Company Law
Essay Questions
2020
These notes are compiled as handouts for the use of registered TLL students. They
are not for sale and may not be copied or distributed or made available to any other
person(s).
TLL is not associated with UNISA in any manner and provides private tuition for
U...
company law essay questions 2020 these notes are compiled as handouts for the use of registered tll students they are not for sale and may not be copied or distributed or made
These notes are compiled as handouts for the use of registered TLL students. They
are not for sale and may not be copied or distributed or made available to any other
person(s).
TLL is not associated with UNISA in any manner and provides private tuition for
UNISA LL.B students.
Bongani has been a non-executive director of Apex (Pty) Ltd since 2012. He is also a
director and sole shareholder of a management consultancy business, Infinity (Pty)
Ltd. Apex (Pty) Ltd is undergoing a process of internal restructuring. Without knowing
of Bongani’s involvement with Infinity (Pty) Ltd, one of the other directors of Apex (Pty)
Ltd proposes to the board of directors of Apex (Pty) Ltd that Infinity (Pty) Ltd should
be approached for advice on the recruitment of key staff. The board of directors of
Apex (Pty) Ltd will be voting on this issue at the next board meeting which is scheduled
for next week.
(a) Bongani seeks your advice. He wants to know whether he must disclose his
interest in this matter to the board of directors of Apex (Pty) Ltd and if so, what
procedure he must adopt to do so. (8)
Unisa’s comment
These circumstances are regulated by section 75 of the Companies Act 71 of
2008 (‘the Act’). It provides that if a director has a personal financial interest in
respect of a matter to be considered at a meeting of the board, the director must
disclose the interest and its general nature before the matter is considered at
the meeting.
A personal financial interest is defined in section 1 of the Act as meaning a
direct material interest of that person of a financial, monetary or economic
nature, or to which a monetary value may be attributed.
Bongani has a personal financial interest in this matter because Infinity (Pty)
Ltd (of which Bongani is a director and sole shareholder) will benefit financially
if Apex (Pty) Ltd appoints Infinity (Pty) Ltd to provide advice to it on the
recruitment of staff.
Therefore, Bongani must disclose his interest in the matter.
1
, The procedure for Bongani to disclose his interest is as follows:
1. He must disclose his interest and its general nature to the board of
directors before the matter is considered at the meeting.
2. He must disclose any material information relating to the matter and
known by him.
3. He may disclose any observations or pertinent insights relating to the
matter if requested to do so by other directors.
4. If present at the meeting, Bongani must leave the meeting after making
any disclosure.
5. He must not take part in the consideration of the matter.
6. He must not execute any document on behalf of the company in relation
to the matter unless specifically requested or directed to do so by the
board.
(b) Assume that Bongani does not disclose his interest. Explain whether the
contract between Apex (Pty) Ltd and Infinity (Pty) Ltd will nonetheless be valid.
(7)
Unisa’s comment
Section 75(7) of the Act provides that a board decision or a transaction or
agreement approved by the board is valid despite any personal financial
interest of a director or a person related to a director, only if –
a) it was approved following disclosure of that interest in the manner
contemplated in section 75
b) despite having been approved without disclosure of that interest, it –
i) has subsequently been ratified by an ordinary resolution of the
shareholders after disclosure of the interest or
2
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 bmm7203. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.49. You're not tied to anything after your purchase.
