MRL2601-Entrepreneurial Law EXAM
COMPREHENSIVE QUESTIONS AND VERIFIED
ANSWERS (2025) ALREADY GRADED A+
Legal Personality - ...(ANSWERS)....A company attains legal personality upon
incorporation.
Limited Liability of Members - ...(ANSWERS)....Legal personality means limited
liability of members.
Exclusive Property of Company Assets - ...(ANSWERS)....The assets of the
company are its exclusive property.
Seeking Redress - ...(ANSWERS)....Where a company is wronged, the company
must itself seek redress.
Managerial Powers - ...(ANSWERS)....Managerial and executive powers are to be
exercised by directors.
Shares in a Company - ...(ANSWERS)....Shares in a company entitle holders
certain interests in the company.
Separate Rights and Duties - ...(ANSWERS)....The new entity can acquire its own
rights and duties separate from its members.
,Lifting the Corporate Veil - ...(ANSWERS)....The Court can disregard the legal
personality to avoid abuse ('lifting' or 'piercing the corporate veil').
Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd - ...(ANSWERS)....A
case reference for lifting the corporate veil.
Hülse-Reutter v Gödde - ...(ANSWERS)....Another case reference related to lifting
the corporate veil.
Section 163(4) - ...(ANSWERS)....If a court finds that the incorporation of a
company constitutes an unconscionable abuse, it may declare that the company
is not a juristic person regarding the abuse.
Corporate Veil Piercing Conditions - ...(ANSWERS)....The veil will only be pierced
in exceptional circumstances where there is no alternative remedy available and it
will prevent an injustice.
Close Corporations Act - ...(ANSWERS)....This is a combination of section 65 of the
Close Corporations Act and the judgment in Botha v Van Niekerk.
Profit Company - ...(ANSWERS)....A profit company has the object of financial gain
for its shareholders.
Public Company - ...(ANSWERS)....A public company can offer shares to the public
and is freely transferable; it can be listed on the JSE Limited.
,State-Owned Company - ...(ANSWERS)....A state-owned company falls under the
meaning of 'state-owned enterprise' as determined in the Public Finance
Management Act.
Examples of State-Owned Companies - ...(ANSWERS)....Examples include CSIR,
SABS, and Sasria.
Personal Liability Company - ...(ANSWERS)....A personal liability company is
mainly used by professional associations, where directors are jointly and severally
liable for debts contracted during their term.
Contracted vs Incurred Liability - ...(ANSWERS)....Section 19(3) uses 'contracted'
and not 'incurred', limiting liability to contractual debts.
Sonnenberg McLoughlin Inc v Spiro - ...(ANSWERS)....A case reference related to
personal liability companies.
Branches and Divisions Legal Personality - ...(ANSWERS)....If branches and
divisions are not registered entities, they do not have their own separate legal
personality.
Private company - ...(ANSWERS)....Its MOI prohibits offering of shares to the
public, cannot freely transfer shares.
, Smuts v Booysens - ...(ANSWERS)....A case reference regarding the requirement
not to transfer shares freely to the public.
Non-profit company - ...(ANSWERS)....Company previously registered under
section 21 of the Companies Act of 1973, with objects relating to social activities,
public benefits, cultural activities or group interests.
Directors of a non-profit company - ...(ANSWERS)....Must have directors, but they
are not allowed to obtain any financial gain from the company other than
remuneration for the work they performed.
Members of a non-profit company - ...(ANSWERS)....Does not have to have
members; if they have members, some may enjoy voting rights while others may
not.
Incorporation of a company - ...(ANSWERS)....The process of forming a company,
which includes flexibility and simplicity as key objectives.
Aims of the 2008 Act - ...(ANSWERS)....Creation of flexibility, simplicity,
encouragement of corporate efficiency, encouragement of transparency, and
provision of predictable regulation of companies.
Memorandum of Incorporation - ...(ANSWERS)....The founding document of the
company that sets out the relationship between the company and its
shareholders, directors, and other parties.
COMPREHENSIVE QUESTIONS AND VERIFIED
ANSWERS (2025) ALREADY GRADED A+
Legal Personality - ...(ANSWERS)....A company attains legal personality upon
incorporation.
Limited Liability of Members - ...(ANSWERS)....Legal personality means limited
liability of members.
Exclusive Property of Company Assets - ...(ANSWERS)....The assets of the
company are its exclusive property.
Seeking Redress - ...(ANSWERS)....Where a company is wronged, the company
must itself seek redress.
Managerial Powers - ...(ANSWERS)....Managerial and executive powers are to be
exercised by directors.
Shares in a Company - ...(ANSWERS)....Shares in a company entitle holders
certain interests in the company.
Separate Rights and Duties - ...(ANSWERS)....The new entity can acquire its own
rights and duties separate from its members.
,Lifting the Corporate Veil - ...(ANSWERS)....The Court can disregard the legal
personality to avoid abuse ('lifting' or 'piercing the corporate veil').
Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd - ...(ANSWERS)....A
case reference for lifting the corporate veil.
Hülse-Reutter v Gödde - ...(ANSWERS)....Another case reference related to lifting
the corporate veil.
Section 163(4) - ...(ANSWERS)....If a court finds that the incorporation of a
company constitutes an unconscionable abuse, it may declare that the company
is not a juristic person regarding the abuse.
Corporate Veil Piercing Conditions - ...(ANSWERS)....The veil will only be pierced
in exceptional circumstances where there is no alternative remedy available and it
will prevent an injustice.
Close Corporations Act - ...(ANSWERS)....This is a combination of section 65 of the
Close Corporations Act and the judgment in Botha v Van Niekerk.
Profit Company - ...(ANSWERS)....A profit company has the object of financial gain
for its shareholders.
Public Company - ...(ANSWERS)....A public company can offer shares to the public
and is freely transferable; it can be listed on the JSE Limited.
,State-Owned Company - ...(ANSWERS)....A state-owned company falls under the
meaning of 'state-owned enterprise' as determined in the Public Finance
Management Act.
Examples of State-Owned Companies - ...(ANSWERS)....Examples include CSIR,
SABS, and Sasria.
Personal Liability Company - ...(ANSWERS)....A personal liability company is
mainly used by professional associations, where directors are jointly and severally
liable for debts contracted during their term.
Contracted vs Incurred Liability - ...(ANSWERS)....Section 19(3) uses 'contracted'
and not 'incurred', limiting liability to contractual debts.
Sonnenberg McLoughlin Inc v Spiro - ...(ANSWERS)....A case reference related to
personal liability companies.
Branches and Divisions Legal Personality - ...(ANSWERS)....If branches and
divisions are not registered entities, they do not have their own separate legal
personality.
Private company - ...(ANSWERS)....Its MOI prohibits offering of shares to the
public, cannot freely transfer shares.
, Smuts v Booysens - ...(ANSWERS)....A case reference regarding the requirement
not to transfer shares freely to the public.
Non-profit company - ...(ANSWERS)....Company previously registered under
section 21 of the Companies Act of 1973, with objects relating to social activities,
public benefits, cultural activities or group interests.
Directors of a non-profit company - ...(ANSWERS)....Must have directors, but they
are not allowed to obtain any financial gain from the company other than
remuneration for the work they performed.
Members of a non-profit company - ...(ANSWERS)....Does not have to have
members; if they have members, some may enjoy voting rights while others may
not.
Incorporation of a company - ...(ANSWERS)....The process of forming a company,
which includes flexibility and simplicity as key objectives.
Aims of the 2008 Act - ...(ANSWERS)....Creation of flexibility, simplicity,
encouragement of corporate efficiency, encouragement of transparency, and
provision of predictable regulation of companies.
Memorandum of Incorporation - ...(ANSWERS)....The founding document of the
company that sets out the relationship between the company and its
shareholders, directors, and other parties.
