followed before the dividend proposed by the

board of directors may be declared and paid. (8)

(Your answer must not exceed one page)

2.2 Outline the requirements of the Companies Act 71 of 2008 that must be complied

with in order for the company to provide financial assistance to Gareth. (12)

(Your answer must not exceed two pages)

2.3 Advise the board of directors whether the loan of R10 million may validly be given

to Gareth. (3)

(Your answer must not exceed half a page)

QUESTION 3 [10]

Lexie is a director of Spice Galore Ltd. Spice Galore Ltd needed to appoint a new

marketing agent to market and advertise its products in Gauteng. At a meeting of the

board of directors, Lexie persuaded the board to appoint Premium Marketing CC by

convincing the board that this corporation would be ideal for this task. However,

Lexie did not disclose to the board the fact that her husband, Vishal, had a

substantial member9s interest in Premium Marketing CC. She also did not disclose

to the board the fact that Premium Marketing CC did not have the necessary

capacity and experience to market diverse products for a large company such as

Spice Galore Ltd. Premium Marketing CC was appointed as the new marketing

agent for Spice Galore Ltd, but a few months later it became clear that Spice Galore

Ltd had suffered substantial losses in Gauteng because its products were not being

advertised effectively. A number of shareholders of Spice Galore Ltd are upset by the

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