UNIVERSITY OF KWAZULU-NATAL

EXAMINATIONS: JUNE 2007 SUBJECT, COURSE AND CODE: CORPORATE LAW (LAWS4COP1)

DURATION: 2 HOURS TOTAL MARKS: 60 ________________________________________________________________________ External Examiner: Mr C Rademeyer Internal Examiner: Mrs DM Farisani ________________________________________________________________________ STUDENTS ARE REQUESTED, IN THEIR OWN INTERESTS, TO WRITE LEGIBLY ________________________________________________________________________ PLEASE NOTE: This question paper consists of 2 pages. Please see that you have them both. INSTRUCTIONS TO STUDENTS 1. 2. 3. 4. This paper contains three questions. Answer any two questions. Where appropriate, refer in your answers to relevant decided cases.

This is a closed book examination. No reference materials of any kind may be brought into the examination room or consulted in the course of the examination. ________________________________________________________________________ QUESTION 1. Seth is a shareholder in a private company. He has recently been appointed to the companys board of directors. Upon finding out that you are a final year LLB student he approaches you with a request to answer the following question: Who, in law, has authority to represent and bind the company to a contract, and, in particular, do I have authority to do so? With reference to relevant case law, advise Seth in relation to the applicable general principles, and in relation to his own authority, if any. (30)

Question 2

UNIVERSITY OF NATAL, PIETERMARITZBURG, EXAMINATIONS: JUNE 2007 SUBJECT: CORPORATE LAW PAGE: 2

QUESTION 2. Discuss the fiduciary duties (if any) of members of a close corporation as well as the liability of members for the debts of a close corporation; include in your answer a discussion of the circumstances, if any, in which the members may incur personal liability for the debts of the close corporation. (30)

QUESTION 3. Discuss the common law principles regarding the enforcement of corporate duties owed by directors as well as members of the company who hold a controlling interest in the company, including any difficulties or unsatisfactory aspects of those common law principles. Your discussion must deal only with the common law and not, for example, with the statutory derivative action. (30)