LML4806 Assignment 1 Semester 1 2024

LML4806
Assignment 1 Semester 1 – 2024
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QUESTION: 1

Mandla is both a director and shareholder of Cargo Logistics Ltd. He wants to
buy more shares in Cargo Logistics Ltd but does not have enough money to do
so. He offers to rent out a warehouse to Cargo Logistics Ltd. Cargo Logistics
Ltd agrees to pay R1.2 million per annum as rent for the warehouse. Mandla then
uses part of the money to purchase 10 000 shares in Cargo Logistics Ltd.

With reference to the relevant case law, statutory provisions and the facts
provided in the above scenario, discuss whether Cargo Logistics Ltd has
provided financial assistance for the purchase of its securities. (6)



To determine whether a planned transaction qualifies as financial aid related to the
acquisition of shares, the transaction must undergo two stages. The first stage
involves determining whether the transaction qualifies as financial help, while the
subsequent stage involves assessing whether the financial aid is intended for the
acquisition of shares in a firm.