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Question: 1
Multicuisine Ltd wishes to sell shares to a newly incorporated company called
Multicuisine Ramatla (RF) Ltd to enable Multicuisine Ltd to comply with Broad-
Based Black Economic Empowerment (BBBEE) legislation in South Africa.
Multicuisine Ramatla (RF) Ltd does not have the money to pay for the shares.
Multicuisine Ltd provides a loan of R85 million to Multicuisine Ramatla (RF) Ltd,
and Multicuisine Ramatla (RF) Ltd uses the loan to purchase 850 000 ordinary
shares in Multicuisine Ltd. This loan is to be repaid over a period of 10 years by
using the dividends declared by Multicuisine Ltd.
Question
With reference to the Companies Act 71 of 2008 and appropriate
authority, indicate the type of company that Multicuisine Ramatla (RF)
Ltd falls under and discuss in detail whether Multicuisine Ltd has
provided financial assistance for the purchase of its securities.
Answer:
Type of Company:
Multicuisine Ramatla (RF) Ltd is a private company (Pty) Ltd
incorporated under the Companies Act 71 of 2008. It is a special
purpose vehicle established to acquire shares in Multicuisine Ltd to