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Where leaders learn

Company Law
A

Course Outline
2020

Lecturer:
Mr T Moroeng
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1. Introduction
Welcome to Company Law A. In this course you will be introduced to various kinds of
juristic persons, and more specifically types of companies. Company law is largely
regulated by the Companies Act 71 of 2008. This legislative text forms the basis of this
course and you should familiarise yourself with its contents.

Significance of this course

This course seeks to inform, educate and engage students towards the objective of
understanding the framework within which companies in South Africa, as defined in
the Companies Act 71 of 2008, operate and are regulated.

How to use this document

This outline is meant to guide you through the course content and the various sources
that you will work with. In order to keep track of what is discussed in class and also to
plan ahead for the semester, you are expected to first read this outline at least twice,
and to refer to this outline throughout the semester. You can expect to find the
following in this document: course outcomes, administrative information, description
of teaching methods, list of prescribed material, and integrated practise questions.

General information

Room no. and Telephone no. and email

Name
Building address
046 603 8432
Lecturer Mr Moroeng Law F6A
[email protected]

Arranged via email

Consultation
Hours
Please allow the lecturer 24 hours to respond to your email with
confirmation of the appointment date and time
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2. Assumptions of prior learning

Before you start this course, you must be able to:

• Write and communicate in coherent English,

• Demonstrate a thorough knowledge of the general principles of the law of contract,
• Demonstrate a working understanding of the law of agency, and the rules for
statutory interpretation.
• Be capable of independent learning,
• Understand the system of judicial precedent and the important role precedent plays
in our law,
• Read, analyse and extract principles from law reports and other source material,
• Apply legal problem solving techniques to practical situations.

3. Critical Outcomes
Apart from the knowledge and skills that relate directly to Company Law, the
following skills are central to the study and practice of law which the course
intends to enhance. By the end of this course you should be able to:

• Identify and solve practical legal problems,

• Organise and manage yourself and your work load,
• Analyse and evaluate the information conveyed during lectures and
contained in the course handout,
• Communicate effectively in class discussions, written assignments and
written examinations,
• Use academic technologies,
• Recognise problem-solving contexts in company law.
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4. Specific outcomes
By the end of this course, students will be able to achieve the following
outcomes:
• Critically analyse the meaning, scope and extent of separate legal personality,
• Identify, distinguish and characterise the different forms of companies,
• Provide a factual and theoretical understanding of the rights, duties,
obligations and liabilities of the stakeholders in a corporate environment
• Understand internal regulatory oversight.
• Identify and systematically apply statutory provisions to determine subsidiary
relationships,
• Appreciate and simulate the legal political social and cultural factors that are
likely to significantly affect the South African corporate environment.
• Appreciate the corporate social responsibility of companies and their role in
promoting social justice.
• Apply the knowledge acquired during the course to solve practical problems
with regard to business enterprises,
• Critically analyse, explain and apply the various remedies provided in the
Companies Act 71 of 2008 for the protection of minority interests,
• Advise an ordinary person regarding the legal rules that apply for the
incorporation of a company in terms of the Companies Act 71 of 2008.

5. Teaching methods and learning responsibility of students

This course aims to analyse and critique the law in its present state and consider the
imminent changes to this area of law. To this end:

• A combination of formal lecturing and class discussions will be conducted.

• Formal lecturing will be facilitated through a case study method. To this end,
appropriate cases and the narratives of a legal dilemma will be the basis of
lectures and class discussion.
• All lecture materials (excluding power point presentations) will be placed
on RUConnected well in advance to free up time for class discussions.
• Students are expected to take responsibility for their own learning by reading
and preparing the course material provided.
• Students are encouraged to voice their opinions in class and in assessments
in order to illustrate how critically they have reflected and engaged with the
relevant legal principles.
• The required reading for the entire course is part of this course outline.
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6. Student assessment

SPECIFIC OUTCOMES ASSESSMENT CRITERIA ASSESSMENT

TASKS
(What evidence must
you provide to show that
you are competent?)

On completion of this
course, you should be You must be able to: The evidence will
able to: be gathered in:
• Identify the different theories • Apply statutory and -Class discussions
of incorporation to provide a common law principles. -Class assignments
crucial context in which -Test
students will appreciate how • Identify critical aspects -Examination
concepts and principles of of case law.
company law in south Africa
are shaped by different • Demonstrate an
objectives. understanding of the
concepts and principles
contained in the case
law and statutes.
• Identify, distinguish and • Describe and explain -Class discussions
characterise the different various companies. -Class assignments
forms of companies. -Test
• Discuss the advantages and -Examination
disadvantages of each
company.

• Identify the relevant

legislative provisions.

• Identify critical aspects of case

law regarding each company.

Provide a factual -Class discussions

and theoretical  Identify different stakeholders in -Class assignments
understanding of the -Test
rights, duties, obligations a company
-Examination
and liabilities of the
stakeholders in a  Describe the rights, duties,
corporate environment
obligations and liabilities of
stakeholders.

 Apply the common law and

legislative principles in respect
of the rights, duties, obligations
and liabilities of stakeholders.
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 Understand the impact of

majority rule & protection of
minority interests in a company.

 Appreciate the rules for the

management of
companies.

 Demonstrate an understanding
of and apply the relevant
principles of the law of agency
and contract to practical
situations.
• Understand internal • Identify the nature and -Class discussions
regulatory oversight extent of powers of -Class assignments
auditors. -Test
-Examination

• Appreciate and simulate • Describe and predict -Class discussions

the legal political social some of these factors -Class assignments
and cultural factors that such as: -Test
are likely to significantly -Examination
affect the South African • the nature and extent
corporate environment. of corporate
governance codes;

• South Africa’s
economic hegemony in
Africa; and

• the evolving
recognition of
companies as
subjects of
international law
• Apply the knowledge • State the relevant law, -Test
acquired during the and discuss the -Examination
course to solve practical relevant legal
problems with regard to precedents with regard
business enterprises to that issue.

• Apply the law to the

facts in order to come
to a reasoned
conclusion about the
problem and the legal
remedies that might
flow from the finding.
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7. Assessment strategy
You will be assessed by means of three (3) tasks and an examination to be written in
June. You are encouraged to make proper use of all these assessment opportunities
as each will contribute to your final mark. Do not be fooled by the tasks that weigh the
least – these may very well be the tasks that could boost your marks if you find yourself
in a border line situation in June. Please consult RUconnected, the notice board and
website of the faculty for relevant dates.

Assessment task Weighting Purpose of task

To refresh your memory on content relating
Prior Knowledge Test (PKT) 5% to the assumptions of prior learning
stated earlier in this document
To evaluate whether you are able to
Assignment 10% critically analyse and apply the provisions
of the Companies Act 71 of 2008
To assess student learning and ability to
Semester Test 15% solve legal problems through application of
the relevant legal rules

Semester mark 30%

Exam 70%
TOTAL 100%

8. DP certificate
Attendance of lectures is compulsory and a register will be taken during each lecture.
It is accepted that 100% class attendance is generally not attainable; however,
students may miss no more than six (6) lectures for this course. Students are
responsible for collecting, retaining and presenting all relevant documents (doctor’s
letters etc) in respect of the lectures and assessments missed and filling out the
necessary LOA form. LOA forms must be submitted within five (5) working days of the
lecture or assessment which you missed. Failure to do so may result in your LOA
application being denied.

A schedule of lectures is available on RUconnected to help you keep track of the

sessions.

Please be reminded that signing for another student constitutes fraud and any student
caught doing so will be prosecuted in terms of the student disciplinary code.
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9. Study Material
A number of study material can be used to broaden and sharpen your understanding
of company law. The following are prescribed and recommended sources. Under each
theme, The “Companies and other Business Structures in South Africa” by Davis et al
is the prescribed book that must be covered for in preparation for lectures. Some
themes may prescribe Chapters from other recommended textbooks. For these
particular Chapters, the recommended textbooks must be covered in preparation for
lectures. Save for when it is expressly stated, the recommended textbooks for the
theme may be covered to broaden your understanding.

You will require the following for completion of this course:

a. Companies Act 71 of 2008

b. Prescribed: Davis et al, Companies and other Business Structures in South Africa 3rd
edition (2019) Oxford University Press: Cape Town

c. Recommended: Cassim et al, Contemporary Company Law 2nd edition (2012)

Juta: Claremont

d. Recommended: Cassim et al, The Law of Business Structures (2012) Juta:

Claremont

e. King IV: Report on Corporate Governance in South Africa (2016)

f. Useful links:
Independent Institute of Directors of Southern Africa www.iodsa.co.za
Companies Intellectual Property Commission www.cipc.co.za
Financial Services Board www.fsb.co.za
Johannesburg Securities Exchange www.jse.co.za

PLEASE BE ADVISED THAT THE PRESCRIBED MATERIAL IS SUBJECT TO

CHANGE, AS IS THE LAW, AND THAT I RESERVE THE RIGHT TO ADD/REPLACE
STUDY MATERIAL DURING THE COURSE OF THE SEMESTER.

ANNOUCEMENTS IN THIS RESPECT WILL BE MADE DURING CLASS / ON

RUCONNECTED AND STUDENTS ARE EXPECTED TO REMAIN UP TO DATE.
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10. Course Content

Theme 1: Introduction to South African company law and

the concept of separate legal personality
Purpose of the theme:
The scope of application of various sources of company law will be discussed in this
theme. This will be done with a view to ensure that students understand the most
important principle of company law, which is separate legal personality.

Some key terms will come up quite often during the lectures. You are advised to
familiarise yourself with these concepts. Listed below are some of the most important
terms that you must understand. Ideally, you should use section 1 of the Companies
Act 71 of 2008 throughout the entire course. For starters, look for the following words
in section 1 of the Companies Act 71 of 2008 and study the meanings thereof:

• alterable provision • securities

• company • share
• debenture • shareholder
• director • shareholders meetings
• general voting rights • special resolution
• juristic person • unalterable provision
• memorandum of incorporation • voting rights
• ordinary resolution • voting securities

Sources of reference:
• s1; s5; s20(9) of the Companies Act 71 of 2008
• Prescribed: Chapters 1 & 2.1 – 2.4 in Davis et al, Companies and Other Business
Structures (2019)
• Recommended: Chapters 1 & 4 in Cassim et al, The Law of Business Structures (2012)
• Recommended: Chapter 2 in Cassim et al, Contemporary Company Law (2012)

Case law
• Salomon v Salomon & Co Ltd [1897] AC 22 (HC)
• Dadoo Ltd v Krugersdorp Municipal Council 1920 AD 530
• Robinson v Randfontein Estates Gold Mining Co 1921 AD 168
• Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790 (A)
• Le’Bergo Fashions CC v Lee 1998 (2) SA 608 (C)
• Hülse-Reutter v Godde 2001 (4) SA 1336 (SCA)
• Ex Parte Gore 2013 (3) SA 382 (WCC)
• City Capital SA Property Holdings Ltd v Chavonnes Badenhorst St Clair Cooper
NO (85/2017) [2017] ZASCA 177 (1 December 2017)

Journal articles

• Rehana Cassim ‘Piercing the veil under s 20(9) of the Companies Act 71 of 2008:
A new director’ (2014) 26(2) South African Mercantile Law Journal 307 – 337.
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Theme 2: Types of business structures and groups of

companies
Purpose of the theme:
In this section you will compare and contrast the different types of companies and
other business structures such as a sole proprietorship and close corporations. You
will also learn how to determine when a person is said to have control in a company.

Sources of reference:
• s1, s2, s3, s8 of the Companies Act 71 of 2008
• Prescribed: Chapters 2.5 & 3 in Davis et al, Companies and Other Business Structures
(2019)
• Recommended: Chapter 5 & 8 in Cassim et al, The Law of Business Structures (2012)
• Recommended: Chapters 3 & 6 in Cassim et al, Contemporary Company Law
(2012)

Case law
• Cuninghame v First Ready Development 249 (association incorporated under
section 21) 2010 (5) SA 325 (SCA)

Journal articles
• Maleka Femida Cassim ‘The Contours of Profit-Making Activities of Non-Profit
Companies: An Analysis of the new South African Companies Act’ (2012) 56(2)
Journal of African Law 243 – 267.
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Theme 3: Formation of companies and company

constitution
Purpose of the theme:
In this section you will learn the criteria for the incorporation of a company and the
legal rules that apply to company names. You will also be exposed to various
examples of relevant company documents such as a memorandum of incorporation,
notice of incorporation, and company rules.

Sources of reference:
• s11, s12, s14, s15, s16, s21, s160 of the Companies Act 71 of 2008
• Prescribed: Chapters 2.9 – 2.12 in Davis et al, Companies and Other Business
Structures (2019)
• Recommended: Chapter 6 in Cassim et al, The Law of Business Structures (2012)
• Recommended: Chapter 4 in Cassim et al, Contemporary Company Law (2012)

Case law
• Venalex (Pty) Limited v Vigraha Property CC and others [2015] JOL 33169 (KZD)
• Richard Du Plessis Barry v Clearwater Estates NPC & others (187/2016) [2017]
ZASCA 11 (16 March 2017)
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Theme 4: Corporate capacity, authority and liability

Purpose of the theme:
In this section you will distinguish between the concepts of capacity and authority. You
will be introduced to the powers and the capacity that a company possesses, while
also critically engaging with the legal principles of agency and representation in a
company.

Sources of reference:
• s19, s20, s66 of the Companies Act 71 of 2008
• Prescribed: Chapter 5 in Cassim et al, Contemporary Company Law (2012)
• Recommended: Chapter 7 in Cassim et al, The Law of Business Structures (2012)

Case law
• Royal British Bank v Turquand (1856) 119 ER 886
• One Stop Financial Services (Pty) Ltd v Neffensaan Ontwikkelings (Pty) Ltd and
Another 2015 (4) SA 623 (WCC)
• Recommended: Makate v Vodacom (Pty) Ltd [2016] ZACC 13

Journal articles
FHI Cassim & MF Cassim “The authority of company representatives and the
Turquand rule revisited” (2017) 134(3) SALJ 639.
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Theme 5: Share capital, shareholders meetings and

resolutions
Purpose of the theme:
This section will help you learn how to identify shares and different classes of shares.
You will also go through the legal rules that apply for the convening of shareholders’
meetings and resolutions.

Sources of reference:
• s1; s4; s46; s57-65 of the Companies Act 71 of 2008
• Prescribed: Chapters 4; 5 & 8 in Davis et al, Companies and Other Business Structures
(2019)
• Recommended: Chapter 9, par 10.2 & chapter 11 in Cassim et al, The Law of
Business Structures (2012)
• Recommended: Chapter 7 & 9 in Cassim et al, Contemporary Company Law
(2012)

Case law
• Richard Du Plessis Barry v Clearwater Estates NPC & Others (187/2016) [2017]
ZASCA 11 (16 March 2017)
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Theme 6: The Board of Directors and Directors’ Duties

Purpose of the theme:
This section of company law is very important. In this theme you will learn about the
fiduciary relationship that exists between directors, the company and its shareholders.
The theme entails an overview of appointment and dismissal of directors as well the
legal rules for the constitution of board meetings. In this section you will also embark
on an in-depth analysis of the duties that directors owe towards the company, what
constitutes a breach of these duties and which remedies can be used to hold directors
liable for non-compliance with their duties.

Sources of reference:
• s66-78 of the Companies Act 71 of 2008
• Prescribed: Chapter 6 in Davis et al, Companies and Other Business Structures (2019)
• Recommended: Chapter 12 & 14 in Cassim et al, The Law of Business Structures
(2012)
• Recommended: Chapters 10 & 12 in Cassim et al, Contemporary Company Law
(2012)

Case law
• Kaimowitz v Delahunt and others 2017 (3) SA 201 (WCC)
• Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134
• Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168
• Cook v Deeks [1916] 1 AC 554 (PC)
• Industrial Developments Consultants Ltd v Cooley [1972] 2 All ER 162

Journal articles
• R Stevens " The Legal Nature of the Duty of Care and Skill: Contract or Delict?"
PER / PELJ 2017(20)
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Theme 7: Protection of minority interests and remedies

Purpose of the theme:
In this section you will learn about the pitfalls of the majority rule. You will also learn
about the various remedies that are aimed at the protection of minority interests as
provided in the Companies Act 71 of 2008. You will also be expected to engage with
the opinions of various legal scholars in order to critically reflect on the effectiveness
of these statutory remedies.

Sources of reference:
• s 20(5), (6) & (9); s161; s162; s163; s164; s165 of the Companies Act 71 of 2008
• Prescribed: Chapter 14 in Davis et al, Companies and Other Business Structures (2019)
• Prescribed: Chapter 18 in Cassim et al, The Law of Business Structures (2012)
• Recommended: Chapter 16 in Cassim et al, Contemporary Company Law (2012)
• Recommended: MF Cassim The new derivative action under the Companies Act:
Guidelines for judicial discretion (2016) Juta: Claremont

Case law
• Foss v Harbottle (1843) 67 ER 189
• Visser Sitrus (Pty) Ltd v Goede Hoop Sitrus (Pty) Ltd and Others 2014 (5) SA 179
(WCC)
• Giwhala & Others v Grancy Property Ltd and Others [2016] 2 All SA 649 (SCA)
•

Journal articles
• M. Lehloenya & T Kgarabjang “Defining the limits of the “Oppression Remedy’ in
the wake of section 163 of the Companies Act 71 of 2008 – Grancy Properties
Limited v Manala [2013] 3 All SA 111 (SCA)” 36 Obiter 511
• MF Cassim “When companies are harmed by their own directors: The defects in
the statutory derivative action and the cures Part 1” (2013) 25 SA Merc LJ 168.
• MF Cassim “When companies are harmed by their own directors: The defects in
the statutory derivative action and the cures Part 2” (2013) 25 SA Merc LJ 301.
• R Cassim “Delinquent directors under the Companies Act 71 of 2008: Giwhala &
Others v Grancy Property Limited 2016 ZASCA 35” 2016 (19) PELJ 1-28.
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Theme 8: King IV: Report on Corporate Governance in

South Africa
Purpose of the theme:
This section will briefly introduce the principles of corporate governance of South
Africa, as contained in the King Code IV report published in 2016.

Sources of reference:
• King IV: Report on Corporate Governance for South Africa – 2016
Author: Ansie Ramalho / King IV Project Lead, Institute of Directors in
Southern Africa

This item can be found on the LexisNexis library under the ‘Corporate and
Commercial’ tab.
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11. Student Feedback / Course evaluation

How students experience the course, the lecturer’s approach to the course and
assessments tasks is an important part of teaching and learning. As a result, students
will be required to participate in a course evaluation at the end of the semester. The
purpose of this evaluation is to give students a platform to express and reflect on how
they experience the course as a whole and provide suggestions for improvement.
Students will be requested to complete an evaluation questionnaire in which they will
reflect and comment on the course and reflect on how they have experienced the
course. Students are highly encouraged to use this platform to express their concerns,
challenges and even suggest possible ways in which the course can improve.

Last updated: January 2020

‘I wish you all the best and the greatest success in completing this course.’
N Mashinini