CIS INTERNATIONAL

QUALIFYING BOARD EXAMINATION

May 2009

Corporate Secretaryship
Date:

22 May 2009

Time:

9h00 12h00

Duration:

3 hours

Marks:

100

General instructions
1. Check that you have the correct examination paper - and that it has all its pages and
sections.
2. Write clearly and only use BLACK BALL-POINT INK. Do NOT use felt-tip pens. Cross
out errors in ink - do NOT use correcting fluid. Please do NOT use highlighter pens.
3. Do not use your own name or that of your company in any of your answers.
4. Start each answer on a fresh page, clearly numbering it at the top.
5. Write the numbers of the questions you have answered on the front page of your answer
book.
6. Marks may be awarded when appropriately quoting evidence, such as relevant legislation.
7. Securely fasten all pages and check that all answers are correctly numbered.
8. Submit your working papers wherever applicable - making sure that you clearly identify
them as WORKING PAPERS.

Specific instructions for this paper

9. There are seven questions each of 20 marks. Candidate must answer any five questions of
their choice.
10. You should allow approximately 35 minutes per question.
11. Candidates are permitted to use approved copies of the South African Companies Act and
the Close Corporation Act provided that these copies are UNMARKED in any way.

Page 1 of 8

Answer any FIVE questions.

QUESTION 1
You are the company secretary attending to the transfer of shares and the issue of share
certificates is part of your responsibilities. You are about to retire and, because your
successor has not yet been appointed, the company accountant will be responsible for this
function in the interim. He has never been involved with the transfer of shares and has
requested you to draft a memorandum in which you explain to him who may sign transfer
forms on behalf of principals.
Required:
Draft a check list for the accountants use in determining whether a person may validly sign a
transfer form on behalf of a principal.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 2 of 8

QUESTION 2
Section 38 of the Company Act, 1973, which deals with a company giving assistance to
acquire its shares, has recently been amended. The prohibition of making such assistance
available is still in place, but an additional exception was created.
You are the company secretary of Responsible Guys Limited, a company that has decided to
make such assistance available by means of a loan to a BEE group in terms of the new
exception. The loan must be repaid within 5 years in equal annual instalments.
Required:
Draft the minutes of the relevant Board meeting in terms of which the Board complies with
ALL the requirements of the exception.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 3 of 8

QUESTION 3
You are the company secretary of WantToBeSure Limited. The Chairman has asked you to
brief the Board regarding the judgment in the recent case of Mpofu v South African
Broadcasting Corporation Ltd and Others (13815/2008) [2008] ZAGPHC 144 (19 May
2008), in which the court recently found that a meeting was not a proper meeting of the
Board of the Corporation and a resolution taken at that meeting was declared void.
The facts of the case were:
1. The Articles of the company provided as follows:
The corporation will have a Board which shall consist of 15 (fifteen) Directors, of
whom 12 (twelve) shall be non-executive Directors appointed by the President and 3
(three) shall be Executive Directors, namely, the Group Chief Executive Officer, the
Chief Financial Officer and the Chief Operating Officer or their equivalents.
2. A meeting was convened and that meeting resolved to suspend the Group Chief
Executive Officer.
3. The three Executive Directors were deliberately excluded and they received no notice
of the meeting.
Required:
Prepare a briefing paper for the use of the Chairman of the Board regarding the requirements
concerning the convening of a valid private meeting, the notice for such a meeting, what the
sources of those requirements are, and how the requirements apply to the stated facts, and
indicate why the meeting of the South African Broadcasting Corporation was not a valid
board meeting.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 4 of 8

QUESTION 4
You are a company secretary in private practice. A certain Mr Kawunde from Uganda has
written you an e-mail through the contact us functionality of your web site. He is in
possession of share certificates of a company that has subsequently been listed on the JSE.
He wrote a letter to the company concerned because he wishes to sell these shares. The
response from the company requested him to arrange for the dematerialisation of the shares
by contacting CSDP.
He is suspicious because he does not understand what dematerialisation means and is afraid
of losing his shares and money.
Required:
Write a letter to Mr Kawunde explaining to him in broad terms what STRATE is, who
participants are, what is meant by the dematerialisation of shares and whom he should
contact in order to dematerialise and trade in such shares.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 5 of 8

QUESTION 5
You are a company secretary in private practice. A company, soon to be listed on the JSE,
has requested you to brief its Board on the requirement of appointing a company secretary
and, if necessary, to assist them with recruitment and selection of a suitable candidate.
Required:
Draft a report for the use of the Nominations Committee, setting out the legal requirements
regarding the appointment of company secretaries and make suitable recommendations in
accordance with best practice.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 6 of 8

QUESTION 6
You have been approached by the directors of a newly incorporated private company and
requested to draft the agenda for its first Board meeting. The company has adopted the
Articles in Table B of Schedule 1 of the Companies Act, 1973.
Required:
Draft a comprehensive agenda for the first board meeting of the company.
[20 marks]

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

Page 7 of 8

QUESTION 7
In the recent judgment of the court in Airport Cold Storage (Pty) Limited v Ebrahim and
Others (3181/06) [2007] ZAWCHC 25 (22 May 2007), the plaintiff sued the members and
liquidator of a close corporation, Sunset Beach CC, in their personal capacity for nonpayment of a debt.
The court commented as follows:
It follows, in my view, that the plaintiff is entitled to a declaratory order in terms of s 65 of
the Act, to the effect that Sunset Beach is deemed not to be a juristic person but, in respect of
the plaintiffs claim herein, a venture of the defendants personally. It follows, further, that the
defendants should be held liable jointly and severally to the plaintiff for whatever amounts
Sunset Beach owed the plaintiff at the date of liquidation.
You have been approached by a member of an unrelated close corporation for assistance. He
holds 30% of the members interest in the CC. However, the other members have been
conducting the business without his consent or input and he is worried that he may be held
personally liable for the debts incurred. He also alleges that the other members are changing
the business of the close corporation considerably and selling off assets.
Required:
7.1

7.2

Explain under what circumstances a member of a close corporation may be held

liable for the debts or losses of a close corporation.

(10)

Explain what the rights of a member are and when his vote will be required for the
corporation to conduct its business. Also explain how he can ensure that his vote is
considered.

(10)

[20 marks]

END OF PAPER

CORPORATE SECRETARYSHIP

CIS QUALIFYING BOARD EXAM

MAY 2009

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