Please enable JavaScript.
Coggle requires JavaScript to display documents.
For the Test Pt 2 - Coggle Diagram
For the Test Pt 2
Section 75:
Directors personal financial interest
S
end a notice
to board including the
nature & extent of interest
.
Director may
disclose a personal financial interest
in advance
Process
Disclose any material information
Disclose observations or pertinent insight i.t.o the matter
Personal financial interest
in matter considered at board meeting:
Not considered present to consider
if resolution has sufficient support to be adopted
May
not take part in voting
on the matter
Must
not execute any documents on behalf of the board
on the matter (unless requested by the board)
Forms part of
quorum to consider if sufficient directors are present
Disclose the interest
(
nature
)
Must leave meeting after disclosure was made
Continued
Decision/transaction/agreement in which
director has a interest
is
valid if
:
Approved by board
(after disclosure) or
Ratified by the shareholders
Court may
declare transaction valid
despite
failure to disclose interest
If interest required after matter decided on
Disclose nature and extent to board
Company only has one director - who has an interest on a matter
Matter approved by shareholders
Section 77:
Liability of directors
In accordance with common law:
Breach of fiduciary duties
Delict for loss or damage or cost sustained by the company
In terms of the Company Act:
Carrying on business recklessly or under insolvent conditions
Being part of a act of omission intended to defraud creditors or employees or shareholders for fraudulent purposes
Acting in the name of the company without authority
Signing or approving the publication of FS that is false or misleading in material respect or prospectus with untrue statements
Present at meeting and fail to vote against:
Director may be held liable:
In terms of the Company Act
In accordance with common law
Present at meeting and fail to vote against:
Granting options for unauthorised shares
Loans to directors without special resolution
Issuing of shares to directors without special resolution
Approving distribution when Solvency & Liquidity test not met
Issuing of unauthorised shares
Acquiring of company shares when Solvency & Liquidity test not met
Allotment of shares contrarily to stated requirements
Auditors
Section 90: Appointment of auditor
Appointment: Public & State-owned company must appoint auditor
Each year at AGM
Hold office until next AGM
If no appoint at AGM, directors have to appoint auditor within 40 business days of AGM
Upon incorporation
Hold office until next AGM
If auditor not appointed when MOI is register, directors have to appoint auditor within 40 business days after incorporation
Person/firm can qualify for appointment if:
Accepted by audit committee as being independent
Not Disqualified:
Director or officer or employee of the person appointed as company secretary
Person contemplated in 1 – 3 above during the five financial years proceeding the appointment
Employee or consultant of company (more than one year responsible for maintaining accounting records & preparing FS of the company)
Person related to a person in 1 – 4 above
Director of the company
Registered auditor (IRBA)
Retiring auditor can automatically be reappointed at AGM without resolution unless:
Audit committee objects
Company gave notice of intent to appoint another auditor
No longer qualifies/unwilling to accept appointment
Section 91: Resignation of auditor and vacancies
Resignation effective when notice is filled
Directors must appoint new auditor within 40 business days if company only has one auditor
Propose to audit committee within 15 business days after the vacancy at least one name of registered auditor to be considered
Directors may go ahead if audit committee does not object within 5 business days after delivering the proposal
Section 92: Rotation of auditors
May not be reappointed within 2 years of rotation
But a firm can be an auditor for more than five years, partner to rotate
Same individual not allowed to serve as an auditor for longer than 5 years
Section 93: Rights and restricted functions of auditors
Auditor of a company has the right:
Obtaining information and explanations from directors and officers
Attend shareholder meetings:
Be heard at the meeting
Receive all notices and other communication sent to members in respect of the meeting
Auditor of holding company:
Obtaining information and explanations from directors and officers of subsidiary
Access to current & previous FS of subsidiaries
Audit may apply to court to enforce above rights
Section 76:
Standard of directors conduct
Directors of a company must:
C
ommunicate info
that comes to their attention
to the board
as soon as possible
Not knowingly
cause harm to company or subsidiary
Not
use their position
/info obtained to
gain advantage for him/herself
or another person
other than the company/wholly-owned subsidiary
A director must
exercise powers & perform functions
:
In the
best interest of the company
With
required care, skills and experience
In
good faith
Director will
meet above obligation if
:
Has
no personal financial interest
in the matter/
disclosed the interest
Made/supported a decision
on a rational basis
If they have
taken reasonable diligent steps to become informed about matter
Company Secretary
Section 86: Mandatory appointment of company secretary:
The first company secretary may be appointed by:
Within 40 business days after the incorporation of the company, by either:
an ordinary resolution of the holders of the company’s securities.
the directors of the company; or
The incorporators of the company; or
Vacancy should be filled within 60 days.
Public & State-owned company must have a company secretary
Section 88: Duties of company secretary:
Reporting to the board failure of company/directors to comply with MOI/rules/Act
Minutes are recorded for:
Shareholder/ board/ board committees/audit committee meetings
Making directors aware of laws relevant or affecting the company
Certifying in the AFS:
Returns & notices appear to be correct, true & up to date
Required returns & notices has been filed
Providing directors guidance with their duties, responsibilities and powers
Copy of AFS sent to entitled persons
Section 89: Resignation or removal of company secretary:
If less that one month’s notice need board approval
Removed by the board
Company secretary may require that statement are include in AFS setting out the secretary’s argument/contention
Resign at any time (one month notice)
Section 73:
Board meetings:
Board meeting:
C
onducted electronically
or
participate electronically
Minutes
Calling of board meeting:
Director
(
at any point of time
)
Social and Ethics Committee
All state owned entities, listed public companies, or company with PIS >500 in any two of the past five years must appoint a social and ethics committee
Unless;
It’s a sub of a company with a social and ethics committee, and that company will perform required functions.
Exempted by Tribunal
Audit Committee
Section 94: Audit committees
Election of Audit committee (AC):
Public & state-owned company must have AC
Other companies can voluntarily elect AC.
At AGM
First member appointed by:
Incorporators or
Board within 40 business days of incorporation
At least three members unless:
Company is subsidiary of another company that has a AC and that AC will perform the function required under this section.
Vacancies:
Filled within 40 business days after vacancy arises
Each member must:
Not be:
Prescribed officer/full-time employee/related or inter-related company (during the previous 3 years)
Material supplier or customer (integrity & objectivity be influenced)
Involved in day-to-day management (or seen to be in the previous financial year)
Related to any person who falls within above criteria
Be a director
Duties of the AC:
Nominate for appointment as auditor a registered auditor who is independent
Determines audit fees & terms of engagement
Ensure appointment of auditor is in compliance with Act and other legislation
Determine nature and extent of non-audit work
Pre-approve any proposed agreement with auditor for non-audit services
Duties of the AC continue:
Duties of the AC continue:
Prepare report (Included in AFS):
How the AC carried out its functions
Satisfaction on auditors independence
Commenting on the FS, accounting practices and internal financial control
Receive and deal with complaints & concerns:
Accounting practices and internal audit
Content or auditing of FS
Internal financial controls
Any related matter
Submissions to the board concerning accounting policies/financial controls/records & reporting
Perform functions determine by the board
Chapter 5: Fundamental Transactions, Takeovers and offers
Section 112: Proposals to dispose of all or greater part of assets or undertaking
Approved by special resolution of shareholders
Notice of shareholders meeting:
Within prescribed time
Within prescribed manner
Written summary of the precise terms of the transaction
Part of undertaking or assets to be disposed considered at its fair market value at date of proposal
If 15% or more oppose need court approval