LML4806 Company law
Questions and Answers
Types and Forms of Companies - Correct Answer:1. Profit Company
2. Non - profit company
Profit companies 4 tipes - Correct Answer:1. Sate owned
- schedule 2/3 of PFMA
-Municipality
- National government business
2. Public
- can sell shares to public & freely transferable
-Can be listed on JSE
3. Personal
- Professional association e.g Attorneys
- Directer jointly and severely liable
4. Private
- Cant sell shares to public MOI forbids it.
- Not freely transferable
- Fudtrust matter.
Section 66: Board, directors and prescribed officers - Correct Answer:- S 66(1): business of a
company must be managed by or under direction of its board
- directors have a duty to manage the company but shareholders retain control over the directors
by their power to appoint and remove directors
- before certain transactions can take place, such transactions must be approved by shareholders,
either by way of special or ordinary resolution
- a company's own MOI can restrict the powers of directors or others to act i.r.o a particular
matter
- MOI can provide that certain transactions have to be pre-approved by shareholders
- shareholder: holder of share issued by a company and who is entered as such in the certificated
or uncertificated securities register of the company
- for purposes of part F of Ch 2 person who is entitled to exercise any voting rights in relation to
a company, irrespective of the form, title or nature of the securities to which those voting rights
are attached
- share: one of the units into which the proprietary interest in a profit company is divided
- shareholders meeting: meeting of those holders of a company's issued securities who are
entitled to exercise voting rights in relation to that matter
Important principles - Correct Answer:- meeting must be properly called and convened
- properly convened if the prescribed notice for convening the meeting was given by authorised
- notice must be given to all persons who are entitled
- meeting must be convened for a time, date and place that is accessible to shareholders
, - meeting may only commence if a quorum is present
- quorum is minimum number of members who have to be present at meeting before it can begin
Record date S 59 - Correct Answer:S 59. Record date for determining shareholder rights
- record date: NB because it's the date that determines shareholder rights, e.g. right to vote at
meeting
- board of directors may set a record date for determining which shareholders are entitled to:
o receive notice of shareholders' meeting
o participate in and vote at a shareholders' meeting
o decide any matter by written consent or electronic communication
- record date may not be earlier than date on which it is determined or more than 10 business
days before date on which event or action is scheduled to occur
- must be published to shareholders in manner that satisfies requirements
- where board doesn't determine record date, unless the MOI or rules of company provide
otherwise, record date is:
o in case of a meeting, latest date by which company is required to give shareholders notice of
that meeting; or
o date of action or event
Calling of a shareholders meeting
S 61. Shareholders Meeting - Correct Answer:S 61. Shareholders Meeting
- board of directors, or any other person specified in the company's MOI or rules, may call a
shareholders' meeting at any time
- A shareholders' meeting must be called in the following circumstances:
o at any time that the board is required to convene a meeting and to refer a matter to decision by
shareholders as provided for in the Companies Act or by the MOIT
o when a meeting is demanded by shareholders, provided that the demand is signed by the
holders of at least 10 % of the voting rights (company's MOI may specify a lower percentage
Notice of meetings
Section 62 and 63(3) - Correct Answer:- must be in writing & include date, time and place &
include record date if set
- explain the general purpose of the meeting and any other specific purposes
- public company or non-profit company that has voting members notice should be given 15
business days before date of meeting
- for any other company, notice must be sent 10 business days before date of meeting
- provisions of MOI may prescribe longer minimum notice
- a copy of any proposed resolution which is to be considered at the meeting, must accompany
the notice
- should indicate the % voting rights required for the resolution to be adopted
- notice convening annual general meeting of a company must contain a summary of the
financial statements that will be tabled at the meeting
- should also explain the procedure that a shareholder can follow to obtain a complete copy of
the annual financial statements for the preceding financial year
- notice convening a meeting must contain a prominent statement that a shareholder is entitled to
appoint a proxy to attend, participate in, and vote at the meeting
Questions and Answers
Types and Forms of Companies - Correct Answer:1. Profit Company
2. Non - profit company
Profit companies 4 tipes - Correct Answer:1. Sate owned
- schedule 2/3 of PFMA
-Municipality
- National government business
2. Public
- can sell shares to public & freely transferable
-Can be listed on JSE
3. Personal
- Professional association e.g Attorneys
- Directer jointly and severely liable
4. Private
- Cant sell shares to public MOI forbids it.
- Not freely transferable
- Fudtrust matter.
Section 66: Board, directors and prescribed officers - Correct Answer:- S 66(1): business of a
company must be managed by or under direction of its board
- directors have a duty to manage the company but shareholders retain control over the directors
by their power to appoint and remove directors
- before certain transactions can take place, such transactions must be approved by shareholders,
either by way of special or ordinary resolution
- a company's own MOI can restrict the powers of directors or others to act i.r.o a particular
matter
- MOI can provide that certain transactions have to be pre-approved by shareholders
- shareholder: holder of share issued by a company and who is entered as such in the certificated
or uncertificated securities register of the company
- for purposes of part F of Ch 2 person who is entitled to exercise any voting rights in relation to
a company, irrespective of the form, title or nature of the securities to which those voting rights
are attached
- share: one of the units into which the proprietary interest in a profit company is divided
- shareholders meeting: meeting of those holders of a company's issued securities who are
entitled to exercise voting rights in relation to that matter
Important principles - Correct Answer:- meeting must be properly called and convened
- properly convened if the prescribed notice for convening the meeting was given by authorised
- notice must be given to all persons who are entitled
- meeting must be convened for a time, date and place that is accessible to shareholders
, - meeting may only commence if a quorum is present
- quorum is minimum number of members who have to be present at meeting before it can begin
Record date S 59 - Correct Answer:S 59. Record date for determining shareholder rights
- record date: NB because it's the date that determines shareholder rights, e.g. right to vote at
meeting
- board of directors may set a record date for determining which shareholders are entitled to:
o receive notice of shareholders' meeting
o participate in and vote at a shareholders' meeting
o decide any matter by written consent or electronic communication
- record date may not be earlier than date on which it is determined or more than 10 business
days before date on which event or action is scheduled to occur
- must be published to shareholders in manner that satisfies requirements
- where board doesn't determine record date, unless the MOI or rules of company provide
otherwise, record date is:
o in case of a meeting, latest date by which company is required to give shareholders notice of
that meeting; or
o date of action or event
Calling of a shareholders meeting
S 61. Shareholders Meeting - Correct Answer:S 61. Shareholders Meeting
- board of directors, or any other person specified in the company's MOI or rules, may call a
shareholders' meeting at any time
- A shareholders' meeting must be called in the following circumstances:
o at any time that the board is required to convene a meeting and to refer a matter to decision by
shareholders as provided for in the Companies Act or by the MOIT
o when a meeting is demanded by shareholders, provided that the demand is signed by the
holders of at least 10 % of the voting rights (company's MOI may specify a lower percentage
Notice of meetings
Section 62 and 63(3) - Correct Answer:- must be in writing & include date, time and place &
include record date if set
- explain the general purpose of the meeting and any other specific purposes
- public company or non-profit company that has voting members notice should be given 15
business days before date of meeting
- for any other company, notice must be sent 10 business days before date of meeting
- provisions of MOI may prescribe longer minimum notice
- a copy of any proposed resolution which is to be considered at the meeting, must accompany
the notice
- should indicate the % voting rights required for the resolution to be adopted
- notice convening annual general meeting of a company must contain a summary of the
financial statements that will be tabled at the meeting
- should also explain the procedure that a shareholder can follow to obtain a complete copy of
the annual financial statements for the preceding financial year
- notice convening a meeting must contain a prominent statement that a shareholder is entitled to
appoint a proxy to attend, participate in, and vote at the meeting
