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LWCL211 Supp Test 2014 Final

Corporate Law (Eduvos)

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FACULTY OF LAW

CORPORATE LAW

LWCL211

SUPPLEMENTARY TEST – MAY 2014

INTERNAL EXAMINER: Lalie Moraba

TOTAL MARKS: 30
DURATION: 1 Hour

SECTION A: Short Questions 10 Marks

SECTION B: Discussion Questions 20 Marks

INSTRUCTIONS TO CANDIDATES:
1. Read each question carefully.
2. You must answer ALL sections.
3. Answer all questions in the answer book provided.
4. All rough work should be done in the back of the answer book and indicated
as such.
5. Please write legibly.
6. This test paper should not be removed from the venue.

NB This test paper consists of 4 pages

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Section A

Short questions 10 Marks

Answer the following question in the answer book provided.

QUESTION 1
Select only the CORRECT statements and record each corresponding
number in your answer book. Please DO NOT rewrite the statements in your
answer book.
1.1 The ultra vires doctrine applies partially to close corporations.
1.2 A close corporation may be the main shareholder of a company.
1.3 75% of the members must consent to the voluntary winding-up of a close
corporation.
1.4 As a general rule, a close corporation may be a member of a
partnership, but not of another close corporation.
1.5 Members of a close corporation owe their fiduciary duties to the close
corporation.
1.6 Every time a new member joins a close corporation, a new association
agreement must be concluded.
1.7 A trustee may be a member of a close corporation in his official capacity.
1.8 A member’s interest is determined by the size of the member’s
contribution.
1.9 A third party dealing with a close corporation is presumed to know the
contents of the founding statement.
1.10 A third party dealing with a close corporation is presumed not to know
the contents of the association agreement.
1.11 Where a member acts without representation authority, the act will not
bind the close corporation.
1.12 A member’s interest in a close corporation is freely transferable.

SUBTOTAL: [10]

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Section B

Discussion Questions 20 Marks

Answer the following questions in the answer book provided.

QUESTION 1
Colin wants to register a company called Cool Cats (Pty) Ltd and comes to
you for advice. You inform him that there is already a company using that
name, but he insists on applying for registration using the name. Advise him
on how the Companies and Intellectual Property Commission (CIPC) will deal
with this matter and whether his company will be registered at all. [6]

QUESTION 2
Joy is a director of Smarty Pants Ltd and requires advice on certain provisions
of the Memorandum of Incorporation of Smarty Pants Ltd which are as
follows:
2.1 Shareholders of Smarty Pants Ltd may elect a maximum of 40% of the
directors of Smarty Pants Ltd.
2.2 Smarty Pants Ltd must appoint at least 8 directors to its board.
2.3 No director may serve on the board of Smarty Pants Ltd for more than 5
consecutive years.
2.4 A director may not be removed from the board except by special
resolution of the shareholders.

Advise Joy on the above provisions. In your answer, provide your own
reasons or explanations, to help Joy understand why some provisions may be
acceptable while others may not be so. [8]

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QUESTION 3
Marmalade Ltd has issued notices that it intends to hold a general
shareholders’ meeting on 28 April 2014. Jam, one of the shareholders,
realises that he might not be able to attend as he will be away for the long
weekend then. He would like to ask his sister, Jelly, to attend on his behalf,
but is concerned that she is not a shareholder in Marmalade Ltd. Advise Jam
with reference to the kind of persons that may represent others at
shareholders’ meetings and the documentation required. [6]

SUBTOTAL: [20]

TOTAL: [30]

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