Tutorial Letter 201/2/2018
COMPANY LAW
LML4806
Semester 2
Department of Mercantile Law
This tutorial letter contains important information
about your module.
BARCODE
, CONTENTS
Page
1. FEEDBACK ON ASSIGNMENT 01 ...................................................................................................... 3
2. FEEDBACK ON ASSIGNMENT 02 ...................................................................................................... 5
3. OCTOBER/NOVEMBER 2017 EXAMINATION ................................................................................... 6
4. FEEDBACK ON OCTOBER/NOVEMBER 2017 EXAMINATION ....................................................... 10
2
, LML4806/201/2/2018
Dear Student
1. FEEDBACK ON ASSIGNMENT 01
Question (a)
The general principle
In terms of section 38 of the Companies Act 71 of 2008, the board of directors may resolve to
issue shares in a company at any time in accordance with the provisions of and within the
classes authorised in terms of the company’s Memorandum of Incorporation. Thus the approval
of the shareholders is not required for the issue of shares unless the Memorandum of
Incorporation provides otherwise.
The provision of section 41
However, section 41 of the Companies Act requires shareholder approval by a special
resolution for issuing shares in certain cases.
Shareholder approval for issuing shares in certain cases
(i) Chief Executive Officer (prescribed officer)
Legal principle
In terms of section 41(1)(a) of the Companies Act 71 of 2008, the approval of the shareholders
by special resolution is required where the issue of shares is to a present director or prescribed
officer of the company.
Application of legal principle
A Chief Executive Officer of a company is a director or a prescribed officer of the company. The
approval of the shareholders by special resolution will be required to issue the shares to him or
her.
3
COMPANY LAW
LML4806
Semester 2
Department of Mercantile Law
This tutorial letter contains important information
about your module.
BARCODE
, CONTENTS
Page
1. FEEDBACK ON ASSIGNMENT 01 ...................................................................................................... 3
2. FEEDBACK ON ASSIGNMENT 02 ...................................................................................................... 5
3. OCTOBER/NOVEMBER 2017 EXAMINATION ................................................................................... 6
4. FEEDBACK ON OCTOBER/NOVEMBER 2017 EXAMINATION ....................................................... 10
2
, LML4806/201/2/2018
Dear Student
1. FEEDBACK ON ASSIGNMENT 01
Question (a)
The general principle
In terms of section 38 of the Companies Act 71 of 2008, the board of directors may resolve to
issue shares in a company at any time in accordance with the provisions of and within the
classes authorised in terms of the company’s Memorandum of Incorporation. Thus the approval
of the shareholders is not required for the issue of shares unless the Memorandum of
Incorporation provides otherwise.
The provision of section 41
However, section 41 of the Companies Act requires shareholder approval by a special
resolution for issuing shares in certain cases.
Shareholder approval for issuing shares in certain cases
(i) Chief Executive Officer (prescribed officer)
Legal principle
In terms of section 41(1)(a) of the Companies Act 71 of 2008, the approval of the shareholders
by special resolution is required where the issue of shares is to a present director or prescribed
officer of the company.
Application of legal principle
A Chief Executive Officer of a company is a director or a prescribed officer of the company. The
approval of the shareholders by special resolution will be required to issue the shares to him or
her.
3
