company law Flashcards
List any 6 (six) duties of a judicial manager (business rescue practitioner) in terms of the Company’s Act 28 of 2004. (6 marks)
- Assuming management of the company.
- Conduct management subject to the orders of court in a manner he or she
considers economic of the creditors. - To comply with any directive given by court in the final judicial management
order. - To keep accounting and financial statements of the company which its directors
would have been obliged to keep. - To convene Annual General Meetings (AGM) and other meetings as required.
- Convene meetings of the creditors of the company.
- To examine the affairs of the company before the judicial management order
and ascertain whether any present or past director has contravened the Act or
committed an offence and within 6 months of appointment submit such report to
the Master of the High Court in terms of section 406 required to be submitted to
the Master by the liquidator.
Using legal terms, explain what is meant by the term company
a company is a legal entity made
up of an association of people, should they be natural, legal or a mixture of both
carrying on a commercial enterprise for profit or nonprofit purposes. A company
will always have a separate legal personality from its directors and shareholders.
A company can sue or be sued and has perpetual succession. An example of a
company in Namibia, pwc
true or false
answer true or false
A legal person can enter into marriage
false
A natural person can be appointed as curator ad litem of a minor child
true
Limited liability means that the shareholders of a company are liable for the debts of the company
false
A shareholder holds members interest in a company
false
Perpetual succession means that a company continues to operate even at the death of the incorporators
true
With regards to the principle of separate legal personality of a company, discuss the legal principle as outlined in salomon v salomon
-Salomon conducted business in the name of the company to limit liability over the
debts of the company.
It was held that:
-In the case it was found that Salomon and the company was one person.
- It was explained further in the case that that is the reason why individuals induce
private companies to avoid risk of bankruptcy and increased facility to borrow money.
-conception of the existence of a company as a separate entity distinct from that of its
shareholders is a matter of substance.
-the company is at law a different person from its subscribers to the memorandum and
is not in law the agent of the subscribers.
-by means of a private company, a trade can be carried on with limited liability and
without exposing the persons interested in it in the event of failure.
4
Salomon was held liable for the debts of the company.
What do you understand by the term piercing the corporate veil
When the court pierces the veil, it treats the liabilities of a company as those of the
shareholders and directors of a company and disregards the corporate personality of
the company, as expounded in Salamon v Salomon. After the curtain is pierced by the
courts, directors and shareholders of the company will be rendered powerless, liable
and unable to hide behind the curtain being the company
What are Articles of Association of a company?
It is a legal document prepared by a company, to explicitly state the purpose of a
company, in other words, what the objective of the company is
List any 4 (four) contents found in the Articles of Association
- Share capital
- Alteration of capital
- Rights of shareholders
- Issue of preference share
- General meetings
- Proxy
- Board of directors and their responsibilities
- Buy back of shares
What section of the company’s Act 28 of 2004 deals with the alteration of Articles of Association
Section 67 of the Company’s Act 28 of 2004
What is the manner used in terms of your answer in 4.3 above which allows for the alteration of Articles of Association
special resolution
Explain what you understand by the term Turquand Rule while making mention in your answer the case which the principle is derived from
The tarquand rule was historically formed as an exception to the doctrine of constructive
notice and was designed to mitigate the severe effects of the doctrine of constructive
notice.
The tarquand rule is derived from the case of Royal British Bank v Tarquand which
was concerned with restrictions placed by the constitution of a company on the authority
of directors of the company to contract on its behalf.
The tarquand rule also protects bona fide third parties who are not aware of any internal
irregularities that affect the validity of their contracts with the company