Legal Personality
True or False: A wrong to a company is a wrong to a shareholder
False. A company is a separate juristic person
What type of company ends in: Ltd or Limited
Public Company
What document sets out rights, duties and responsibilities of shareholders, directors and others within and in respect to a company.
Memorandum of Incorporation (MOI)
Define Ultra Vires
Beyond the Powers. When an act has been performed that is beyond authority of actor
Cazuna Ltd owns a Lambo. Zakes, a shareholder, shows the Lambo to his girlfriend and says that its his. It he correct?
No. Shareholders have no ownership in company's assets.
What type of company ends in Pty (Ltd)
Private Company
Explain what happens after the Commission receives a notice of incorporation.
2. Once formalities are met, give applicant a certificate of registration.
Define the Turquand Rule
If there is no action taken which is obviously contrary to the provisions of the docs which the company has lodged with the registrar then a bona fide third party can assume there was compliance with internal reqs.
Cite the authority that deals with lifting the corporate veil.
Section 20 (9) Companies Act, 2008
Which type of company has legal personality but unlimited liability
Personal Liability Company
What is need when one wants to incorporate their company
1. Notice of Incorporation
2. Copy of MOI
3. Prescribed Fee
Define concept of constructive knowledge
Anyone dealing with a company is deemed to know the contents of the company's MOI and internal docs filed with registrar's office
Name the landmark case that dealt with lifting the corporate veil
Cape Pacific v Lubner Controlling Investments (Pty) Ltd
Name a state owned company
Eskom, Transnet, SAA
Explain the concept of passing off
When one business adopts a distinguishing feature of a competitor e.g. competitor's trade name.
What section of which Act gives shareholders/directors/prescribed officers recourse when there is an ultra vires act
Section 20 (4) with sub-s (5) :
shareholders/director/prescribed officer can institute proceedings to restrain company from performing action in breach of Act or limitation in MOI.
Explain the limited liability of shareholders ito incorporated companies
Shareholders are not liable for the debts of a company. This is because a company is a separate juristic person.
Explain what an external company is
Foreign company carrying on business or non-profit activities within the Republic.
What happens if a board of directors DOES NOT ratify a pre-incorporation contract.
Party who incurs liability can recover benefit
Rollo Pollo Ltd is a company that buys and sells used affordable cars. The director, Tim, buys a yacht from Joe, an innocent third party. If it has been concluded that this is an ultra vires act, will the agreement be void?
No. Section 20 (1) no action void if prohibited by limitation, restriction or qualification in MOI.