NAME: MOKOLOKOLO MOSA LEKGAU

STUDENT NUMBER: 26922444

MODULE: MERCANTILE LAW 292
DATE: 27/02/2024
SECTION A
QUESTION 1
D. This Statement reflects the Principles that disregarding the separate legal personalities of the
individual companies within a group can constitute an abuse of legal personality, as established in the
legal precedent of Ex Parte Gore.
QUESTION 2
C. In The Case of WSAG, the association has a constitution outlining its purpose and operations . It
organises activities, such as the annual remembrance day on Robben Island, and raises Funds through
the sales of hot dogs. The fact that it can open a bank account in its own name and conducts its affairs
independently suggests that it may have a legal personality under the common law.
QUESTION 3
False. Many type of business enterprise have legal personality, not all of them. For Example, a sole
Proprietorship typically does not have legal personality separate from its owner, whereas partnership,
trust, close corporation, and companies typically do. Each type of business entity is governed by
different legal rules regarding its formation, structure, and legal personality.
QUESTION 4
True. The companies Act of 2008 does indeed provide for an extensive system of criminal liability for
contraventions and non-compliance with the Act. This includes provisions for various offenses such
as fraudulent trading, reckless trading, failure to keep proper accounting records, and more. Criminal
liability service as one of the main enforcement mechanism of the Act, aiming to deter misconduct
and ensure compliance with corporate laws and regulations.
QUESTION 5
False. Companies do not have the same constitutional rights as individuals. While some rights, like
the right to property, may extend to companies, the right to privacy is typically not recognized as
applying to companies in the same way it does to individuals. However, there may be certain privacy
protections afforded to companies under specific laws or regulations related to business
confidentiality or data protection.
QUESTION 6
False. While a shareholder who holds 100% of the shares in a private company and is also the sole
director has significant control over the company, they are not considered the "owner" of the
company's assets in the same sense as one would own personal property. In corporate law, there is a
concept known as the "separate legal personality" of a company, which means that the company is
considered a legal entity separate from its shareholders and directors.
The assets of the company are owned by the company itself, not by its shareholders or directors
individually. Shareholders have ownership rights in the form of shares, which represent their
ownership interest in the company, but they do not directly own the company's assets. Instead, they
have rights to dividends, voting rights, and other entitlements associated with their shareholding.
So, while the shareholder/director may have significant control over the company, they do not
personally own the assets of the company.
QUESTION 7
True. The statement "The Companies Act of 2008 is not a codification of company law" means that
the Companies Act of 2008 does not encompass all aspects of company law within its provisions.
Instead, it provides a framework for the regulation of companies in South Africa but does not cover
every detail of company law. Therefore, company law rules from common law, which are not
explicitly overridden or addressed by the Companies Act, may still apply in certain circumstances.
SECTION B
QUESTION 1
Partnership seems to be the most suitable option for Caleb and Dimpho to establish their landscaping
business because Partnerships typically have fewer regulatory requirements and formalities compared
to other business entities like companies. They do not require formal registration with the
government, although it's advisable to have a written partnership agreement outlining the terms of
their partnership.
Caleb and Dimpho want to be the only people involved in the management of the entity. In a
partnership, each partner is directly involved in the management and decision-making of the business.
There are no formal board of directors or shareholders to answer to, allowing for more autonomy and
control.
Caleb and Dimpho are willing to put their personal assets on the line for the debts or liabilities of the
business. In a partnership, each partner is personally liable for the debts and obligations of the
business. This aligns with their willingness to take on personal risk for the business.
QUESTION 2
James and Mitch's defense regarding the locus standi of the association, Beauty for Men, may not be
successful. Locus standi refers to the legal standing or capacity of a party to bring a claim or action in
court.
In this case, Beauty for Men is an association formed by James, Lindokuhle, and Mitch, with the
purpose of promoting the services of its members and creating awareness about male beauty and
grooming. It appears that Beauty for Men has been actively engaging in business activities, including
purchasing office equipment, renting office space, and employing a marketing expert.
Furthermore, Beauty for Men has a contractual agreement with the owner of the office space,
indicating that it has legal rights and obligations as an entity. This suggests that Beauty for Men has
legal standing to enter into contracts and engage in legal proceedings.
Given that Beauty for Men is actively conducting business operations and has incurred damages due
to the actions of its members, it is likely that the association would have standing to sue James and
Mitch for breach of duty. The fact that they have breached their duty of trust against the association
by working privately with Kate to obtain potential clients for their own businesses strengthens Beauty
for Men's case.
Therefore, James and Mitch's defense regarding the locus standi of Beauty for Men may not be
successful, as the association appears to have the legal capacity to bring a claim against its members
for breaching their duties. However, the final determination would depend on the specific legal
provisions and circumstances of the case, as well as the arguments presented by both parties in court
 QUESTION 3
Doogz may have recourse to pursue a remedy against Sexton (Pty) Ltd. under company law,
particularly in the context of the doctrine of corporate personality and the legal obligations of
directors.
In certain circumstances, courts may pierce the corporate veil to hold individual shareholders or
directors personally liable for the actions of the company. If it can be shown that Antoine and Bundee,
as the directors and shareholders of Sexton, acted fraudulently or in bad faith in preparing and
disseminating the materially incorrect financial statements, the court may disregard the separate legal
personality of the company and hold them personally liable for the damages suffered by Doogz.
Directors of a company owe fiduciary duties to act in the best interests of the company and to exercise
reasonable care, skill, and diligence. If Antoine and Bundee breached these duties by knowingly
allowing materially incorrect financial statements to be prepared and disseminated, they could be held
personally liable for the resulting losses incurred by third parties, such as Doogz.
However, it's important to note that Antoine and Bundee's attempt to transfer Sexton's assets and
business to Kolisi for a nominal amount and then liquidate Sexton may be seen as an attempt to evade
liability. Courts may look into the substance of such transactions and, if found to be a fraudulent or
improper attempt to avoid liability, could set aside the transfer and hold Antoine and Bundee
personally liable
Doogz may have a valid claim against Sexton (Pty) Ltd. for the financial losses suffered due to the
materially incorrect financial statements.
REFERENCE
1. Companies Act No. 71 of 2008, Part B, Categories of companies.
2. Salomon v. Salomon & Co. Ltd. (1897).
3. Companies Act of 2008, Sections 424-430.
4. Karl Llewellyn, The Common Law Tradition: Deciding Appeals at 77–87, Little, Brown,
Boston MA (1960)
5. Business Enterprise (1904) by Thorstein Veblen
6. Salomon v A Salomon & Co Ltd [1897] AC 22
7. "Gower and Davies' Principles of Modern Company Law" by Paul L. Davies and Sarah
Worthington.
8. "Constitutional Law: Principles and Policies" by Erwin Chemerinsky