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Company Law
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09 March 2015

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Question 1
1.1 Juristic person
A Juristic Person is a company, a close corporation, a body corporate or a trust which the law
allows a group of natural persons to act as if it were a single composite individual for certain
purposes, or in some jurisdictions, for a single person to have a separate legal personality other
than their own. This legal fiction does not mean these entities are human beings, but rather
means that the law recognizes them and allows them to act as natural persons for some purposes
most commonly lawsuits, property ownership, and contracts.
1.2 Pre-incorporation contract
A pre incorporation contract is one which is purportedly made by or on behalf of a corporation at
a time when the corporation has not yet been incorporated. Because the corporation named in the
promoter's contract has not been formed at the time the contract is made, the corporation when
formed is not bound by the contract. However, adoption of the contract is anticipated by the
parties to the contract
1.3 Ratification
Ratification means affirmation or approval. By ratifying an act or action, a person becomes
responsible for the consequences of that act or action. Ratification can be implied or express.
However, whether there is an implied ratification depends on the circumstances of the case.
1.4 Articles of Association
The Articles of Association is a document that contains the purpose of the company as well as
the duties and responsibilities of its members defined and recorded clearly. Information typically
required to be included are the name and address of the corporation, its general purpose and the
number and type of shares of stock to be issued and any special characteristics.
1.5 Share capital
Share capital is the money invested in a company by the shareholders. Share capital is a longterm source of finance. There are two general types of share capital, which are common stock
and preferred stock. The amount of share capital is governed by law and is termed Authorised
share capital. The company then issue any amount as long as it does not exceed the authorised, it
is known as issued share capital.
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1.6. Proxy
In law, a proxy is an agent or substitute authorized to act for another person. In companies
proxies usually substitute principal shareholders in their absence at general meetings
1.7 Express authority
It arises in a principal-agent relationship in which an agent has actual authority. The actual
authority is then express authority when the principal explicitly tells the agent what to
1.8 Voting majority
A voting majority typically arises when more than half of the members who cast a vote agree in
order for the entire body to make a decision on the measure being voted on.

Question 2

A restriction on the free transferability of its shares

A limitation on the number of members
A prohibition on invitations to the public to subscribe for its shares or debentures

Preference shares
Ordinary shares
Deferred shares


The proportion of a members nominal value of shares to the total nominal value of the company
should be the same as the members proportion of par value shares to total votes in the company.

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Question 3

The companys constitution states that shareholders must appoint a managing director. The
constitution of Westies Minerals (Pty) ltd does not however state the number of directors
required to appoint the managing director but the companies act section 217 allows subscribers
to memorandum to appoint director in writing. Clearly the two shareholders, who appointed
peter, signed a letter thus making the managing directors appointment valid.
Peters appointment as a director was valid however as a director, he was given limitations in
terms of his power i.e. limiting his contractual capacity to N$5million. Knowing that, he had a
fiduciary duty to observe the limitations of his own authority to act on behalf of the company.
Such limitations however cannot be used as an argument to free the company from its contractual
obligations with the seller of the mineral crusher. The company is bound by the contract entered
by Peter and the contract is valid because the appointment of Peter was valid.

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Question 4
It is a special resolution.
Notice requirements:
Written notice convening the meeting must have been given 21 days before the meeting date
The notice had to state the intention to propose the resolution as a special resolution
The resolution has not been passed because of the following:
Total votes present in meeting (1200/5000 x 100) = 24%. The first requirement for a special
resolution is the quorum requirement which requires at least one quarter (25%) of the total votes
in the company to be present. The meeting held by Fishcor Ltd only had 24% thus the quorum
requirement was not met.
Secondly, of the votes represented at the meeting, at least three quarters (75%) of the members
entitled to vote on a show of hands must vote in favour. Annie holding (500/1200 = 42%) is the
only one who showed hands.

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Question 5
The auditor does not have a contractual or fiduciary relationship with third parties. My claim has
to be established on the basis of the general principles of common law delictual liability. All
delicts in Namibian law can be defined as follows: A wrongful and culpable act or omission
causing damage to another. In modern Namibian law damage can consist of injury to ones
dignitas and feelings on the one hand or pure economic loss on the other hand. These are the five
elements in any delictual claim which have to be satisfied before liability can be imposed on the

The Act
Wrongfulness or Wrongfulness as omission

The act occurred so there is no arguing that. Although wrongfulness may be seen as a separate
element to the act, or a failure to act when action was required (in other words an omission) it
is convenient and conceptually economical to treat all ideas together. Fault is a subjective
enquiry and is concerned with the state of mind of the wrongdoer and we cannot accurately judge
the state of mind of the Auditor. There is factual causation in this case in that the actions
wrongful and culpable conduct of the auditor caused the damage or harm for which
compensation is sought. It is possible to prove the amount of damages.
Therefore it is possible to claim damages from the auditor

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