AUI4862Assignment 2 2025
Unique Number:
Due date: 2025
QUESTION 1
1.1.
The Companies Act 71 of 2008 lays out strict requirements to manage conflicts of interest
involving directors and prescribed officers. The relationship between Thabo Shabalala, a
director of Holiday Factory (Pty) Ltd, and Oscar, the majority shareholder of Iceland (Pty) Ltd
(the supplier in the contract), raises a potential personal financial interest situation, even if
Thabo himself does not directly benefit from the transaction.
1. Disclosure of Personal Financial Interest (Section 75):
Under section 75(4) of the Act, a director who has a personal financial interest in a matter to
be considered by the board must:
Disclose the nature and extent of that interest before the matter is discussed.
Recuse themselves from the meeting during the discussion and decision-making on
the matter (section 75(5)(e)).
Not influence or attempt to influence the decision.
DISCLAIMER & TERMS OF USE
Educational Aid: These study notes are intended to be used as educational resources and should not be seen as a
replacement for individual research, critical analysis, or professional consultation. Students are encouraged to perform
their own research and seek advice from their instructors or academic advisors for specific assignment guidelines.
Personal Responsibility: While every effort has been made to ensure the accuracy and reliability of the information in
these study notes, the seller does not guarantee the completeness or correctness of all content. The buyer is
responsible for verifying the accuracy of the information and exercising their own judgment when applying it to their
assignments.
Academic Integrity: It is essential for students to maintain academic integrity and follow their institution's policies
regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
inspiration. Any direct reproduction of the content without proper citation and acknowledgment may be considered
academic misconduct.
Limited Liability: The seller shall not be liable for any direct or indirect damages, losses, or consequences arising from
the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
consequences resulting from the application or misuse of the information provided.
, For additional support +27 81 278 3372
QUESTION 1
1.1.
The Companies Act 71 of 2008 lays out strict requirements to manage conflicts of
interest involving directors and prescribed officers. The relationship between Thabo
Shabalala, a director of Holiday Factory (Pty) Ltd, and Oscar, the majority
shareholder of Iceland (Pty) Ltd (the supplier in the contract), raises a potential
personal financial interest situation, even if Thabo himself does not directly benefit
from the transaction.
1. Disclosure of Personal Financial Interest (Section 75):
Under section 75(4) of the Act, a director who has a personal financial interest in a
matter to be considered by the board must:
Disclose the nature and extent of that interest before the matter is discussed.
Recuse themselves from the meeting during the discussion and decision-
making on the matter (section 75(5)(e)).
Not influence or attempt to influence the decision.
Ensure that the disclosure is recorded in the minutes of the meeting.
A personal financial interest includes an indirect benefit—such as a benefit to a
family member (in this case, Thabo’s brother), which may amount to an indirect
interest under the Act.
2. Validity of the Contract:
If Thabo failed to disclose his indirect interest or participated in the meeting, the
company may have breached the Act. However, the contract itself may still be valid
under section 75(8), if:
Shareholder approval was obtained, particularly if required by the company’s
Memorandum of Incorporation (MOI).
The MOI clause cited in the scenario specifically requires prior approval by
poll in a general meeting for contracts where a director or prescribed officer
Unique Number:
Due date: 2025
QUESTION 1
1.1.
The Companies Act 71 of 2008 lays out strict requirements to manage conflicts of interest
involving directors and prescribed officers. The relationship between Thabo Shabalala, a
director of Holiday Factory (Pty) Ltd, and Oscar, the majority shareholder of Iceland (Pty) Ltd
(the supplier in the contract), raises a potential personal financial interest situation, even if
Thabo himself does not directly benefit from the transaction.
1. Disclosure of Personal Financial Interest (Section 75):
Under section 75(4) of the Act, a director who has a personal financial interest in a matter to
be considered by the board must:
Disclose the nature and extent of that interest before the matter is discussed.
Recuse themselves from the meeting during the discussion and decision-making on
the matter (section 75(5)(e)).
Not influence or attempt to influence the decision.
DISCLAIMER & TERMS OF USE
Educational Aid: These study notes are intended to be used as educational resources and should not be seen as a
replacement for individual research, critical analysis, or professional consultation. Students are encouraged to perform
their own research and seek advice from their instructors or academic advisors for specific assignment guidelines.
Personal Responsibility: While every effort has been made to ensure the accuracy and reliability of the information in
these study notes, the seller does not guarantee the completeness or correctness of all content. The buyer is
responsible for verifying the accuracy of the information and exercising their own judgment when applying it to their
assignments.
Academic Integrity: It is essential for students to maintain academic integrity and follow their institution's policies
regarding plagiarism, citation, and referencing. These study notes should be used as learning tools and sources of
inspiration. Any direct reproduction of the content without proper citation and acknowledgment may be considered
academic misconduct.
Limited Liability: The seller shall not be liable for any direct or indirect damages, losses, or consequences arising from
the use of these notes. This includes, but is not limited to, poor academic performance, penalties, or any other negative
consequences resulting from the application or misuse of the information provided.
, For additional support +27 81 278 3372
QUESTION 1
1.1.
The Companies Act 71 of 2008 lays out strict requirements to manage conflicts of
interest involving directors and prescribed officers. The relationship between Thabo
Shabalala, a director of Holiday Factory (Pty) Ltd, and Oscar, the majority
shareholder of Iceland (Pty) Ltd (the supplier in the contract), raises a potential
personal financial interest situation, even if Thabo himself does not directly benefit
from the transaction.
1. Disclosure of Personal Financial Interest (Section 75):
Under section 75(4) of the Act, a director who has a personal financial interest in a
matter to be considered by the board must:
Disclose the nature and extent of that interest before the matter is discussed.
Recuse themselves from the meeting during the discussion and decision-
making on the matter (section 75(5)(e)).
Not influence or attempt to influence the decision.
Ensure that the disclosure is recorded in the minutes of the meeting.
A personal financial interest includes an indirect benefit—such as a benefit to a
family member (in this case, Thabo’s brother), which may amount to an indirect
interest under the Act.
2. Validity of the Contract:
If Thabo failed to disclose his indirect interest or participated in the meeting, the
company may have breached the Act. However, the contract itself may still be valid
under section 75(8), if:
Shareholder approval was obtained, particularly if required by the company’s
Memorandum of Incorporation (MOI).
The MOI clause cited in the scenario specifically requires prior approval by
poll in a general meeting for contracts where a director or prescribed officer
