LML4806 question with answers
What info must be contained in a compromise proposal? - -- any proposals made "informally" by a
company creditor
- details of all assets and creditors
- treatment of ongoing contracts
- order of preference, proceeds apply
- conditions precedent
- number of employees
- t&c of employment
- projected balance sheet
- income and expenses for 3 years
- certificate by authorized director stating info is factual, accurate, up to date
-When will compromise be adopted and binding - -- S155(6) adopted if supported by a majority in
number representing at least 75% in value of creditors
- A company may apply to court for an order approving the proposal
- suggests it is not necessary for a company to obtain sanction of High Court before a compromise
becomes binding on dissenting creditors
-Record date - -- determines certain rights of shareholders
- S59(1) a company may set a record date for purpose of determining which shareholders are entitled to
receive the notice, vote etc
- latest date by which the company is required to give notice to SH of the meeting, or date of action or
event
- board fail to set date, date is last day on which notice should be given to SH of SH meeting (public = 15
bdays; private = 10 bdays)
-Compromise - -- agreement or arrangement or restructuring of claims between a company and its
creditors in terms of which the creditors agree to accept less than their full claims against the company
- binding on all companies creditors
-Compromise proposal is divided into three parts - -- background
- the proposal itself
- assumptions and conditions
-How is proposal of compromise effected? - -- by delivery of a copy of the proposal
- and notice of a meeting to consider the proposal to the Companies Commission and to every creditor
of the company or every member of the relevant class of creditors whose name and address is known or
can reasonable be obtained by the company
-When is compromise proposal adopted - -- when supported by a majority in number
- representing at least 75% in value of creditors present & voting (or proxy)
-If a compromise is approved by court? - -- company must file a copy of the order with Companies
Commission within 5 business days
- copy must be attache to each copy of Company MOI
, - order of court is final and binding on all creditors or class of creditors from the date on which a copy of
the order is filed
-Company Secretary - -- public & state owned company are obliged to appoint one
- company must maintain record of company secretaries
- secretary is chief administration officer
- should be someone with knowledge of and experience in relevant legislation
- accountable to board of directors
- duties - guide directors on duties; powers & responsibilities; make directors aware of law
- board may adopt a resolution to remove company secretary
-How do you hold a SH meeting w/o everyone present - -PROXY
- S58
- appointment must be in writing & signed
- speak & vote on behalf of SH
WRITTEN RESOLUTION
- S60
- must be submitted to SH for consideration
- adopted by same % of support as is required to pass the res at a meeting
- SH must vote on res within 20 business days after res was submitted to them
- company must deliver a statement to SH describing the results of vote within 10 business days after
company adopted written resolution
-Delinquency - -- S162(1)
- person grossly abused the position of director
- took personal advantage of info or an opportunity contrary to S76(2)(a)
- intentionally or by gross negligence inflicted harm upon the company or subsidiary of company
- acted in a manner that amounted to gross negligence, wilful misconduct or breach of trust in relation
to the performance of the directors functions
- Gihwala v Grancy property - 3 directors appropriated financial benefit or themselves. Court held that
their conduct entailed gross abuse of position of director. Action was intentional. Therefore breach of
trust
-RF company - -- when MOI contains special conditions
- special conditions is a condition which restricts or prohibits the amendment of any particular provision
in the MOI of a company
- purpose of RF is to draw attention of 3rd parties to the presence of special conditions in MOI
-Group of companies - -- a holding company and all its subsidiaries
-Wholly owned subsidary - -- a company in which all of the voting rights are held by another person or
persons
-Shareholder meeting - quorum & adjournment requirement? - -- S64 meeting may not begin until at
least 25% of all voting rights are present (subject to company MOI)
- for companies with more than 2 SH, at least 3 SH present & 25% requirement
What info must be contained in a compromise proposal? - -- any proposals made "informally" by a
company creditor
- details of all assets and creditors
- treatment of ongoing contracts
- order of preference, proceeds apply
- conditions precedent
- number of employees
- t&c of employment
- projected balance sheet
- income and expenses for 3 years
- certificate by authorized director stating info is factual, accurate, up to date
-When will compromise be adopted and binding - -- S155(6) adopted if supported by a majority in
number representing at least 75% in value of creditors
- A company may apply to court for an order approving the proposal
- suggests it is not necessary for a company to obtain sanction of High Court before a compromise
becomes binding on dissenting creditors
-Record date - -- determines certain rights of shareholders
- S59(1) a company may set a record date for purpose of determining which shareholders are entitled to
receive the notice, vote etc
- latest date by which the company is required to give notice to SH of the meeting, or date of action or
event
- board fail to set date, date is last day on which notice should be given to SH of SH meeting (public = 15
bdays; private = 10 bdays)
-Compromise - -- agreement or arrangement or restructuring of claims between a company and its
creditors in terms of which the creditors agree to accept less than their full claims against the company
- binding on all companies creditors
-Compromise proposal is divided into three parts - -- background
- the proposal itself
- assumptions and conditions
-How is proposal of compromise effected? - -- by delivery of a copy of the proposal
- and notice of a meeting to consider the proposal to the Companies Commission and to every creditor
of the company or every member of the relevant class of creditors whose name and address is known or
can reasonable be obtained by the company
-When is compromise proposal adopted - -- when supported by a majority in number
- representing at least 75% in value of creditors present & voting (or proxy)
-If a compromise is approved by court? - -- company must file a copy of the order with Companies
Commission within 5 business days
- copy must be attache to each copy of Company MOI
, - order of court is final and binding on all creditors or class of creditors from the date on which a copy of
the order is filed
-Company Secretary - -- public & state owned company are obliged to appoint one
- company must maintain record of company secretaries
- secretary is chief administration officer
- should be someone with knowledge of and experience in relevant legislation
- accountable to board of directors
- duties - guide directors on duties; powers & responsibilities; make directors aware of law
- board may adopt a resolution to remove company secretary
-How do you hold a SH meeting w/o everyone present - -PROXY
- S58
- appointment must be in writing & signed
- speak & vote on behalf of SH
WRITTEN RESOLUTION
- S60
- must be submitted to SH for consideration
- adopted by same % of support as is required to pass the res at a meeting
- SH must vote on res within 20 business days after res was submitted to them
- company must deliver a statement to SH describing the results of vote within 10 business days after
company adopted written resolution
-Delinquency - -- S162(1)
- person grossly abused the position of director
- took personal advantage of info or an opportunity contrary to S76(2)(a)
- intentionally or by gross negligence inflicted harm upon the company or subsidiary of company
- acted in a manner that amounted to gross negligence, wilful misconduct or breach of trust in relation
to the performance of the directors functions
- Gihwala v Grancy property - 3 directors appropriated financial benefit or themselves. Court held that
their conduct entailed gross abuse of position of director. Action was intentional. Therefore breach of
trust
-RF company - -- when MOI contains special conditions
- special conditions is a condition which restricts or prohibits the amendment of any particular provision
in the MOI of a company
- purpose of RF is to draw attention of 3rd parties to the presence of special conditions in MOI
-Group of companies - -- a holding company and all its subsidiaries
-Wholly owned subsidary - -- a company in which all of the voting rights are held by another person or
persons
-Shareholder meeting - quorum & adjournment requirement? - -- S64 meeting may not begin until at
least 25% of all voting rights are present (subject to company MOI)
- for companies with more than 2 SH, at least 3 SH present & 25% requirement
