CONTACT: 07846835171Modo is a member of Yapcan CC. He is the oldest of all the membersand is concerned about his deteriorating health. He does not want tosell his member's interest since the corporation's business is doing verywell. Advise Helmut whether or not he can bequeath his interest in theclose corporation to his daughter.In addition, advise him whether or not effect will be given to his wishesif he makes provision in his will for the transfer of his interest to hisdaughter. (5)A member of a close corporation may bequeath his or her members interestin the corporation in his will to someone. In terms of section 35 of the CloseCorporations Act, the law applies unless it is determined otherwise in anassociation agreement. Before the members’ interest may be transferred tothe heir, the other members of the close corporation must consent. Ifpermission is not granted by the other members, the executor may sell themembership interest to the corporation, to another member or to a thirdparty subject to a right of pre-emption in favour of existing members.Good Food CC’s main business is catering. The corporation has 5members: Anthea, Bert-Filandro, Carol, Daniel and Elvis. Each memberholds a 20% member’s interest. The association agreement determinesthat only Daniel is authorised to represent the close corporation.Anthea enters into a contract for the purchase of a racehorse on behalfof the close corporation with Bert-Filandro. Is the close corporationbound to the transaction? (6)Section 54(1) of the Close Corporations Act 69 of 1984 determines that anymember of a close corporation will in relation to a person is not a member,and is dealing with the close corporation, be an agent of the closecorporation.Section 54(2) of the Close Corporations Act determines that any act of amember will bind the close corporation whether such act was performed inconnection with the business of the CC or not unless the member has infact no authority to act for the corporation in the particular matter and thecontracting party has or ought reasonably to have knowledge of themember’s lack of authority. The close corporation will not be bound sinceBert is a member of the close corporation. He should know that Antheacannot act on behalf of the close corporation.Consequently the other
CONTACT: 07846835172contracting party cannot rely on s 54 of the Close Corporations Act to holdthe close corporation liable.Saraphina is a member of Mend & Sew CC. The other members, Alphiand Botsego feel that Saraphina has not been complying with hermanagement duties. Advise them regarding the three grounds uponwhich the court may, in terms of the Close Corporations Act 69 of1984 order that a member shall cease to be a member of a closecorporation. (4)Section 36 of the Close Corporations Act 69 of 1984 is applicable. Thegrounds upon which a court would grant an order for termination of amember’s interest are:- Permanent inability to perform her part in carrying on the business;- Conduct which is likely to have a prejudicial effect on the carrying on ofthe business;- Conduct making it reasonably impossible for the other members toassociate with her in the carrying on of the business or- It being just and equitable in the view of the court that she should cease to
Upload your study docs or become a
Course Hero member to access this document
Upload your study docs or become a
Course Hero member to access this document
End of preview. Want to read all 34 pages?
Upload your study docs or become a
Course Hero member to access this document
Term
Fall
Professor
N/A
Tags
