LML4806 ASSIGNMENT 1 OF SEMESTER 1
2023
UNIQUE CODE: 702485
, QUESTION 1
Musa, Amos, Sipho and Jimmy are directors of Khubo Limited. Jimmy was appointed as an
executive director of Khubo Limited three years ago under a five-year contract of
employment with the company. Musa has expressed his concerns to the board of
directors that for the past two financial years Jimmy has been failing to ensure the timely
preparation and submission of the company’s annual financial statements, and that
Jimmy omitted to sign the annual financial statements for the previous financial year as
the authorised director, as required. Musa has also informed the board of directors that,
after joining Khubo Limited, Jimmy was removed as chairperson of the board of trustees
of the JF Pension Fund after he forged some documents and withdrew R2 million from the
JF Pension Fund’s bank account for his personal use. Advise Jimmy on the following:
1.1. Whether under the circumstances of this case the board of directors of Khubo
Limited will have valid grounds to remove him (Jimmy) as a director of the
company.1
In terms of section 71 of the Companies Act a director may be removed by an ordinary
resolution adopted at a shareholders meeting by the persons entitled to exercise voting
rights in an election of that director.
1
Refer to sections 61, 65(7)-(8), and 71 of the Companies Act 71 of 2008, paragraphs 11.7.2.3, 11.14.1 and
11.14.2 in the prescribed textbook and paragraphs 1.3, 1.14 and 2.13 in the study guide
1
2023
UNIQUE CODE: 702485
, QUESTION 1
Musa, Amos, Sipho and Jimmy are directors of Khubo Limited. Jimmy was appointed as an
executive director of Khubo Limited three years ago under a five-year contract of
employment with the company. Musa has expressed his concerns to the board of
directors that for the past two financial years Jimmy has been failing to ensure the timely
preparation and submission of the company’s annual financial statements, and that
Jimmy omitted to sign the annual financial statements for the previous financial year as
the authorised director, as required. Musa has also informed the board of directors that,
after joining Khubo Limited, Jimmy was removed as chairperson of the board of trustees
of the JF Pension Fund after he forged some documents and withdrew R2 million from the
JF Pension Fund’s bank account for his personal use. Advise Jimmy on the following:
1.1. Whether under the circumstances of this case the board of directors of Khubo
Limited will have valid grounds to remove him (Jimmy) as a director of the
company.1
In terms of section 71 of the Companies Act a director may be removed by an ordinary
resolution adopted at a shareholders meeting by the persons entitled to exercise voting
rights in an election of that director.
1
Refer to sections 61, 65(7)-(8), and 71 of the Companies Act 71 of 2008, paragraphs 11.7.2.3, 11.14.1 and
11.14.2 in the prescribed textbook and paragraphs 1.3, 1.14 and 2.13 in the study guide
1
