QUESTION 3 [20 Marks]

3.1 Discuss the appointment and composition of the audit committee. (12 Marks)

3.2 Pricecutter Ltd has been experiencing operational and financial challenges over the past five years due to increasing working capital requirements. As a result, Pricecutter Ltd obtained an unsecured loan of R60 million from the Commercial Bank of South Africa Ltd in order to finance its working capital requirements. Pricecutter Ltd has not yet repaid the loan, which is now due and payable. A successful company called Fresh Produce Ltd has concluded an agreement with Pricecutter Ltd, in terms of which Fresh Produce Ltd will acquire and hold all the assets and liabilities of Pricecutter Ltd ('the Transaction'). Upon receiving notification of the Transaction, the Commercial Bank of South Africa Ltd is concerned that if the Transaction proceeds, it may potentially lose its right to claim repayment of the loan. It is clear from the agreement that, subsequent to the implementation of the Transaction, Pricecutter Ltd will be deregistered and will cease to exist. The agreement also stipulates that the directors who had procured the loan will cease to be directors with effect from the commencement of the Transaction and that Fresh Produce Ltd will not be liable for payment of any debts incurred by Pricecutter Ltd. The Commercial Bank of South Africa Ltd is deeply concerned that it might never be able to receive full payment of the loan granted to Pricecutter Ltd. With reference to the Companies Act 71 of 2008 and the facts provided:

3.2.1 Identify the type of Transaction that is contemplated in the scenario above. (2 Marks)

3.2.2 Advise the Commercial Bank of South Africa Ltd on the legal steps it may take to prevent the implementation of the Transaction. (6 Marks)