LML4806
ASSIGNMENT 2
DUE DATE: 10 APRIL 2025
, LML4806
2 ASSIGNMENT 2
Question: 1
Mashudu and Peter are the only directors of Star Engineering (Pty) Ltd. Peter was appointed
as an executive director of Star Engineering (Pty) Ltd two years ago under a five-year
contract of employment with the company. Mashudu is concerned that for the past two
financial years Peter has been failing to ensure the timely preparation and submission of the
company’s annual financial statements, and that Peter omitted to sign the annual financial
statements for the previous financial year as the authorised director, as required. Mashudu
approaches you for legal advice regarding the removal of a company director. Advise
Mashudu on the following matters:
1.1 Whether there is any valid basis to remove Peter as a director of Star Engineering
(Pty) Ltd.
Grounds for Removal
Peter’s failure to ensure the timely preparation and submission of annual financial statements,
as well as his omission to sign them, may constitute a breach of his statutory and fiduciary
duties as a director.¹ Under the Companies Act 71 of 2008 (“the Act”), directors are required
to exercise their powers and perform their functions:
In good faith and for a proper purpose;²
With the degree of care, skill, and diligence reasonably expected of a person carrying out
their functions;³ and
ASSIGNMENT 2
DUE DATE: 10 APRIL 2025
, LML4806
2 ASSIGNMENT 2
Question: 1
Mashudu and Peter are the only directors of Star Engineering (Pty) Ltd. Peter was appointed
as an executive director of Star Engineering (Pty) Ltd two years ago under a five-year
contract of employment with the company. Mashudu is concerned that for the past two
financial years Peter has been failing to ensure the timely preparation and submission of the
company’s annual financial statements, and that Peter omitted to sign the annual financial
statements for the previous financial year as the authorised director, as required. Mashudu
approaches you for legal advice regarding the removal of a company director. Advise
Mashudu on the following matters:
1.1 Whether there is any valid basis to remove Peter as a director of Star Engineering
(Pty) Ltd.
Grounds for Removal
Peter’s failure to ensure the timely preparation and submission of annual financial statements,
as well as his omission to sign them, may constitute a breach of his statutory and fiduciary
duties as a director.¹ Under the Companies Act 71 of 2008 (“the Act”), directors are required
to exercise their powers and perform their functions:
In good faith and for a proper purpose;²
With the degree of care, skill, and diligence reasonably expected of a person carrying out
their functions;³ and
