Commercial Law Assignment 1-1

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R E G E N Tp US 1N ESS SC H O O lAssignment cover /meetProgrammeBcom in Supply Chain ManagementModule NameCommercial LawAssignment Number01SurnameMndzebeleFirst Name/SLuyandaStudent Number22236960Date Submitted28/09/2024Postal AddressKwaluseni P.O. Box 181E-MAILmyregent email address... 22236960@myregent.ac.zaE-MailMavegemabuza21@gmail.com(alternate email address)Contact NumbersCell:76910271Home : 79115579Work :Alternate contact :Name:Nikiwe MabuzaRelationship:ParentContact number:76151265I Luyanda Mndzebele _______ID/PassDort No.0002047100116hereby confirmthat the assignment submitted herein is my own original work.Date:28/09/2024FOR OFFICE USE ONLYMarks per question (Q)QiQ2Q10

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QUESTION ONE1.1 The Companies Act 71 of 2008 is a key piece of legislation that aims to ensure a fair andefficient corporate environment while also ensuring that shareholders' interests aresafeguarded. The Companies Act 71 of 2008 since its enactment has greatly impacted thecorporate governance and business practices in number of ways, here there are; firstly,stakeholder's inclusion, the act has promoted that all stakeholders are included, recognizedin the corporate governance and business practices. In way that they interests are welltaken care of and guarantee given. Secondly ensuring facilitation of business rescue,mechanism rescue has been implemented in corporate governance and business practicesfor all South African companies that are facing financial difficulties to be able to restructureand continue operations other than facing liquidation.To dive deep there are driving forces behind the implementation of this Companies Act 71 of2008, it is that they were barriers to entrepreneurship. The was a lot of red tape in theformation and operation of companies, in way that some companies stopped operatingbecause of these regulations, others couldn't even commence.Unethical corporategovernance also caused the implementation of the act, the were no stricter governancestandards in the companies, transparency was not highly emphasized, neither accountabilityand ethical conduct. Both stakeholders and companies had their way in the corporate world.The was a lack of global standards, in that the South African practices did not align with theinternational corporate governance practices. Leading to South African companies beenbeen unable compete with international companies.In summary, I say the Companies Act 71 of 2008 has greatly impacted the corporategovernance and business practices in South Africa by promoting recognition of allstakeholders and the introduction of rescue schemes for financially straggling companies inthe corporate environment , and banders to entrepreneurship, unethical corporategovernance causing an increase in corruption and need to align with global standards , forinternational recognition been the driving force to the implementation of the act.

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1.2 XYZ Innovations (Pty) Ltd is a private company, as its name ends with (Pty) Ltd whichstands for (Proprietary) Limited, which all private companies' names must end with as by theCompanies Act 71 of 2008. In addition, private companies have number of characteristicsthat are specific to them as by the Companies act 71 of 2008. 1 will shortly name four, thefirst one been not to solicit share subscriptions to the public, which clarifies that companyshares are not to be sold to the public but to existing shareholders of the entity. Secondlythe company is not obliged to share certain information to the public, this is to say the entitymay not share its financial records to the public, if it wishes not to do so, unlike publiccompanies. Thirdly private companies are limited to a maximum of fifty shareholders andminimum of one, this briefly entails that private companies are not to have more than fiftyshareholders or members, surpassing that it no longer a private company. The fourthcharacteristic is that the is a restriction on the transfer of shares, this implies thatshareholders cannot sell shares to the public but can only sell them to the company's othershareholders and cannot be done without proper informing all the shareholders.1.3 According to the Companies Act 71 of 2008 personal liability means that the directors ordirector is held personally responsible for any loss incurred by the company. In a privatecompany limited liability means the liability of shareholders is limited to the amount theyhave invested in the entity. This states that any obligation that the company enters into willbe settled by the company. By this law the personal assets of the shareholders andfounders are protected in case of liquidation or the entity failures to meet its obligations.Also in the case of liquidation the amount the shareholders can lose is the money theyhave only invested in the business. Although this law can be bypassed if the shareholders orowners make their personal assets as securities when acquiring for a loan for the companyto bank or other financial institutions.Furthermore, separate legal personality is a concept that state a registered company is adistinct legal person that is separated from its shareholders and directors. This conceptaccording to the Companies Act 71 of 2008 states the entity can enter into contract, canown property, can sue and can be sued without the any involvement of the shareholders,completely making the business a legal person. This also protects the shareholders andtheir personal assets from creditors of the entity and when the company goes underliquidation. It goes to the extent that the existence of the company continues even when theshareholders are no longer there.

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