4 - Companies Act

Question 1

five types of companies?

Answer 1

• personal liability = Inc
• public = Ltd
• state-owned = SOC Ltd
• non-profit = NPC
• private = (Pty) Ltd

Question 2

board of directors composition for different company types?

Answer 2

min 1 director = private, PL comps

min 3 directors = public, NPC

Question 3

nomination in Comps Act?

Answer 3

not covered, only in King IV

Question 4

election in Comps Act?

Answer 4

if profit company (not SOC), SH must be allowed to elect at least 50% board members/directly

Question 5

remuneration in Comps Act?

Answer 5

directors may be paid remuneration by special resolution (75% SH agree), within 2 years preceding payment

Question 6

a person may be ineligible to be a director if?

Answer 6

• juristic person
• unemancipated minor
• due to MOI condition
• don’t even have the right to apply

Question 7

a person may be disqualified from being a director if?

Answer 7

• declared delinquent
• unrehab insolvent
• previous removal for dishonesty
• convicted for fraud

Question 8

if a director has a personal financial interest?

Answer 8

• disclose interest before matter is considered
• disclose material info relating to matter
• leave the meeting and not take part in consideration of matter

Question 9

fiduciary duty?

Answer 9

act in best interests of company and act in good faith

Question 10

section 76 in Comps Act?

Answer 10

• must not use position to gain personal advantage
• knowingly cause harm to comp/subsidiaries
• act in good faith
• act in best interests of comp
• act with a reasonable degree of skill, diligence, care

Question 11

section 77 in Comps Act?

Answer 11

a director will be held personally liable for losses sustained by the company as a result of them breaching s75 or s766

Question 12

social and ethics committee?

Answer 12

• required if public or SOC

- must comprise of at least 3 directors, 1 NED

Question 13

audit committee?

Answer 13

• required if public or SOC
• must be elected at each AGM
• must comprise of at least 3 members, must be directors

Question 14

audit comm member must not be?

Answer 14

• not an ED
• not a prescribed officer / full-time employee (or one of a related comp during the previous 3 yrs)
• a material supp/cust
• related to any of the above

Question 15

audit comms have the duty to?

Answer 15

• nominate auditor

- approve proposed agreement with the auditor for the provision of non-audit services

Question 16

section 28 in Comps Act?

Answer 16

a company must keep accurate and complete accounting records in one of the official republic languages

Question 17

section 29 in Comps Act?

Answer 17

• if a company provides FS, they must not be false/misleading and must satisfy reporting standards
• must prepare FS within 6months of year end