LML4806
ASSIGNMENT 2 (SEMESTER 1)..
DUE DATE: May 2025..
PREVIEW:
QUESTION 1
1.1 Valid Basis for Removal
Mashudu has substantial legal grounds to seek Peter’s removal as a director of Star Engineering (Pty) Ltd.
Under the Companies Act 71 of 2008, directors are obligated to act in the best interests of the company
and to ensure compliance with statutory requirements. Peter’s failure to fulfill these duties constitutes
valid reasons for his removal.
One of the most fundamental responsibilities of a director, particularly an executive director, is to ensure
the timely preparation and submission of annual financial statements. Section 30 of the Companies Act
explicitly requires companies to prepare and submit their financial statements within six months after
the end of the financial year. Peter has failed to comply with this obligation for two consecutive
financial years, demonstrating serious negligence in discharging his duties. Furthermore, his failure to
sign the annual financial statements as the authorised director for the previous financial year
aggravates the situation, as this is a necessary legal requirement.
In addition, Section 76 of the Companies Act sets out the fiduciary duties of directors, which include the
duty to:
1. Act in good faith and in the best interests of the company
2. Perform their functions with the necessary care, skill, and diligence
3. Ensure compliance with the law and the company’s financial obligations
Disclaimer:
Peter’s continued failure to uphold these fiduciary duties reflects gross negligence and a disregard for
The materials provided are intended for educational and informational purposes only. They should not be
corporate governance, which negatively impacts Star Engineering (Pty) Ltd. His actions (or lack thereof)
submitted as original work or used in violation of any academic institution's policies. The buyer is solely
could also expose the company to legal and financial risks, such as penalties for non-compliance, loss of
responsible for how the materials are used.
investor confidence, and reputational damage.
Additionally, Section 77 of the Companies Act provides that directors can be held personally liable for
losses suffered by the company due to gross negligence, recklessness, or willful misconduct. If Peter’s
ASSIGNMENT 2 (SEMESTER 1)..
DUE DATE: May 2025..
PREVIEW:
QUESTION 1
1.1 Valid Basis for Removal
Mashudu has substantial legal grounds to seek Peter’s removal as a director of Star Engineering (Pty) Ltd.
Under the Companies Act 71 of 2008, directors are obligated to act in the best interests of the company
and to ensure compliance with statutory requirements. Peter’s failure to fulfill these duties constitutes
valid reasons for his removal.
One of the most fundamental responsibilities of a director, particularly an executive director, is to ensure
the timely preparation and submission of annual financial statements. Section 30 of the Companies Act
explicitly requires companies to prepare and submit their financial statements within six months after
the end of the financial year. Peter has failed to comply with this obligation for two consecutive
financial years, demonstrating serious negligence in discharging his duties. Furthermore, his failure to
sign the annual financial statements as the authorised director for the previous financial year
aggravates the situation, as this is a necessary legal requirement.
In addition, Section 76 of the Companies Act sets out the fiduciary duties of directors, which include the
duty to:
1. Act in good faith and in the best interests of the company
2. Perform their functions with the necessary care, skill, and diligence
3. Ensure compliance with the law and the company’s financial obligations
Disclaimer:
Peter’s continued failure to uphold these fiduciary duties reflects gross negligence and a disregard for
The materials provided are intended for educational and informational purposes only. They should not be
corporate governance, which negatively impacts Star Engineering (Pty) Ltd. His actions (or lack thereof)
submitted as original work or used in violation of any academic institution's policies. The buyer is solely
could also expose the company to legal and financial risks, such as penalties for non-compliance, loss of
responsible for how the materials are used.
investor confidence, and reputational damage.
Additionally, Section 77 of the Companies Act provides that directors can be held personally liable for
losses suffered by the company due to gross negligence, recklessness, or willful misconduct. If Peter’s
