LML4806 EXAM PACK 2024

LML4806 EXAM PACK 2024• Every person must be present at the board meeting when the matter was referred to them in their capacity as shareholders. • A sufficient number of persons must be present in their capacity as shareholders to satisfy the quorum requirements as set out in section 64 of the Companies Act. • A resolution adopted by the shareholders be supported by shareholders holding at least the percentage of shares required for adopting an ordinary resolution at a properly constituted shareholders’ meeting. In this case, Oliver was not present at the meeting. Therefore, the first proviso is not satisfied because not every person was present at the board meeting when the matter was referred to them in their capacity as shareholders. The default position for a quorum to be satisfied is that at least 25% of all the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the meeting must be present before the meeting may start. Since three out of four shareholders were present at the meeting the quorum requirements for the meeting were satisfied. The default position for the support of an ordinary resolution is more than 50% of the voting rights exercised on the resolution. In conclusion, Olivers objection is valid because every person was not present at the board meeting when the matter was referred to them in their capacity as shareholders. Therefore, the ordinary resolutions were not validly passed. 1.2. With reference to appropriate authority and the facts provided, discuss whether Generators Unlimited (Pty) Ltd is bound by the contract concluded by Nthabiseng and Matthews Section 20(7) of the Companies Act, 2008 provides that a person dealing with a company in good faith, other than a director, prescribed officer or shareholder of the company, is entitled to presume that the company, in making any decision in the exercise of its powers, has complied with all of the formal and procedural requirements in terms of this Act, its Memorandum of Incorporation and any rules of the company, unless, in the circumstances, the person knew or reasonably ought to have known of any failure by the company to comply with any such requirement. A third party dealing with the company in good faith may assume that that the company has complied with all of the formal and procedural requirements in terms of the Companies Act 71 of 2008 and the company’s Memorandum of Incorporation and rules unless he or she knew or reasonably ought to have been aware that they had not been complied with. Application to the case • There is no indication from the facts that Matthews knew or reasonably ought to have known that Ntabiseng had failed to comply with the procedural requirement in terms of the Memorandum of Incorporation. • There is also no indication that Matthews was aware of the fact that Ntabiseng did not comply with procedural requirement, and that she had acted in bad faith. • The contract is valid, and the company will be bound to it. For the company to be bound by the contract Matthews must prove: • That Generators Unlimited Pty Ltd misrepresented that means the misrepresentation was made by the company). • The misrepresentation was made intentionally or negligently that Ntabisengs in fact had the necessary authority to represent the company. • That he, as a reasonable third party, was induced to deal/ conclude the contract with Ntabiseng on the basis of the misrepresentation. • That he was prejudiced/ suffered damage due to the misrepresentation. Estoppel applies only when the agent did not have actual authority to bind the company. Take particular note of the fact that the misrepresentation (i.e. that the agent had the necessary authority when, in fact he or she did not) must have been made by the company as principal. Based on such misrepresentation, the company will be estopped from denying liability if the third party can prove that1: a) The company misrepresented, intentionally or negligently, b) that the agent concerned had the necessary authority to represent the company; c) The misrepresentation was made by the company; d) The third party was induced to deal with agent because of the misrepresentation; The third party was prejudiced by the misrepresentation. 1 Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 Q.B. 480 (24 January 1964) QUESTON 2 Explain to Jaydin whether the board of directors of Thaba Indle Ltd contravened the provisions of the Companies Act 71 of 2008 in the following circumstances: 2.1.1 When the board issued the ordinary shares to Nathi 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. However, section 41 of the Companies Act requires shareholder approval by a special resolution for issuing shares in certain cases. 2.1.2 When the board issued the ordinary shares to Mario. 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. 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. 2.1.3 When the board issued the ordinary shares to the employees of Thaba Indle Ltd In terms of section 41(2)(d) of the Companies Act, the approval of the shareholders of a company is not required if the shares are issued pursuant to an employee share scheme that satisfies the requirements of section 97 of the Companies Act. If the shares are issued to employees in terms of an employee share scheme which does satisfy the requirements of section 97 of the Companies Act, then the shareholders will not be required to approve the issue of the shares. However, if the requirements of section 97 of the Companies Act are not satisfied, then the approval of the shareholders by special resolution will be required. 2.2. With reference to the Companies Act 71 of 2008 and the facts, advise the shareholders of Global Textiles Ltd whether they would have any grounds for the court to make an order declaring Mandy to be a delinquent director.