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AUE1601 LEGAL ASPECTS IN ACCOUNTANCY > AUE1601 > Flashcards

AUE1601 Flashcards

1
Q

SOL(id)VENCY TEST

A

ASSETS FAIRLY VALUED, ARE EQUAL TO OR EXCEEDS LIABILITIES OF THE COMPANY OR GROUP OF COMPANIES

ASSETS > LIABILITES

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2
Q

LIQUIDITY TEST

A

THE COMPANY WILL BE ABLE TO PAY ITS DEBTS AS THEY BEOME DUE

  • AS THEY BECOME DUE
  • IN ORDINARY COURSE OF BUSINESS,
  • FOR THE PERIOD OF 12 MONTHS AFTER THE DATE OF TEST

CURRENT ASSETS > CURRENT LIABILITIES

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3
Q

RECKLESS TRADING

A
  • WITH GROSS NEGLIGENCE
  • FOR FRAUDULENT PURPOSE
  • WITH PURPOSE OF DEFRAUDING ANY PERSON
  • UNDER INSOLVENT CIRCUMSTANCES
  • How long does a company have to satisfy the Commission that it should be allowed to continue operating its business, after being issued with a notice that there is reason to believe that the company is conducting its business recklessly? - 20 DAYS
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4
Q

FINANCIAL STATEMENTS

A
  • WITHIN 6 MONTHS AFTER YEAR END
  • COMPLY WITH THE STANDARD OF FINANCIAL REPORTING
  • MUST PROVIDE REASONABLE REPRESENTATION OF THE COMPANIES BUSINESS
  • MUST EXPLAIN THE FINANCIAL POSITION AND TRANSACTION OF THE COMPANY
  • MUST STATE IF THE FINANCIAL HAVE BEEN AUDITED / REVIEWED / NEITHER
  • MUST STATE THE NAME AND CAPACITY OF THE PERSON WHO PREPARED THE FINANCIALS
  • MAY NOT BE INCOMPLETE FALCE OR MISLEADING.
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5
Q

ANNUAL FINANCIAL STATEMENTS TO BE AUDITED

A
  • SOC
  • LTD
  • PERSON WHO HOLDS ASSETS IN A FIDUCIARY CAPACITY > 5 MILLION
  • PIS SCORE > 350
  • 100 - 350 - AFS INTERNALLY COMPILED
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6
Q

PUBLIC INTEREST SCORE

A

P - LEASE CERTAIN CONDITIONS
I - INTEREST THE PUBLIC AT LARGE
S -SUM OF POINT ALLOCATED TO CERTAIN ATTRIBUTES

  • EVERY 1 MILLION TURNOVER
  • EVERY 1 MILLION THIRD PARTY
  • EVERY SECURITY HOLDER ( SHAREHOLDER )
  • EVERY EMPLOYEE

350> - RA
100 - 350 - INTERNALLY COMPILED - AUDITED
100 - 350 - AFS EXTERNALLY COMPILED / SHAREHOLDERS NOT ALL DIRECTORS - INDEPENDENT REVIEW
- OWNER MANAGED - NO REVIEW
100 < SHARE YES - NO REVIEW
100 < DIRECTORS - NO - MUST BE REVIEWED

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7
Q

FINANCIAL RECORDS

A
  • ACCURATE AND COMPLETE ACCOUNTING RECORDS
  • MOI
  • DIRECTORS DETAILS
  • AGM DETAILS
  • AFS - 7 YEARS
  • NOTICE AND MINUTES
  • COMMUNICATIONS
  • RESOLUTIONS
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8
Q

MOI

A
  • AFS AUDIT VOLUNTARILY
  • NOTICE OF MEETING
  • FOUNDING COMPANY DOCS
  • LONGER OR SHORTER NOTICE
  • CANNOT EXCLUDE ACT
  • SPECIAL RESOLUTION
  • STRICTER REQUIREMENTS
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9
Q

RELATIONS

A

CONSANGUINITY - BY BLOOD
AFFINITY - BY MARRIAGE

RELATED

  • MARRIED / LIVING TOGETHER - SEPERATED BY 2ND DEGREE
  • TO JURISTIC PERSON - DIRECTLY / INDERECTLY
  • JURISTIC PERSON - JURUSTIC PERSON - CONTOL EACH OF THE BUSINESS OF OTHER
    • SUBSIDAIRY OF OTHER
    • DIRECTLY / INDIRECTLY CONTROL EACH OF THEM / BUSINESS

-

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10
Q

PROFIT COMPANIES

A

STATE OWNED COMPANIES
- OWNED BY MUNICIPALITIES

PUBLIC

  • UNRESTRICTED TRANSFERABLE OF SHARES
  • MIN 1 INCORPORATOR MIN
  • 3 DIRECTORS
  • MUST APPOINT SECRETARY

PTY LTD

  • LESS DISCLOSURE
  • TRANSFERABILITY OF SECURITY RESTRICTED
  • MIN 1 INCORPORATOR
  • MIN 1 DIRECTOR UNLESS MOI SAYS DIFFERENT

NPC

  • MEETS CRITERIA OF PTY LTD
  • MOI STATES IT IS PERSONAL LIABILITY COMPANY
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11
Q

SHARE BUY BACK

A
  • COMPANY SUBSIDIARY MAY BUY BACK THE SHARES OF THE COMPANY
  • AUTHORIZED BY A BOARD RESOLUTION OF THE COMPANY / SUBSIDIARY COMPANY
  • UNLESS IF THE SHARES ARE BOUGHT BACK FROM A DIRECTOR OR FROM PRESCRIBED OFFICER OR A PERSON RELATED TO A DIRECTOR OR PRESCRIBED OFFICER THEN A SPECIAL RESOLUTION IS REQUIRED
  • AFTER THE SHARES ARE BOUGHT BACK THERE MUST STILL BE SHARES IN ISSUE OF THE SAME CLASS AND TYPE
  • ALL SUBSIDIARIES OF THE COMPANY MAY NOT IN AGGREGATE HOLD MORE THAN 10 % OF THE SHARES OF THE COMPANY
  • SUBSIDIARY MAY NOT EXERCISE VOTING RIGHT IN TERMS OF THESE SHARES
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12
Q

WHISTLEBLOWER PROTECTIONS

A
  • SHAREHOLDERS
  • DIRECTORS
  • COMPANY SECRETARY
  • PRESCRIBED OFFICERS
  • EMPLOYEES - TRADE UNIONS - OTHER REPRESENTATIVES OF EMPLOYEES
  • SUPPLIER OF GOODS / SERVICES - EMPLOYEES OF SUCH SUPPLIERS
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13
Q

REGISTERED AUDITOR

A

XXX MUST NOT BE

  • DIRECTOR / PRESCRIBED OFFICER OF THE COMPANY
  • AN EMPLOYEE / CONSULTANT WHO HAS BEEN ENGAGED FOR MORE THAN 1 YEAR IN THE MAINTENANCE OF FINANCIAL RECORDS / PREPARATION OF FINANCIAL STATEMENTS OF THE COMPANY
  • DIRECTOR / OFFICER / EMPLOYEE OF THE COMPANY SECRETARY
  • A PERSON INVOLVED IN PERFORMANCE DUTIES OF AN ACCOUNTANT / BOOKKEEPER OR SECRETARIAL WORK FOR THE COMPANY.
  • A PERSON WHO AT ANYTIME DURING THE 5 FINANCIAL YEARS PRECEDING THE DATE OF APPOINTED
  • A PERSON RELATED TO ANY OF THE ABOVE
  • ASCERTAIN THAT THE AUDITOR DOES NOT RECEIVE ANY DIRECT/ INDIRECT REMUNERATION OTHER THAN AS AN AUDITOR.
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14
Q

COMPANY SECRETARY

A

MANDATORY APPOINTMENTS - PUBLIC COMPANY - STATE OWNED - MOI REQUIRED
40 DAYS AFTER INCORPORATION MUST BE APPOINTED
10 DAYS NOTICE TO CIPC
60 DAYS AFTER VACANCY HAS RISEN MUST BE FILLED

  • JURISTICTION PERSON / PARTNERSHIP
  • MUST BE SA RESIDENT

REMOVAL

  • 1 MONTH WRITTEN NOTICE
  • 1 MONTH APPROVED BY BOARD
  • STATEMENT OF REASONABLE LENGHT IN AFS SETTING SECRETARY OPION ON THE REMOVAL CIRCUMSTANCES.
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15
Q

APPOINTMENT OF AUDITOR

A
  • AUDIT COMMITTEE IS REQUIRED TO APPOINT AN AUDITOR
  • AUDIT COMMITEE - 3MEMBERS MUST BE DIRECTORS
  • AUDIT COMMITEE IS REQUIRED TO ENSURE THAT THE AUDITOR IS INDEPENDENT
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16
Q

FINANCIAL ASSISTANCE FOR SUBSCRIPTIONS OF SECURITY

A
  • A LOAN A GUARANTEE OR THE PROVISION OF SECURITY. OTHERWISE TO ANY PEROSN FOR THE PERSON IN CONNECTION WITH THE SUBSCRIPTION OF ANY OPTION OR SECURITIES ISSUED OR TO BE ISSUED BY THE COMPANY , OR TO BE ISSUED BY THE COMPANY, IR-RELATED OR RELATED COMPANY FOR THE PURPOSE OF ANY SECURITY OF THE COMPANY OR INTERRELATED COMPANY.

REQUIREMENTS

  • IT SHOULD BE APPROVED BY THE BOARD
  • A SPECIAL RESOLUTION SHOULD HAVE BEEN PASSED FOR THE SPECIFIC RECIPIENT OR GENERALLY FOR A CATEGORY OF POTENTIAL RECIPIENT AND THE PARTICULAR RECIPIENT SHOULD FALL WITH IN THIS CATEGORY
  • THE BOARD SHOULD HAVE BEEN SATISFIED THAT SOLVENCY AND LIQUIDITY TEST HAVE BEEN SATISFIED IMMEDIATELY AFTER PROVIDING THE FINANCIAL ASSISTANCE
  • THE BOARD SHOULD BE SATISFIED TAT THE TERMS UNDER WHICH THE FINANCIAL ASSISTANCE IS TO BE GIVEN IS FAIR AND REASONABLE FOR THE COMPANY
  • THE BOARD MUST ENSURE THAT IF THE MOI INCLUDES ANY CONDITION / RESTRICTION REGARDING THE GIVING OF FINANCIAL ASSISTANCE
17
Q

PRE- INCORPORATED AGREEMENT

A
  • MUST BE IN WRITING
  • WITHIN 3 MONTHS AFTER THE DATE ON WHICH THE COMPANY INCORPORTED THE BOARD OF THE COMPANY MUST RATIFY THE CONTRACT
  • IF THEY DO NOT RATIFY OR REJECT THE CONTRACT WILL BE DEEMED TO HAVE BEEN RATIFIED IN 3 MONTHS
  • IF NOT INCORPORATED THE DIRECTORS WILL BE JOINTLY LIABLE
  • IF RATIFIED IT IS ENFORCEABLE AGAINST THE COMPANY
18
Q

SHAREHOLDERS MEETING AND RESOLUTION

A

NOTICES

  • NOTICE OF A SHAREHOLDER MEETING BE ISSUED AT LEAST 10 DAYS BEFORE A MEETING IS TO BE HELD
  • NOTICE SHOULD INCLUDE - DATE TIME PLACE, - PURPOS OF MEETING - COPY OF PROPOSED RESOLUTIONS - RIGHTS OF THE SHAREHOLDERS - SHAREHOLDERS PROVIDE ID AT MEETING

MEETING QORUM
- 25 % SHAREHOLDER

VOTING QORUM
- 25 % SHAREHOLDERS PROJECT

SHAREHOLDERS
ORDINARY - 50%
SPECIAL RESOLUTIONS - 75% (10% HIGHER THA ORDINARY)

19
Q

AMENDMENT OF MOI

A

SPECIAL RESOLUTION

DECISION BY THE BOARD
- MAKE CHANGES TO NUMBER OF SHARES
- RECLASSIFY UNISSUED AUTHORIZED SHARES
- CLASSIFY UNCLASSIFIED SHARES
DETERMINE THE PREFERENCE RIGHT AND LIMITATION OF AUTHORIZED SHARES
- A NOTICE OF AMENDMENT OF MOI MUST BE FILED

20
Q

SHARES ISSUED

A
  • SPECIAL RESOLUTION

IF NOT PASSED

  • CONTRACT WILL BE NULL AND VOID
  • SUBSCRIBER MUST BE PAID INCL INTEREST
  • SHARE CERTIFICATES WILL BE NULLIFIED
  • ENTRIES IN SHARE REGISTER WILL BE NULLIFIES

ANY DIRECTOR WHO WAS PARTY TO SUCH AN ISSUE MAY BE HELD LIABLE FOR LOSSES SUFFERED BY THE COMPANY

21
Q

SUBSCRIPTION OF SHARES

A

PRIVATE/ PUBLIC LIABILITY COMPANY - PROPOSES TO ISSUE SHARES
EXISTING SHARE HOLDERS HAVE PRE-EMPETIVE RIGHTS BEFORE OTHERS TO SUBCRIBE FOR A PERCENTAGE OF THE SHARE OFFERED - EQUAL TO VOTING POWER IMMEDIATELY BEFORE
- WITHIN REASONABLE TIME TO TOFFER

SUBJECT TO
- ANY LIMITATION, REGULATION , RESTRICTION OR OTHER CONDITIONS AS PROVIDED IN THE MOI

DISTRIBUTION OF SHARES

  • PURSUANT TO BE AN EXISTING LEGAL OBLIGATION OR COURT ORDER
  • THE DISTRIBUTION SHOULD BE AUTHORIZED BY A RESOLUTION

SOLVENCY AND LIQUIDITY TEST MUST BE SATISFIED AND ACKNOWLEDGES BYT HE BOARDS (120 DAYS TO DISTRIBUTE)

IF THE REQUIRED ARE NOT ADHER TO

  • THE DIRECTORS CAN BE LIABLE FOR LOSSES THE COMPANY INCURRED
  • THE TRANSACTION WILL BE VOID.
22
Q

SOLVENCY AND LIQUIDITY TEST ARE USED FOR

A
  • SHARE CAPITAL REDUCTION
  • SHARE CAPITALIZATION
  • FINANCIAL ASSISTANCE FOR PURCHASE OF OWN SHARES
  • FINANCIAL ASSISTANCE TO DIRECTORS OR RELATED PERSONS
  • ISSUE OF DIVIDENDS
  • OTHER COMPENSATIONS

AUE1601 LEGAL ASPECTS IN ACCOUNTANCY (2 decks)

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