XAMINATION PACK AUE 1601 Exam pack PAST PAPER SOLUTIONS

XAMINATION PACK AUE 1601 Exam pack PAST PAPER SOLUTIONS AUE 1601 Exam pack MAY/JUNE 2018 Question One 1.1) Circumstances when an individual will be related to a juristic person include the following,  If the individual indirectly controls the juristic person  If the individual directly controls the juristic person Relationship between AAA and XYZ; Mr Xolani (the marketing director of AAA Hospitals Ltd) has a son who owns XYZ Motors. 1.2) Public Companies Private Companies 1 Listed on the Johnsonburg stock of Exchange Not listed 2 Minimum of three directors Minimum of one director 3 Ends with Ltd Ends with (Pty) Ltd 4 Mandated to appoint external auditors Not mandated but may appoint 5 Mandated to appoint a company’s secretary Not mandated but may appoint Only one difference was enough for two marks 1.3) Reckless trading means managing the business with gross negligence, with intent to defraud any person or for any fraudulent purpose; or trade under insolvent circumstances. 3 | P a g e Greatminds tutorials Randburg AUE 1601 +27 Yes the purchase of vehicles will constitute reckless trading because the company is insolvent as its noncurrent liabilities () are greater than its non-current assets (). 1.4)  Must disclose the interests before the meeting  Must disclose to the meeting any material information relating to the matter  May disclose any observations relating to the matter if requested to do so by other directors  If present at the meeting, must leave the meeting immediately after making disclosures  Must not take part in the consideration of the matter (must not vote)  Must not execute any document on behalf of the company.  Must be regarded as present at the meeting even though he will be absent for the purpose of determining whether sufficient directors are present to constitute the meeting. 1.5) The purchase is illegal. Reasons: The company is not satisfying solvency and liquidity tests. - The company is insolvent as its non-current liabilities (R) are greater than its noncurrent assets (R). - The company does not meet liquidity test as its current assets (R) are less than current liabilities (R).