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CIS INTERNATIONAL QUALIFYING

BOARD EXAMINATION
OCTOBER 2010

Corporate Secretaryship
Date:

22 October 2010

Time:

09:00 12:00

Duration:

3 hours

Marks:

100

MEMORANDUM

All references to the Act = The Companies Act 61 of 1973


All references to the CC Act = The Close Corporations Act 69 of 1984
All references to ICSA notes = ICSA Corporate Secretaryship study material
All references to CBA = South African Corporate Business Administration by Juta

Page 1 of 17

QUESTION 1
1.1 (ICSA notes Chapter 2: 4)
Any 6 of the following for 6 marks:
The Companies Act does not impose a general requirement for directors to retire by rotation,
but enabling provisions do appear in the pro-forma Articles set out in the Companies Acts
Schedule 1, Table A, articles 66 to 73.
These are as follows:
1. At the first annual general meeting of the company, all the directors should retire and be
elected by the company in general meeting.
2. At subsequent annual general meetings, one third, or the nearest to one third of the
directors must retire and stand for re-election.
3. Those retiring will be the ones who have been the longest in office since their last election.
For directors appointed on the same day, the retirement is decided by agreement or, failing
that, by lot (i.e. by random choice).
4. If nobody stands against a retiring director, the director is automatically re-elected, unless it
is resolved not to reappoint the director, or not to fill the vacancy.
Marks can also be awarded (if full marks not yet allocated) for:

Managing and other executive directors are exempt from the requirement to retire by
rotation.
The rotation clauses enable the members to choose not to re-elect a director at the expiry
of his period of office.
Any reference to King III and the recommendations regarding retiring by rotation. (One
mark for each recommendation).
(6)

1.2 (ICSA notes Chapter 2: 10.2, 12: 7.1)


Any 6 of the below for 6 marks:

An alternate director is a person appointed by a member of the board to act and speak
during periods of absence or incapacity of the director.
An alternate may only be appointed if the Articles of Association so provide.
During his or her appointment the alternate director is certainly a de facto director.
The particulars of an alternate director, as with a director, should be entered in the register
of directors and a form CM29 lodged with the Registrar of Companies. Alternate directors
are subject to the same rules as directors with regard to disclosure of interests in shares
and debentures of the company and transactions with the company.
They may act only in the absence of the appointing director, who may also revoke the
alternates appointment at any time by notice to the company.
If an appointing director ceases to hold office, for whatever reason, the alternate director
will automatically cease to hold office.
Must be noted in AFS.
Must sign CM27.

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Alternate directors are entitled to:

Attend and vote at any such meeting at which the director appointing him is not personally
present.
Perform all the functions of his appointer as a director in his absence.
The alternate director will not, however, be entitled to receive any remuneration from the
company for his services, although this does not preclude the negotiation of a separate fee
between the director and the alternate director.
(6)

1.3 (ICSA notes Chapter 4: 2.5)

An Incorporated or Inc. company is an unlimited company, but like a limited one, is still
regarded as a company, and is therefore subject to the same rules concerning its capacity
to enter into transactions and incur liabilities.
Unlike a limited company, however, its members are liable to contribute their personal
assets in order to satisfy its debts and liabilities in the event of winding up.
Unlimited companies are often professional practices or special types of trading
organisations that require corporate status and perpetual succession. This means that the
company can carry on regardless of the changes in membership that may occur from time
to time.
(3)

1.4 (ICSA notes Chapter 5: 1.3)


The objects clause is generally not one clause but a series of clauses which set out a
companys objectives, i.e. the business it proposes to carry on and any incidental or ancillary
powers which may be required to achieve this. The main purpose behind the objects clause
relates to the doctrine of which states that any act of a company which is outside the scope of
its objects is ultra vires (beyond the powers).
The clauses can be split into three categories:

The main objects clause(s). These clauses set out what the main business and activities of
the company will be.
The subsidiary objects clause(s) (powers). These clauses set out the main ancillary
activities which a company is authorised to undertake to enable it to achieve its stated
main objects. For example, the power to borrow and lend money, purchase and sell
property, acquire and promote other businesses and to give guarantees.
The catch-all clause. This clause allows a company to do anything which could be
regarded as incidental to the main objects and is usually included as a protection against
the company overstepping the boundaries of the main and subsidiary objects clauses.

(4)

1.5 (ICSA notes Chapter 11: 2.10)


As a member has a right to attend a general meeting of a company it is only possible to evict a
member upon the majority of members present at a meeting voting to exclude him or her from
the meeting.
This is usually only resorted to in the case of disorderly conduct (e.g. the member is drunk and
keeps shouting and disrupting the meeting) and after the Chairman has warned the member
Page 3 of 17

on several occasions the company secretary would need to advise the Chairman of the
options and process to follow.
(2)

1.6 (ICSA notes Chapter 11: 11.1, Section 206 of the Act)
Members have a right to inspect the minutes of general meetings and to be supplied with a
copy of any minutes within seven days of making the request.
The rights of members to inspect minutes are confined solely to minutes of general meetings
and AGMs. Members have no right to inspect the minutes of board meetings.
(2)
1.7 (ICSA notes Chapter 12: 8.1)
(half mark for each bullet point)
All minutes must include the following basic elements:

Name and registration number of the company.


Place where the meeting was held.
Day and date of the meeting.
Type of meeting.
Names of those present and in attendance / apologies.
Record of the proceedings.
Chairmans signature, verifying that the minutes are a true record of proceedings.
The record of proceedings should include the text of any resolutions put to the meeting and
the result of any vote.
Records of any written resolutions should be noted at the next meeting of directors, in
terms of Section 242(2) of the Companies Act.
Date of next meeting / General.
(4)

1.8 (ICSA notes Chapter 13: 1.2, 2.4, 4.2 and 14: 1.1)
Share premium - is the difference between the issue price of a share and its nominal value.
For example, if the nominal value of a share is R1 and it issued for R1.50, the premium is 50
cents.
Letters of renunciation - In the case of rights offers the existing shareholders are often
permitted to renounce the right to acquire shares offered to them in favour of another person
by completing a letter of renunciation, which is usually attached to the letter of offer.
Consolidation of shares - means that the shares of a low nominal value are aggregated into
a smaller number of shares of an increased nominal value. For example, five shares of 10
cents each may be consolidated into one share of 50 cents.
Blank transfer form - when the shareholder completes a securities transfer form (CM42) but
leaves the name of the transferee blank, this is called a blank transfer. This happens when the
shares are used as a form of security for a bank loan.
(4)

Page 4 of 17

1.9 (ICSA notes Chapter 16: 5)

The purpose of a profit-sharing share scheme is to give all employees a common target of
achieving at least a certain level of company profit for the year.
If the profit target is achieved, a formula is used which determines a proportion of the
profits which is set aside for the profit-sharing scheme.
The proportion of the profits is then used to either subscribe for the employers shares or to
purchase the shares in the market.
The shares are then held in a trust for a qualifying period (say at least two or three years)
before they are released to the employee.
No performance conditions usually apply in the qualifying period as the performance was
met at the outset by the company achieving the target profit level.
The employer would need to consider when drafting the scheme rules whether the
participant should have a beneficial interest during the qualifying period e.g. being eligible
to receive any dividends or to vote via proxy at general meetings.
(6)

1.10 (ICSA notes Chapter 13: 2.7)


Any 4 for 4 marks
Pre-listing statements are not required for issues of securities by applicants whose securities
are already listed, and which fall into the following categories:
a)
b)
c)
d)
e)

Securities issued as a result of the conversion of convertible securities;


Securities issued as a result of the exercise of rights under options;
Securities issued in place of securities already listed;
Securities issued/allotted to employees, if securities of the same class are already listed;
Securities issued relating to the extension of a business contemplated by and previously
described in a pre-listing statement;
f) Securities issued as a result of a capitalisation/bonus issue; or
g) an issue of securities, including a rights issue, that, together with any securities of the
same class issued in the previous three months, would increase the securities issued by
less than 30% (for this purpose a series of issues in connection with a single transaction,
or series of transactions that is regarded by the JSE as a single transaction, will be
aggregated and deemed to be a single issue for purposes of measurement against the
30% level).
(4)
[40 marks]

Page 5 of 17

QUESTION 2 (King III hand-out and code)


Well structured memorandum detailing the concerns and the applicable King III
recommendations.
Mark for each well structured concern and any of the bullets per category (up to the
maximum marks indicated).
Ethical leadership (3 marks)
Concerns - the generals political ties, his recommendation of his wifes company,
directors not wanting to express critique against his views due to his connections
and ability to manipulate the future of the company.

The board should provide effective leadership based on an ethical foundation.


Ethical leaders should:
Direct the strategy and operations to build a sustainable business.
Consider the short- and long-term impacts of the strategy on the economy,
society and the environment.
Conduct business ethically.
Do not compromise the natural environment.
Take account of the companys impact on internal and external
stakeholders.

Acting in the best interests of the company (3 marks)


Concerns the generals recommendation of his wifes company (conflict of
interest), directors not wanting to express critique against his views due to his
connections and ability to manipulate the future of the company.

The board and its directors should act in the best interests of the company.
Directors must adhere to the legal standards of conduct.
Real or perceived conflicts should be disclosed to the board and managed.

The roles of the CEO and Chairman (7 marks)


Concerns the combined role of CEO and Chairman, the Chairmans casting vote,
domineering personality, excessive power over the future of the company.

The board should elect a chairman of the board who is an independent nonexecutive director. The CEO of the company should not also fulfill the role of
chairman of the board.
The members of the board should elect a chairman on an annual basis.
The chairman should be independent and free of conflict upon appointment.
A lead independent director should be appointed in the case where an executive
chairman is appointed or where the chairman is not independent or conflicted.
The role of the chairman should be formalised.
The chairmans ability to add value, and his performance against what is
expected of his role and function, should be assessed every year.
The CEO should not become the chairman until 3 years have elapsed since
relinquishing his role as CEO.

Page 6 of 17

The chairman together with the board, should consider the number of outside
chairmanships held.
The board should ensure a succession plan for the role of the chairman.
The board should appoint the chief executive officer and establish a framework
for the delegation of authority.

Balance of power and the concept of non-executive and independent directors (7


marks)
Concerns Overbearing chairman, chairmans casting vote, board composition (no
independent non-executive directors also explain that legal advisor and directors
of holding company not regarded as independent).

The board should comprise a balance of power, with a majority of non-executive


directors. The majority of non-executive directors should be independent.
When determining the number of directors serving on the board, the knowledge,
skills and resources required for conducting the business of the board should be
considered.
Every board should consider whether its size, diversity and demographics make
it effective.
Every board should have a minimum of two executive directors of which one
should be the CEO and the other the director responsible for finance.
At least one third of the non-executive directors should rotate every year.
The board, through its nomination committee, should recommend the eligibility of
prospective directors.
Any independent non-executive directors serving more than 9 years should be
subjected to a rigorous review of his independence and performance by the
board.
The board should be permitted to remove any director without shareholder
approval.

To be regarded as an independent non-executive director, a director should: (Half


marks for any of these, if full marks not already obtained)

Not have been employed by the company or the group of which it currently forms
part in any executive capacity for the preceding three financial years.
Not be a member of the immediate family of an individual who is, or has been in
any of the past three financial years, employed by the company or the group in
an executive capacity.
Not be a professional advisor to the company or the group other than in a
director capacity;
Be free from any business or other relationship which could be seen to materially
interfere with the individuals capacity to act in an independent manner.
Not be a significant supplier to, or customer of the company or group.
Have no significant contractual relationship with the company or group.
Not be a direct or indirect interest in the company (including any parent or
subsidiary in a consolidated group with the company) which is either material to
the director or to the company. A holding of five percent or more is considered
material.
Not receive remuneration contingent upon the performance of the company.
[20 marks]
Page 7 of 17

QUESTION 3.1 (ICSA notes Chapters 5: 3)


Any change to the registered office is made by resolution of the Board.
Change to Registered Office (half mark for any 10 bullet points)

Ordinary board resolution.


Notify the change of registered office address to the Registrar on form CM22.
Section 170(b) 21 days notice to Registrar of change.
Section 170(d) change shall not take effect unless Registrar has recorded the particulars.
Amend company headed stationery.
Amend any signage outside a registered office.
The company secretary should ensure that old stationery is destroyed.
Update the company website.
Notify the SARS office, bank, auditors, lawyers, customers and suppliers.
Inform the JSE Limited. It may also be appropriate to inform the companys shareholders.
Make arrangements with postal authorities and if possible with the occupiers of the
previous property to ensure that any further mail sent to the old address is forwarded on to
the new address.
Note in annual report.
File CM22 in company records.
(5)

QUESTION 3.2 (ICSA notes Chapter 5: 4)


Change of Company name (Any 15 marks as per below)

A special resolution of members is required to change a companys name.


Decide whether old name should be retained as defensive name.
Check that the new name is available.
Before the Board takes a decision to call a general meeting of members, an appropriate
name must be reserved, using a form CM5 and submitted to Registrar.
Upon receipt of the Registrars reservation of name, on the stamped CM5, the directors
resolve to convene a general meeting to consider the necessary special resolution to
change the name, unless the special resolution is to be taken as special business at an
annual general meeting.
This means 21 clear days notice must be given, which notice shall comply with the
requirements of Section 199 of the Companies Act. 25 per cent of the shareholders must
be represented at the general meeting, in order to constitute a quorum. 75 per cent of the
votes represented at the meeting must vote in favour of the special resolution.
Forms CM9 and CM26 must be submitted to the Registrar of Companies.
The directors and the JSE Limited approve a circular to members, which explains the
reasons for the proposed change of name and including the notice of the extraordinary
general meeting.
If passed, file a copy of the special resolution certified by the chairmans signature with the
Registrar of Companies.
The change takes effect from the date of issue by the Registrar of a certificate of
incorporation, or certificate of change of name.
A new certificate of incorporation will be issued showing the effective date of the change.

Page 8 of 17

After the change of name takes effect, the JSE Listings Requirements require that the
company make an announcement on SENS, notifying the change and stating the date on
which it took effect.
Change the name displayed outside the registered office and other places of business,
and elsewhere such as on e-mail addresses or packaging.
Reprint company stationery including company cheques. Destroy obsolete stationery.
Attach a copy of the special resolution to all copies of the Memorandum and Articles.
Although it is not necessary to file a new copy of the Memorandum and Articles with the
Registrar, people known to hold copies of the Memorandum and Articles, such as
directors or the companys professional advisers, should be sent a copy of the special
resolution.
Include change in Annual report.
(15)
[20 marks]

Page 9 of 17

QUESTION 4 (ICSA notes Chapter 16: 6.5, 7)


(Any 20 bullets (half marks for sub bullets) for 20 marks)

A Close Corporation (CC) is a juristic person which has:


o Perpetual succession.
o Limited liability.
o The capacity and powers of a natural person.
The magistrates court has jurisdiction.
The full name of a Close Corporation is to be followed by CC and the registration number.
Membership is between 1 and 10. Members may only be natural persons.
Section 29 (1) of the Close Corporations Act provides that a close corporation which is a
trustee of an inter vivos trust may be a member of another close corporation on behalf of
the beneficiaries. This is conditional upon the number of beneficiaries added to the number
of other members not exceeding 10.
The sale/transfer of members interest requires agreement by 100% of members, and an
amendment of the founding statement.
The provisions for a CC to provide financial assistance to acquire a members interest are
set out in Section 40, which is subject to Section 52 of the Close Corporations Act.
While financial assistance may be given by the CC for the acquisition of a members
interest in the CC, no other loans may be granted to members.
Any increase or reduction in a members contribution requires an amended founding
statement.
Each member has a fiduciary duty to the CC (i.e. as for directors of companies). This is
different to a company where shareholders do not have a fiduciary duty, but directors do.
Explanation of fiduciary duties.
75% of the voting rights (members interests) is required for the following:
o Change in principal business
o Disposal of undertaking.
o Acquisition: assets.
o Disposal of assets.
No payment to members is permitted, in terms of Section 51, if this would result in:
o Liabilities exceeding assets.
o An inability to pay CC debts.
o Cash flow problems in future.
Any member may bind the CC [Section 54]
Annual financial statements are required within 9 months of year end [Section 58(2)] and
should consist of the following:
o Balance sheet.
o Income statement.
o Report of Accounting Officer.
o Must comply with GAAP
Section 58 requires the annual financial statements to show:
o Members contributions.
o Income available for distribution.
o Revaluation of assets.
o Amounts and movements: loans to and from members.
The annual financial statements are to be signed by one or more members holding at least
51% ownership and are not required to be lodged with the Registrar.
Every CC shall appoint an accounting officer.

Page 10 of 17

Accounting officer must have appropriate qualification, be part of accredited / accepted


body.
The accounting officer shall be replaced within 28 days of the resignation of the previous
accounting officer. [Section 59]
Upon resignation or removal of the accounting officer, each member and the CC must be
notified in writing [Section 59(5)]
Members of a CC may become jointly and severally liable, with the CC, for debts incurred
while:
The name does not show CC.
A member does not make initial contributions.
There are more than 10 members.
A member is not a natural person (i.e. is a body corporate).
Solvency/lack thereof is a direct consequence of payment or granting assistance to a
member.
A disqualified person is a manager.
The CC has no accounting officer for a period of 6 months.
Business is carried on:
o Recklessly.
o With gross negligence.
o With intent to defraud.
To a maximum of 2 marks:
Any advantages
Any disadvantages
[20 marks]

Page 11 of 17

QUESTION 5 (ICSA notes Annexure 1)


Format one mark
Any reasonable arguments / information for 20 marks, guideline of information as per below:
There is a need for ethical, open, honest and transparent behaviour by a company in line with
established best practices and procedures. The application of best practices should be
encouraged and monitored. In this respect, the company secretary is in a unique position
within a company and could have a major role to play.
Section 268 of the South African Companies Act specifies the duties of a company secretary
for a public company with a share capital.
King III: (half mark per bullet)

The board should be assisted by a competent, suitably qualified and experienced company
secretary, to whom the following applies:
Has a pivotal role to play in the corporate governance of a company.
Appointment and removal is a matter for the board.
Board should be cognisant of the duties imposed upon the company secretary and
should empower individual to enable proper fulfilment.
Gatekeeper of good governance important to maintain an arms length
relationship, as far as reasonably possible.
Should assist the nomination committee and ensure that the procedure for the
appointment of directors is properly carried out.
Should assist in the proper induction, orientation and development of directors,
including assessing the specific training needs of directors and executive
management in their fiduciary and other governance responsibilities.
Individual directors and board will look to the company secretary for guidance on
their responsibilities and duties and how such should be properly discharged in the
best interests of the company.
Central source of guidance and advice to the board and within the company on
matters of ethics and good governance and changes in legislation.
Should have a direct channel of communication to the chairman and should be
available to provide comprehensive practical support and guidance to directors, with
emphasis on supporting the NEDs, chairman and committee chairmen.
Should ensure that the board and committee charters and terms of reference are
kept up to date.
Ensure proper compilation and timely circulation of board papers and assist
chairmen with drafting of yearly work plans.
Should have the duty to obtain appropriate responses and feedback to specific
agenda items and matters arising from earlier meeting deliberations. Raise matters
that may warrant the attention of the board.
Should ensure proceedings of board and committee meetings are properly recorded
and that approved minutes are circulated in a timely manner.
Should assist the board with the yearly board evaluation, individual directors and
senior management.
Should ideally not be a director of the company.

Page 12 of 17

Section 268 of the South African Companies Act requires the boards of all public companies
with a share capital to appoint a properly qualified and experienced company secretary.
A brief list of some of the tasks and responsibilities of the company secretary should make this
point clear:

The company secretary assists the chairman of the board with preparing for, conducting
and reporting the outcome of board meetings and general meetings of the company. He or
she attends those meetings, and takes the minutes.
The company secretary will have some involvement in the counting of proxy votes from
shareholders for a general meeting. Although the detailed counting is likely to be done by
the companys registrars, the results should be sent to the company secretary. The
company secretary is therefore well informed about shareholder voting intentions.
Directors are required to notify the company of their dealings in shares of the company, by
themselves or by a related party. This information should be notified to the company
secretary, who (in the case of listed companies) must then notify the Securities Exchange
News Service (SENS). The company secretary needs to be aware whether the share
dealings breach any code.
The company secretary is responsible for assisting the chairmen of the committees of the
board, i.e. the audit committee and the remuneration committee. For example, the
company secretarys office is likely to assist a chairman by checking the availability of the
other committee members for a meeting and arranging the venue. He or she may also
attend the meetings and take minutes.
If he or she attends the meetings of the audit committee, the company secretary will have
some involvement with the external auditors and internal auditors of the company and
should be able to offer advice on matters of risk management.
In some companies, the company secretary is responsible for arranging insurance cover
for the group. In such cases, the company secretary is directly involved in risk
management.

The company secretary is close to the board of directors, without necessarily being a director.
He or she is in a position to advise and assist the board chairman. To provide this advice, he
or she should have a proper understanding of corporate governance rules and practice. The
company secretary should be involved in handling allegations by whistleblowers. He or she
might also be asked to investigate cases of illicit share dealings by directors which qualify as
insider trading, potential conflicts of interest of individual directors or the independence of a
particular non-executive.
The Companies Act makes it clear that directors of a public company are obliged to appoint a
company secretary who in their opinion is suitably experienced and qualified. Failure to do so
could result, on conviction, in a fine and/or 3 months imprisonment.
It is clear that the responsibility for the duties (as set out in section 268G) rests with the
appointed Company Secretary.
The company secretary is, however, disqualified unless they qualify (S218) under the same
criteria as directors.
Successive Companies Acts have created obligations for the maintenance and disclosure of
information regarding companies' affairs, e.g. the lodging of statutory accounts/returns and the
maintenance of various company registers. Responsibility for the performance of these

Page 13 of 17

statutory obligations now rests with the company secretary, who can be prosecuted for failure
to comply.
The Companies Amendment Act 1999 provides, in section 268G, that the company secretary
has a responsibility to advise directors of all legal obligations and it specifies his or her
other duties.
A company secretary has direct reporting responsibilities via the annual report. Any shortfall in
performance of that duty to report could result in the company secretary being held personally
liable.
In order to create some security of tenure for company secretaries, statute provides [S268I] a
right, upon resignation or removal, for a company secretary to require that his statement of
circumstances of severance is published in the directors report in the annual financial
statements.
Summary of statutory aspects:
The Companies Act 1973 requires all public companies to appoint a company secretary.
The directors of a public company to appoint.
The secretary to be a resident of the Republic.
In the opinion of the directors, the secretary shall have the requisite knowledge
and experience to perform the duties (Section 268A).
The first secretary shall be appointed by the majority of the subscribers to the
memorandum.
A consent to act as secretary shall accompany the documents lodged with the
Registrar.
Otherwise within 21 days of incorporation the directors shall appoint a secretary.
If the directors fail to appoint a secretary, the Registrar may make an appointment.
Should the directors not appoint the secretary, every director shall be guilty of an
offence (Section 268C).
A casual vacancy shall be filled by the directors within 90 days.
Duties:

A notice of failure to appoint shall be lodged with the Registrar within 7 days of the
expiry of the 90 days by the public company. A director may also lodge such notice.
Failure to comply shall constitute an offence by the directors and the Registrar or the
Court may, upon application by a director or member, order the Company to make an
appointment.
During any vacancy the directors may appoint any officer to act in his stead. (Section
268C)
A body corporate or partnership may be appointed, if one person in its employ
qualifies to be a company secretary.
If a qualified person continues to be in its employ, or a partner, a change in
membership/shareholding shall not be considered to be a casual vacancy.
Immediately upon the services of a qualified person ceasing to be available to a body
corporate or partnership, it shall immediately resign its appointment (Section 268D)
268G: A secretarys duties include, but are not restricted to:
Page 14 of 17

o Providing the directors of the company collectively and individually with guidance
as to their duties, responsibilities and powers.
o Making the directors aware of all law and legislation relevant to or affecting
the company and reporting at any meetings of the shareholders of the company
of the companys directors, any failure to comply with such law or legislation.
o Ensuring that minutes of all shareholders meetings, directors meetings and
the meetings of any committees of the directors are properly recorded in
accordance with section 242.
o Certifying in the annual financial statements of the company that the
company has lodged with the Registrar all such returns as are required of a
public company in terms of this Act and that all such returns are true, correct and
up to date.
o Ensuring that a copy of the companys annual financial statements is sent, in
accordance with section 302, to every person who is entitled thereto in terms
of this Act.
[20 marks]

Page 15 of 17

QUESTION 6 (Act and CBA 13.10, 13.10.1, 13.10.3, 13.10.3.2, 14.7)


Memorandum format
Section 349 - A company, not being an external company, may be wound up voluntarily if the
company has by special resolution resolved that it be so wound up.
Section 350 - A voluntary winding-up of a company shall be a members' voluntary winding-up
if the special resolution so states, but such a resolution shall be of no force and effect unless:
It has been registered
Prior to the registration thereof:
o Security has been furnished to the satisfaction of the Master for the payment of
the debts of the company within a period not exceeding twelve months from the
commencement of the winding-up of the company.
o The Master has dispensed with the furnishing of such security on production to
him of:
A sworn statement by the directors of the company that it has no debts.
A certificate by the auditor of the company that to the best of his
knowledge and belief and according to the records of the company, it
has no debts.
The costs incurred in furnishing the security may be recovered from the company
concerned.
Unless otherwise provided, in a members' voluntary winding-up the liquidator may
without the sanction of the Court exercise all powers by this Act given to the liquidator
in a winding-up by the Court, subject to such directions as may be given by the
company in general meeting.
Section 352
A voluntary winding-up of a company shall commence at the time of the registration of
the special resolution authorizing the winding-up.
The Registrar shall forthwith after the registration by him of the special resolution
transmit a copy thereof to the Master.
Section 353 A company which is being wound up voluntarily shall, notwithstanding anything
contained in its articles, remain a corporate body and retain all its powers as such, but
shall from the commencement of the winding-up cease to carry on its business except
in so far as may be required for the beneficial winding-up thereof.
As from the commencement of a voluntary winding-up all the powers of the directors
of the company concerned shall cease except in so far as their continuance is
sanctioned by the liquidator or the company in a general meeting in a members'
voluntary winding-up.
Section 356 The Master shall upon receipt of a copy of any winding-up order of any company
lodged with him give notice of such winding-up in the Gazette.
o Any company which has passed a special resolution under for its voluntary
winding-up, shall within 28 days after the registration of that resolution lodge
with the Master a certified copy of the resolution concerned, together with any
further resolution nominating a person or persons for appointment as liquidator
or liquidators of the company has been passed, a certified copy of that
resolution.
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o Give notice of the voluntary winding-up of the company in the Gazette.


Other option available = deregistration

Section 73 provides for the circumstances under which a companys memorandum and
articles of association may be cancelled by the Registrar. This process is known as
deregistration and its effect is that the company ceases to exist as a corporation.
The initiative to secure the deregistration of a company may be taken by the Registrar, if
the company has failed for a period of more than six months to lodge an annual return or
if the Registrar has reasonable cause to believe that the company is not carrying on
business or is not in operation.
The Registrar may also deregister the company on receipt of a written statement signed
by all the directors of the company to the effect that the company has ceased to carry on
business and that it has no assets or liabilities.
Suggestion on best approach.
[20 marks]

END OF MEMORANDUM

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