LML4806
ASSESSMENT 2
SEMESTER 2 – 2022
, Question: 1
The board of directors of Express Airlines Ltd is considering an offer from the
board of directors of Easy Airways Ltd, a company involved in the same type of
business, for the two companies to amalgamate or merge their businesses
because both companies are competing in a fairly small market. The proposal
is that Easy Airways Ltd will acquire and hold all the assets and liabilities of
Express Airlines Ltd. Express Airlines Ltd will then be deregistered and cease
to exist. Neither Easy Airways Ltd nor any person related to it holds or controls
any voting rights in Express Airlines Ltd.
The board of directors of Express Airlines Ltd suspects that a group of
shareholders holding between 10% and 20% of the voting rights in Express
Airlines Ltd will be opposed to the amalgamation or merger because Express
Airlines Ltd is far more successful than Easy Airways Ltd, and they want to
retain their shares in Express Airlines Ltd. The board seeks your advice
regarding the possibility of this group of shareholders being able to prevent the
amalgamation or merger.
With reference to the Companies Act 71 of 2008, advise the board of directors
of Express Airlines Ltd on how (if at all) the group of shareholders opposed to
the amalgamation or merger would be able to prevent the amalgamation or
merger from taking place. (15)
An amalgamation or merger occurs when two or more companies combine their assets
and liabilities, these assets and liabilities are then held by one or more of the surviving
companies OR by one or more newly formed companies, and all the other
amalgamating or merging companies then cease to exist upon completion of the
amalgamation or merger.
Such a transaction (amalgamation or merger) is a fundamental transaction and is also
an affected transaction if it involves one or more regulated companies.
Amalgamations or mergers are governed by section 113 of the Companies Act of
2008. Section 113(1) provides that two or more profit companies, including holding
and subsidiary companies, may amalgamate or merge if, upon completion of the
ASSESSMENT 2
SEMESTER 2 – 2022
, Question: 1
The board of directors of Express Airlines Ltd is considering an offer from the
board of directors of Easy Airways Ltd, a company involved in the same type of
business, for the two companies to amalgamate or merge their businesses
because both companies are competing in a fairly small market. The proposal
is that Easy Airways Ltd will acquire and hold all the assets and liabilities of
Express Airlines Ltd. Express Airlines Ltd will then be deregistered and cease
to exist. Neither Easy Airways Ltd nor any person related to it holds or controls
any voting rights in Express Airlines Ltd.
The board of directors of Express Airlines Ltd suspects that a group of
shareholders holding between 10% and 20% of the voting rights in Express
Airlines Ltd will be opposed to the amalgamation or merger because Express
Airlines Ltd is far more successful than Easy Airways Ltd, and they want to
retain their shares in Express Airlines Ltd. The board seeks your advice
regarding the possibility of this group of shareholders being able to prevent the
amalgamation or merger.
With reference to the Companies Act 71 of 2008, advise the board of directors
of Express Airlines Ltd on how (if at all) the group of shareholders opposed to
the amalgamation or merger would be able to prevent the amalgamation or
merger from taking place. (15)
An amalgamation or merger occurs when two or more companies combine their assets
and liabilities, these assets and liabilities are then held by one or more of the surviving
companies OR by one or more newly formed companies, and all the other
amalgamating or merging companies then cease to exist upon completion of the
amalgamation or merger.
Such a transaction (amalgamation or merger) is a fundamental transaction and is also
an affected transaction if it involves one or more regulated companies.
Amalgamations or mergers are governed by section 113 of the Companies Act of
2008. Section 113(1) provides that two or more profit companies, including holding
and subsidiary companies, may amalgamate or merge if, upon completion of the
