LML4806 PAST EXAM ANSWER
FOR ECP 2021
ANSWERS
JOSEPH
0784683517
, QUESTION 1
1.1
According to section 63(2) of the Companies Act of 71 of 2008 (the Act), TMT Group
Limited may provide for a shareholders meeting to be conducted by electronic
communication, provided that the Memorandum of Incorporation does not prohibit it. This
implies that TMT Group Limited may conduct the shareholders’ meeting by video
conference, unless this is prohibited by its Memorandum of Incorporation. A meeting by
electronic communication may be conducted provided that the notice of the meeting sent
out by TMT Group Limited informs shareholders of the availability of participating in the
meeting by electronic communication. This is subject to the proviso that all participants
must be able to communicate concurrently with each other without an intermediary, and
must be able to participate reasonably effectively in the meeting.
It has to be pointed out that permitting shareholders to participate in meetings
electronically and to vote electronically would encourage them to play a more active role
in the company’s affairs. Flexibility is maintained by permitting a company in its
Memorandum of Incorporation to restrict electronic meetings if it so chooses. A
shareholder (or proxy) must pay for the access to the electronic communication (unless
the company determines otherwise).
In light of the above, the shareholders will be liable for the costs of accessing the meeting
by video conference unless TMT Group Limited decides otherwise.
1.2
The two sources the directors of Thorstein Retail Group Ltd can employ are equity
financing and debt financing. Equity financing means issuing of shares in return for
money, which makes up the share capital of a company. Debt financing involves the
loans, which could either be loans by, for instance, a bank or debt securities issued in a
similar manner to shares. The providers of equity financing are the shareholders of a
company. They receive a return on their investment in the form of dividends. If the
company is wound up, and after all the creditors of the company have been paid, the
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FOR ECP 2021
ANSWERS
JOSEPH
0784683517
, QUESTION 1
1.1
According to section 63(2) of the Companies Act of 71 of 2008 (the Act), TMT Group
Limited may provide for a shareholders meeting to be conducted by electronic
communication, provided that the Memorandum of Incorporation does not prohibit it. This
implies that TMT Group Limited may conduct the shareholders’ meeting by video
conference, unless this is prohibited by its Memorandum of Incorporation. A meeting by
electronic communication may be conducted provided that the notice of the meeting sent
out by TMT Group Limited informs shareholders of the availability of participating in the
meeting by electronic communication. This is subject to the proviso that all participants
must be able to communicate concurrently with each other without an intermediary, and
must be able to participate reasonably effectively in the meeting.
It has to be pointed out that permitting shareholders to participate in meetings
electronically and to vote electronically would encourage them to play a more active role
in the company’s affairs. Flexibility is maintained by permitting a company in its
Memorandum of Incorporation to restrict electronic meetings if it so chooses. A
shareholder (or proxy) must pay for the access to the electronic communication (unless
the company determines otherwise).
In light of the above, the shareholders will be liable for the costs of accessing the meeting
by video conference unless TMT Group Limited decides otherwise.
1.2
The two sources the directors of Thorstein Retail Group Ltd can employ are equity
financing and debt financing. Equity financing means issuing of shares in return for
money, which makes up the share capital of a company. Debt financing involves the
loans, which could either be loans by, for instance, a bank or debt securities issued in a
similar manner to shares. The providers of equity financing are the shareholders of a
company. They receive a return on their investment in the form of dividends. If the
company is wound up, and after all the creditors of the company have been paid, the
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