LML4806 Exam Portfolio 19 October – 20 October
Student number:
Student name:
Module Code: LML4806
QUESTION 1
1.1
With reference to the Companies Act 71 of 2008 and the facts provided,
advise Oliver whether his arguments hold merit, and whether the ordinary
resolutions were validly passed at the meeting. (12)
If every shareholder of a company (other than a state-owned company) is also a
director of the company, any matter that is required to be referred by the board to
the shareholders for decision may be dealt with in terms of section 57(4) of the
Companies Act 71 of 2008. The effect of this section is that a matter may be
referred by the board to the shareholders without notice or compliance with any
internal formalities. However, this is subject to the Memorandum of Incorporation
which may provide otherwise. Therefore, as all the shareholders of Exclusive
Properties (Pty) Ltd are directors of the company, section 57(4) of the Companies
Act 71 of 2008 would be applicable, unless the Memorandum of Incorporation
provides otherwise.
Section 57(4) requires the following:
Every person must be present at the board meeting when the matter was referred
to them in their capacity as shareholders. A sufficient number of persons must be
present in their capacity as shareholders to satisfy the quorum requirements as set
out in section 64 of the Companies Act.
A resolution adopted by the shareholders be supported by shareholders holding at
least the percentage of shares required for adopting an ordinary resolution at a
properly constituted shareholders’ meeting. In this case, Oliver was not present at
the meeting. Therefore, the first proviso is not satisfied because not every person
was present at the board meeting when the matter was referred to them in their
capacity as shareholders.
The default position for a quorum to be satisfied is that at least 25% of all the
voting rights eligible to be exercised in respect of at least one matter to be decided
at the meeting must be present before the meeting may start. Since four out of five
shareholders were present at the meeting, the quorum requirements for the
meeting were satisfied.
The default position for the support of an ordinary resolution is that shareholders
holding more than 50% of the voting rights exercised must vote in favour of the
resolution. In conclusion, Oliver’s objection is valid because not every person was
present at the board meeting when the matter was referred to them in their
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, capacity as shareholders. Therefore, the ordinary resolutions were not validly
passed ( oliver’s objections holds merits
1.2
With reference to appropriate authority and the facts provided, discuss
whether Generators Unlimited (Pty) Ltd is bound by the contract concluded
by Nthabiseng and Matthews. (10)
• Refer to section 20(7) of the Companies Act 71 of 2008.
• A third party dealing with the company in good faith may assume that that the
company has complied with all of the formal and procedural requirements in terms
of the Companies Act 71 of 2008 and the company’s Memorandum of
Incorporation and rules unless he or she knew or reasonably ought to have been
aware that they had not been complied with. Application
• There is no indication from the facts that Nthabiseng knew or reasonably ought
to have known that Maki had failed to comply with the procedural requirement in
terms of the Memorandum of Incorporation.
• There is also no indication that Nthabiseng was aware of the fact that Maki did
not comply with procedural requirement, and that she had acted in bad faith.
• The contract is valid, and the company will be bound to it.
Nthabiseng must prove the requirements for Estoppel. She must prove:
• That Generators Unlimited (Pty) Ltd (i.e., the misrepresentation was made
by the company).
• The misrepresentation was made intentionally or negligently that Maki in
fact had the necessary authority to represent the company. o
• That she, as a reasonable third party, was induced to deal/ conclude the
contract with Maki on the basis of the misrepresentation. o
• That she was prejudiced/ suffered damage due to the misrepresentation.
• Refer to Freeman & Lockyer v Buckhurst Park Properties as authority.
QUESTION 2
2.1 Explain to Jaydin whether the board of directors of Thaba Indle Ltd
contravened the provisions of the Companies Act 71 of 2008 in the following
circumstances:
2.1.1 When the board issued the ordinary shares to Nathi. (3)
Legal principles : in terms of section 41(I) of the Companies Act 71 of 2008, the
approval of the shareholders by special resolution is required where the issue of
shares is to a present director or prescribed officer of the company. Legal
principles : in terms of section 41(I) of the Companies Act 71 of 2008, the approval
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Student number:
Student name:
Module Code: LML4806
QUESTION 1
1.1
With reference to the Companies Act 71 of 2008 and the facts provided,
advise Oliver whether his arguments hold merit, and whether the ordinary
resolutions were validly passed at the meeting. (12)
If every shareholder of a company (other than a state-owned company) is also a
director of the company, any matter that is required to be referred by the board to
the shareholders for decision may be dealt with in terms of section 57(4) of the
Companies Act 71 of 2008. The effect of this section is that a matter may be
referred by the board to the shareholders without notice or compliance with any
internal formalities. However, this is subject to the Memorandum of Incorporation
which may provide otherwise. Therefore, as all the shareholders of Exclusive
Properties (Pty) Ltd are directors of the company, section 57(4) of the Companies
Act 71 of 2008 would be applicable, unless the Memorandum of Incorporation
provides otherwise.
Section 57(4) requires the following:
Every person must be present at the board meeting when the matter was referred
to them in their capacity as shareholders. A sufficient number of persons must be
present in their capacity as shareholders to satisfy the quorum requirements as set
out in section 64 of the Companies Act.
A resolution adopted by the shareholders be supported by shareholders holding at
least the percentage of shares required for adopting an ordinary resolution at a
properly constituted shareholders’ meeting. In this case, Oliver was not present at
the meeting. Therefore, the first proviso is not satisfied because not every person
was present at the board meeting when the matter was referred to them in their
capacity as shareholders.
The default position for a quorum to be satisfied is that at least 25% of all the
voting rights eligible to be exercised in respect of at least one matter to be decided
at the meeting must be present before the meeting may start. Since four out of five
shareholders were present at the meeting, the quorum requirements for the
meeting were satisfied.
The default position for the support of an ordinary resolution is that shareholders
holding more than 50% of the voting rights exercised must vote in favour of the
resolution. In conclusion, Oliver’s objection is valid because not every person was
present at the board meeting when the matter was referred to them in their
Page | 1
, capacity as shareholders. Therefore, the ordinary resolutions were not validly
passed ( oliver’s objections holds merits
1.2
With reference to appropriate authority and the facts provided, discuss
whether Generators Unlimited (Pty) Ltd is bound by the contract concluded
by Nthabiseng and Matthews. (10)
• Refer to section 20(7) of the Companies Act 71 of 2008.
• A third party dealing with the company in good faith may assume that that the
company has complied with all of the formal and procedural requirements in terms
of the Companies Act 71 of 2008 and the company’s Memorandum of
Incorporation and rules unless he or she knew or reasonably ought to have been
aware that they had not been complied with. Application
• There is no indication from the facts that Nthabiseng knew or reasonably ought
to have known that Maki had failed to comply with the procedural requirement in
terms of the Memorandum of Incorporation.
• There is also no indication that Nthabiseng was aware of the fact that Maki did
not comply with procedural requirement, and that she had acted in bad faith.
• The contract is valid, and the company will be bound to it.
Nthabiseng must prove the requirements for Estoppel. She must prove:
• That Generators Unlimited (Pty) Ltd (i.e., the misrepresentation was made
by the company).
• The misrepresentation was made intentionally or negligently that Maki in
fact had the necessary authority to represent the company. o
• That she, as a reasonable third party, was induced to deal/ conclude the
contract with Maki on the basis of the misrepresentation. o
• That she was prejudiced/ suffered damage due to the misrepresentation.
• Refer to Freeman & Lockyer v Buckhurst Park Properties as authority.
QUESTION 2
2.1 Explain to Jaydin whether the board of directors of Thaba Indle Ltd
contravened the provisions of the Companies Act 71 of 2008 in the following
circumstances:
2.1.1 When the board issued the ordinary shares to Nathi. (3)
Legal principles : in terms of section 41(I) of the Companies Act 71 of 2008, the
approval of the shareholders by special resolution is required where the issue of
shares is to a present director or prescribed officer of the company. Legal
principles : in terms of section 41(I) of the Companies Act 71 of 2008, the approval
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