MRL Study PACK587568 - Summary Entrepreneurial Law

Modo is a member of Yapcan CC. He is the oldest of all the members and is concerned about his deteriorating health. He does not want to sell his member's interest since the corporation's business is doing very well. Advise Helmut whether or not he can bequeath his interest in the close corporation to his daughter. In addition, advise him whether or not effect will be given to his wishes if he makes provision in his will for the transfer of his interest to his daughter. (5) A member of a close corporation may bequeath his or her members interest in the corporation in his will to someone. In terms of section 35 of the Close Corporations Act, the law applies unless it is determined otherwise in an association agreement. Before the members’ interest may be transferred to the heir, the other members of the close corporation must consent. If permission is not granted by the other members, the executor may sell the membership interest to the corporation, to another member or to a third party subject to a right of pre-emption in favour of existing members. Good Food CC’s main business is catering. The corporation has 5 members: Anthea, Bert-Filandro, Carol, Daniel and Elvis. Each member holds a 20% member’s interest. The association agreement determines that only Daniel is authorised to represent the close corporation. Anthea enters into a contract for the purchase of a racehorse on behalf of the close corporation with Bert-Filandro. Is the close corporation bound to the transaction? (6) Section 54(1) of the Close Corporations Act 69 of 1984 determines that any member of a close corporation will in relation to a person is not a member, and is dealing with the close corporation, be an agent of the close corporation. Section 54(2) of the Close Corporations Act determines that any act of a member will bind the close corporation whether such act was performed in connection with the business of the CC or not unless the member has in fact no authority to act for the corporation in the particular matter and the contracting party has or ought reasonably to have knowledge of the member’s lack of authority. The close corporation will not be bound since Bert is a member of the close corporation. He should know that Anthea cannot act on behalf of the close corporation. Consequently the other Downloaded by zandile madi () lOMoARcPSD| CONTACT: 7 2 contracting party cannot rely on s 54 of the Close Corporations Act to hold the close corporation liable. Saraphina is a member of Mend & Sew CC. The other members, Alphi and Botsego feel that Saraphina has not been complying with her management duties. Advise them regarding the three grounds upon which the court may, in terms of the Close Corporations Act 69 of 1984 order that a member shall cease to be a member of a close corporation. (4)