JUSTICE TRAINING CENTRE - 2022

FINAL EXAMINATION

SUBJECT: Commercial Transactions and Drafting of Contracts

DATE: Monday, 21 November 2022

TOTAL MARKS: 100

LECTURERS: Ms.MiaKellerman(mia@eSrnamibta-eom)
Dr. Meyer van den Berg (hvandenberq@unam.na)

INSTRUCTIONS TO CANDI DATES :

(1) All questions. must be answered.

(2) Please write legibly.

(3) Bad spelling and grammar and sloppy work will count against you.

(4) \Mth the exception of the true / false questions, do NOT answer questions with
one-word responses only. Use full, loglcal, well-constructed sentences.
Responses not containing at least a verb will not be marked.

(5) Refer to relevant Acts / Regulations / Ruled where applicable.

(6) Where a question requires you to discuss a relevant provision or principle, it is

not enough just to identify that provision or principle. You need to show that
you understand the provision or principle.
 PART A: BUSINESS ENTITIES

Question '1:

[6 marks]
Mention six factors that someone must consider when determining the most suitdble
business entity.

Question 2:
[4 marks]
Brieflv discuss the differences between the actio pro socio and the actio communi
dividundo.

Question 3:

[20 marks]
Your client, Stan Smith, is a shareholder in Langley lnvestments (Pty) Ltd. He holds
40o/o of the shares and his colleac::es, Avery Bullock and Terry Lewis, hold the other
60% in equal shares. Langley lnvestments (Pty) Ltd conducts business as a private
investigation agency. All three shareholders are directors as well. Stan comes to you
with several questions about private compantes.

3.1 . What are the rights of shareholders of private companies?

[6 marks]

3.2. Are there instances where a shareholder of a prlvate company can be liable for
the debts of the company?

[4 marks]

3.3. lf the shareholders want to stop doing business, can they merely deregister the
company?

[3 marks]

3.4. lf the shareholders want to apply to court for liquidation and winding-up of the
company on the grounds of insolvency, what are the different tests for
insolvency that the court may consider?

ff marksl
Question 4:

[20 marks]
Below are twenty statements. lndicate whether each statement is true or false. You
need to answer with "true" or "false" oEIy.

4.1. A minor cannot hold shares in a company.

4.2. A sole proprietor can be liable to register for VAT.

4.3. The assets of a partnership vest in the managing partner.

4.4. A prartnership agreement does not have to be in writing. ta

4.5. The sole trustee of a trust can never be a beneflciary.

4.6 A partnership does not have separate legal identity.

4.7. AIi partners in a partnership must share in the proflts of the partnership.

4.8. The assets of a trust vest in the founder.

4.9. A paftnership agreement cannot terminate by agreement between the partners.

4.10. Court sanction is required to issue shares at a discount.

4.11. The afticles of association of a company deals with its external relations.

4.12. Directors can never be criminally liable for acts performed in their capacities as
directors.

4.13. Changes in share capital of companies require a special resolution by the

members.

4.14. A share in a company is considered movable property.

 4.15. ln both private and public companies, shareholders have a preferent right over
the shares held by other shareholders.

4.16. The directors of a company supervise the judicial management process.

4.17. Shareholders are the ultimate owners of a company.

4.18. ln a public company, the shareholders can be held personally liable if the
number of members drop below ten for more than six months.

4.19. A deregistered company can be restored.

F

4.20. Private companies do not have to be audited.

4
 PART B: DRAFTING OF CONTRACTS

911 Medical Services CC is a start-up emergency medical senrices provider in

Windhoek (.CC"). The CC approached National Bank Limited to finance the purchase
of an ambulance, which it requires for the services to be rendered.

National Bank agreed to finance the ambulance and will enter into a hire purchase
agreement with the CC accordingly. The purchase price of the ambulance is
N$580,000.00, which must be repaid by the CC to National Bank over a 5 year term
and will attract interest at the prime lending rate +1%. As security, for the transaction,
Nationil Bank requires the CC's majority member (holding 70o/o of the members
interest), Mr lsak Doeseb, to provide a personal suretyship, binding him for the full
principal debt and interest thereon, in favour of National Bank.

National Bank approached your firm to draft the requisite security document, Please
draft accordingly.

[50 marks]