DURATION: 3 HOURS TOTAL MARKS: 70 INTERNAL EXAMINERS : MS M. MARITZ MS Z. TALJAARD INSTRUCTIONS:

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1 Page 1 of 6 DURATION: 3 HOURS TOTAL MARKS: 70 INTERNAL EXAMINERS : MS M. MARITZ MS Z. TALJAARD INDEPENDENT MODERATOR : DR E. MNENEY INSTRUCTIONS: 1. This paper consists of three 3 Sections: Section A, Section B and Section C. 2. Students must answer Section A on the MCQ grid provided. 3. Students will receive one turquoise (3 pages) answer book and one blue (7 pages) answer book. Section B must be answered in the turquoise (3 pages) answer book clearly marked Section B Business Trust. Section C must be answered in the blue (7 pages) answer book clearly marked Section C Partnerships. 4. Students must answer all questions in all Sections. 5. It is in your interests that you write clearly. 6. This examination paper consists of 13 pages. It is your responsibility to ensure that you have a complete copy.

2 Page 2 of 6 Section A Multiple Choice Questions 20 marks Section B Business Trusts 10 marks ANSWER IN THE TURQUOISE (3 PAGES) ANSWER BOOK CLEARLY MARKED SECTION B BUSINESS TRUSTS. Question 1 Frankie wants to create a trust in order to benefit his son, Bernard. He states in his trust instrument that he intends to appoint Thandi as trustee. He also provides in the trust instrument that Thandi has the power of assumption, the power of subrogation and the power of substitution. However, these powers were never confirmed in writing by the Master of the High Court. A month after assuming the office as trustee, Thandi realises that she will not be able to handle the workload as trustee on her own. She acts on her power of assumption and appoints Thabo to help her administer the trust. Did Thandi act validly in terms of her rights and duties as a trustee? Substantiate your answer with reference to relevant legislation and case law. Question 2 [Total Q1: 7 marks] After graduating from UKZN, Frazana and Peter decide that they would like to start their own business. After doing some research as to the various business enterprises that they could form, they are very confused and decide to approach you for advice. They inform you that they would like to form a partnership where they can work together as a team to share the profits and the losses of this business. However, upon closer investigation, they say that they have heard that there are some disadvantages to forming a partnership. Frazana and Peter want to know from you whether there is another type of legal institution that they could form that would give them more or less the same sort of

3 Page 3 of 6 advantages as a partnership. Advise Frazana and Peter. In your answer, you should briefly refer to the structure of the business enterprise you recommend. [Total Q2: 3 marks] Section C Partnerships, Close Corporations and Companies [Total Section B: 10 marks] 40 marks ANSWER IN THE BLUE (7 PAGES) ANSWER BOOK CLEARLY MARKED SECTION C PARTNERSHIPS Question Jay-Z and Beyonce enter into an agreement to form a partnership called Government Records. Explain whether they can use this name for their partnership. [4 marks] 3.2 Tom, Richard and Harry are partners in a partnership of accountants. In 2010 the partnership incurs a net loss of R Both Richard and Harry pay their share in the losses, but Tom refuses. Explain and discuss the action that Richard and Harry can institute in court in order to claim Tom s share of the losses. [5 marks] Question 4 [Total Q3: 9 marks] 4.1 Sello and Isaac are members in a Close Corporation that restores classic cars. They have been members of this business for almost 20 years. A client approaches the Corporation to modify the interior of his 1957 Chevrolet and undertakes to pay the Corporation R While Sello is busy reattaching the leather to the gear lever, he runs out of super glue and uses some Pritt glue to further attach the material. On the first day that the client takes his new car out on the road, the leather comes off from the gear lever of the car. The client refuses to pay the R to the Close Corporation. Advise the Close Corporation on the legal position of Sello.

4 Page 4 of 6 [6 marks] 4.2. Mpho and Isaac are members in a Close Corporation. On all of their official communication the name of the Corporation appears as follows: Question 5 Left Shoe CC Members: Mpo Zuma, Isaac Mhlangu Is this information on the letterhead sufficient to comply with the Close Corporations Act? Provide an explanation for your answer. [2 marks] [Total Q4: 8 marks] 5.1 Goodbread Limited wants its members to vote on the appointment of two new directors to the company. It issues notice to all its members of a general meeting and proposes that this be a special resolution. (a) (b) (c) Explain how notice convening this meeting must be issued. [2 marks] Explain in which circumstances such a special resolution will be passed. [4 marks] Within how many days should the Registrar be informed of the passing of the special resolution? [1 mark] 5.2 The articles of incorporation of Heartbucks, a public company, specify that only directors may bind the company in respect of the granting of bonds over the immovable property of the company. Jay, the manager in the company s department of Human Resources approaches ABSA Bank and grants a bond over one of the company s office buildings. Discuss the legal position of ABSA Bank. [5 marks]

5 Page 5 of Name and briefly discuss the types of companies provided for in the new Companies Act 71 of [4 marks] [Total Q5: 16 marks]

6 Page 6 of 6 Question 6 Shakira has a clothing account at Soulworths, a franchise that sells clothing. The outstanding amount on Shakira s account is R On 8 August 2010 Shakira informs Soulworths that she is not able to pay her account. Soulworths is tired of Shakira s non payment and wants her estate to be sequestrated. Discuss how Soulworths can effect this, and what they need to prove. [Total Q6: 7 marks] [Total Section C: 40 marks] ~~~~~~~~~~~~~~~~~ END OF EXAMINATION PAPER ~~~~~~~~~~~~~~~~~

09h00 12h00 (3 Hours)

Case Study 1: 09h00 12h00 (3 Hours) 50 Marks Section A: [Total 19] Question 1 [9] Calculate the following: SHOW ALL CALCULATIONS/STEPS FOLLOWED 1.1 The tax he paid on the withdrawal of 10 March 2011 (3)