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Assignment 02

The document provides instructions for Assignment 02 for a Corporate Insolvency Law module. It details that students must provide legal advice to shareholders of Aloe-Well (Pty) Ltd based on case law principles, discussing whether a shareholder claim for reduction in share value is correct and interpretational challenges of section 218(2) of the Companies Act 71 of 2008.

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112 views4 pages

Assignment 02

The document provides instructions for Assignment 02 for a Corporate Insolvency Law module. It details that students must provide legal advice to shareholders of Aloe-Well (Pty) Ltd based on case law principles, discussing whether a shareholder claim for reduction in share value is correct and interpretational challenges of section 218(2) of the Companies Act 71 of 2008.

Uploaded by

jennisha95
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MCL5903/Assignment 02/2024

CORPORATE INSOLVENCY
LAW
MCL5903
Year module-2024
Assignment 2

MERCANTILE LAW

This letter contains important information


about your module.
TABLE OF CONTENTS

1. General Instructions………………………………………………………….3

2. Assignment 02 Question…………………………………………………….3-4

2
1. General Instructions

• There are TWO (2) assignments in this module. Both assignments are compulsory
and contribute to your year mark. If you do not submit both Assignment 01 and
Assignment 02 before the relevant date, your registration will be cancelled, and you will
not be admitted to the examination in MCL5903.

• The due date for Assignment 01 is 26 August 2024

• The unique number for Assignment 01 is 648248

• No resubmissions will be permitted. Please ensure that you submit the correct
document.

• Your answer should not exceed five (5) typed pages (A4 single line spacing) or eight
(8) handwritten pages (excluding the Bibliography). If you exceed the page limitation,
you will be penalised.

• References to sources must be provided by means of footnotes or in text references


and a Bibliography must be included.

• The assignments are individual assignments and must be completed without the
assistance of other students or external parties.

• Formative assessment (assignments one and two) will contribute 25% towards the
final mark for this module. Summative assessment (exam portfolio) will contribute
75% towards the final mark for this module. Also refer to paragraph 9.1 of Tutorial
Letter 101/0/2024 regarding the assessment criteria.

• Please read paragraph 9.2 of Tutorial Letter 101/0/2024 for information on the
general approach to answering essay type assignments.

• Also refer to paragraph 10 of Tutorial Letter 101/0/2024 for important information


regarding academic dishonesty (plagiarism and cheating).

2 ASSIGNMENT 02 QUESTION [20 marks]

Aloe-Well (Pty) Ltd (‘Aloe-Well’) is a company that distributes Aloe Vera sports supplements. Aloe-Well
has been a successful company, generating profits and declaring dividends in accordance with the terms
3
stipulated in the company’s memorandum of incorporation. In the beginning of December 2021, the
directors of Aloe-Well issued a media statement, stating that the share price of the company had
collapsed. According to the media statement, the collapse of the share price is due to accounting
irregularities. Furthermore, it was discovered during forensic investigations that the financial statements
of Aloe-Well were ‘false, falsified, misleading, incomplete, and failed to reflect an accurate picture of the
company’s financial state’. The shareholders of Aloe-Well, most of whom lost a significant portion of their
investment in Aloe-Well, approach you to initiate proceedings in terms of section 218(2) of the
Companies Act 71 of 2008. The purpose of the proceedings is to launch a claim against the directors of
Aloe-Well, for pure economic loss as a result of a reduction in the value of shares of the company.

As the legal counsel for the shareholders of Aloe-Well, you are required to provide legal advice, based
on the principles established in Itzikowitz v Absa Bank Ltd (20729/2014) [2016] ZASCA 43 (31 March
2016) related cases and authority on the following aspects:

a) Whether a shareholder’s claim based on a reduction in the value of shares, is a correct cause of
action for the shareholders to pursue, given the applicable company law principles. (10)

b) Discuss the interpretational challenges that beset the application of section 218(2) of the Companies
Act 71 of 2008 for delictual claims based on pure economic loss. (10)

In your answer, discuss the relevant legal principle/s established through case law. Your answer
should reflect a synthesised, brief, and objective discussion, analysis and critique of the relevant
legal principle/s, prescribed judgments, and journal articles to earn good marks. Note that you will
not earn marks for quotations of sections of the Companies Act, journal articles and case law. Your
answers should be in your own words to reflect your understanding of the relevant principles,
articles, and case law.

Good luck with your assignment

Your lecturers

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