ODR NOTES
Semester Test 2
Date à 18 October 2023
Scope à Study Unit: 13, 14, 15
Exam
Date à 20 November 2023
Scope à Study Unit: 1, 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 17, 18
GOODLUCK STUDYING! J
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, STUDY UNIT 1: INTRODUCTION TO BUSINESS STRUCTURES
*** EXAM WORK ***
INTRODUCTION TO COMPANIES
COMPANIES
LEGISLATION - Companies Act 71 of 2008 (CA).
LEGAL PERSONALITY - Separate legal entity à separate from
owners.
SEQUESTRATION OR LIQUIDATION? - Liquidation à assets are sold.
MANAGEMENT - S66 CA à Board of directors manage
the company.
REPRESENTATION - Board of directors OR an agent can
enter into contracts on behalf of the
company.
FORMALITIES - Registering the company.
OWNERSHIP - Shareholders own the company
- For non-profit companies à members.
CREATION - Memorandum of Incorporation (MOI) is
compulsory.
- Shareholders agreement is optional.
PERSONAL LIABILITY - Normally no personal liability à but
there are exceptions.
PERPETUAL SUCCESSION - Company continues to exist à despite
any change in membership.
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, STUDY UNIT 7: COMPANIES ACT AND SEPARATE LEGAL ENTITY
*** EXAM WORK ***
INTRODUCTION TO THE COMPANIES ACT
Who are the main role players in companies?
Shareholders
- They do not manage the company à they only invest (using capital)
o The investment is in exchange for the right to attend shareholders
meetings and vote.
Directors / “the board”
- S66 CA à they control / manage the company.
Creditors
- The company owes them money.
How does the company function?
Decisions are made on majority vote (s1 CA)
- Majority vote à ordinary resolution (shareholders holding 51%).
In some cases, more than 51% is needed
- Special resolution (s1 CA) à shareholders holding 75%
o This protects minority shareholders in big decisions.
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, SEPARATE LEGAL PERSONALITY
Effect of a legal personality
Companies have a separate legal personality to their shareholders à meaning:
- Salomon v Salomon à an incorporated company is independent of its
shareholders (even if 1 person holds all the shares).
- Daddoo case à a company owns immovable property (not its shareholders).
Piercing / lifting the corporate veil
A separate legal personality for a company is not absolute
- Courts may disregard it in the case of unconscionable abuse.
When can this remedy (piercing the corporate veil) be used?
- Common law position à not used anymore
o Botha case à strict and rigid approach where unconscionable abuse
must be proven (Exceptional remedy).
o Cape Pacific case à Botha was too rigid, and this remedy can be used
even if other remedies are available (Not exceptional remedy).
o Hulse-Reutter case à this is an exceptional remedy which cannot be
used while other remedies are available (Exceptional remedy).
- Current position à s20(9) CA provides for unconscionable abuse BUT:
o Gore case à s20(9) should be interpreted widely, so the remedy can
be used as a regular corporate remedy, even where other remedies
are available (Not exceptional remedy).
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
Semester Test 2
Date à 18 October 2023
Scope à Study Unit: 13, 14, 15
Exam
Date à 20 November 2023
Scope à Study Unit: 1, 7, 8, 9, 10, 11, 12, 13, 14,
15, 16, 17, 18
GOODLUCK STUDYING! J
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, STUDY UNIT 1: INTRODUCTION TO BUSINESS STRUCTURES
*** EXAM WORK ***
INTRODUCTION TO COMPANIES
COMPANIES
LEGISLATION - Companies Act 71 of 2008 (CA).
LEGAL PERSONALITY - Separate legal entity à separate from
owners.
SEQUESTRATION OR LIQUIDATION? - Liquidation à assets are sold.
MANAGEMENT - S66 CA à Board of directors manage
the company.
REPRESENTATION - Board of directors OR an agent can
enter into contracts on behalf of the
company.
FORMALITIES - Registering the company.
OWNERSHIP - Shareholders own the company
- For non-profit companies à members.
CREATION - Memorandum of Incorporation (MOI) is
compulsory.
- Shareholders agreement is optional.
PERSONAL LIABILITY - Normally no personal liability à but
there are exceptions.
PERPETUAL SUCCESSION - Company continues to exist à despite
any change in membership.
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, STUDY UNIT 7: COMPANIES ACT AND SEPARATE LEGAL ENTITY
*** EXAM WORK ***
INTRODUCTION TO THE COMPANIES ACT
Who are the main role players in companies?
Shareholders
- They do not manage the company à they only invest (using capital)
o The investment is in exchange for the right to attend shareholders
meetings and vote.
Directors / “the board”
- S66 CA à they control / manage the company.
Creditors
- The company owes them money.
How does the company function?
Decisions are made on majority vote (s1 CA)
- Majority vote à ordinary resolution (shareholders holding 51%).
In some cases, more than 51% is needed
- Special resolution (s1 CA) à shareholders holding 75%
o This protects minority shareholders in big decisions.
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
, SEPARATE LEGAL PERSONALITY
Effect of a legal personality
Companies have a separate legal personality to their shareholders à meaning:
- Salomon v Salomon à an incorporated company is independent of its
shareholders (even if 1 person holds all the shares).
- Daddoo case à a company owns immovable property (not its shareholders).
Piercing / lifting the corporate veil
A separate legal personality for a company is not absolute
- Courts may disregard it in the case of unconscionable abuse.
When can this remedy (piercing the corporate veil) be used?
- Common law position à not used anymore
o Botha case à strict and rigid approach where unconscionable abuse
must be proven (Exceptional remedy).
o Cape Pacific case à Botha was too rigid, and this remedy can be used
even if other remedies are available (Not exceptional remedy).
o Hulse-Reutter case à this is an exceptional remedy which cannot be
used while other remedies are available (Exceptional remedy).
- Current position à s20(9) CA provides for unconscionable abuse BUT:
o Gore case à s20(9) should be interpreted widely, so the remedy can
be used as a regular corporate remedy, even where other remedies
are available (Not exceptional remedy).
These notes have been made by KL Davey, please do not distribute them or resell them. I do
not claim this work as my own, all intellectual credit goes to the author of the prescribed
textbook, the lecturer, and the University of Pretoria. I am not responsible for any missing /
misinformation, it is your own responsibility to ensure you have studied all the correct
material for the test.
