LML4806 QUALITY ANSWERS 💯
24 OCTOBER 2024
EXAMINATION ELABORATION
💯Pass guarantee
OCTOBER/NOVEMBER 2024
LML4806
COMPANY LAW
80 marks
Duration
, QUESTION 1
1.1 Stefan, the chairperson of JP Textiles Ltd, is concerned that many shareholders and
proxies who are based outside Johannesburg and overseas may not be able to attend
the upcoming AGM in person. Under Section 63(2) of the Companies Act, a company
can hold a general meeting in such a way that shareholders are able to attend and
participate in the meeting through electronic communication.1 This means that JP
Textiles Ltd can set up an electronic system, such as video conferencing or
teleconferencing, to allow shareholders and proxies to attend the meeting remotely. The
technology used must enable shareholders to participate in the discussions and vote on
resolutions during the meeting as if they were physically present. By implementing
electronic participation, JP Textiles Ltd will ensure that it complies with the Companies
Act, providing all shareholders a fair and reasonable opportunity to engage in the AGM,
regardless of their location.2
1.2 SA Renewables Ltd and Green Energy Ltd are related companies, we refer to
Section 2 of the Companies Act 71 of 2008, which defines related companies as
companies that are directly or indirectly controlled by the same entity, or where one
company controls another. In this scenario, SA Renewables Ltd holds 40% of the
ordinary shares in Green Energy Ltd, and New Technologies Ltd, a wholly owned
subsidiary of SA Renewables Ltd, holds an additional 25% of Green Energy Ltd’s
shares.3 Since SA Renewables Ltd indirectly holds 65% of the shares in Green Energy
Ltd, it effectively controls Green Energy Ltd. Control is established when one company
holds more than 50% of the shares in another, either directly or indirectly. Therefore, SA
Renewables Ltd and Green Energy Ltd are related companies within the meaning of the
Companies Act.4
1.2.2 Before SA Renewables Ltd can authorise the agreement to repay a loan on
behalf of Investment Solutions (Pty) Ltd, the directors must comply with the
requirements of Section 45 of the Companies Act 71 of 2008.5 Section 45 regulates the
provision of financial assistance by a company to a related or interrelated company for
purposes such as purchasing shares or other financial transactions. In this case, SA
1
Companies Act 71 of 2008, s 63(2).
2
Companies Act 71 of 2008, s 63(2).
3
Companies Act 71 of 2008, s 63(2).
4
Companies Act 71 of 2008, s 63(2).
5
Companies Act 71 of 2008, s 45(3).
24 OCTOBER 2024
EXAMINATION ELABORATION
💯Pass guarantee
OCTOBER/NOVEMBER 2024
LML4806
COMPANY LAW
80 marks
Duration
, QUESTION 1
1.1 Stefan, the chairperson of JP Textiles Ltd, is concerned that many shareholders and
proxies who are based outside Johannesburg and overseas may not be able to attend
the upcoming AGM in person. Under Section 63(2) of the Companies Act, a company
can hold a general meeting in such a way that shareholders are able to attend and
participate in the meeting through electronic communication.1 This means that JP
Textiles Ltd can set up an electronic system, such as video conferencing or
teleconferencing, to allow shareholders and proxies to attend the meeting remotely. The
technology used must enable shareholders to participate in the discussions and vote on
resolutions during the meeting as if they were physically present. By implementing
electronic participation, JP Textiles Ltd will ensure that it complies with the Companies
Act, providing all shareholders a fair and reasonable opportunity to engage in the AGM,
regardless of their location.2
1.2 SA Renewables Ltd and Green Energy Ltd are related companies, we refer to
Section 2 of the Companies Act 71 of 2008, which defines related companies as
companies that are directly or indirectly controlled by the same entity, or where one
company controls another. In this scenario, SA Renewables Ltd holds 40% of the
ordinary shares in Green Energy Ltd, and New Technologies Ltd, a wholly owned
subsidiary of SA Renewables Ltd, holds an additional 25% of Green Energy Ltd’s
shares.3 Since SA Renewables Ltd indirectly holds 65% of the shares in Green Energy
Ltd, it effectively controls Green Energy Ltd. Control is established when one company
holds more than 50% of the shares in another, either directly or indirectly. Therefore, SA
Renewables Ltd and Green Energy Ltd are related companies within the meaning of the
Companies Act.4
1.2.2 Before SA Renewables Ltd can authorise the agreement to repay a loan on
behalf of Investment Solutions (Pty) Ltd, the directors must comply with the
requirements of Section 45 of the Companies Act 71 of 2008.5 Section 45 regulates the
provision of financial assistance by a company to a related or interrelated company for
purposes such as purchasing shares or other financial transactions. In this case, SA
1
Companies Act 71 of 2008, s 63(2).
2
Companies Act 71 of 2008, s 63(2).
3
Companies Act 71 of 2008, s 63(2).
4
Companies Act 71 of 2008, s 63(2).
5
Companies Act 71 of 2008, s 45(3).
