QUESTION 5

5.1 Saraphina is a member of Mend & Sew CC. The other members, Alphi and Botsego, feel that Saraphina has not been complying with her management duties in the close corporation, and they do not see their way forward with her continuing as a member. Advise them regarding the grounds upon which the court may, in terms of the Close Corporations Act 69 of 1984, order that a member shall cease to be a member of a close corporation.

(5)

5.2

Lesedi and Carol are the members of Private Investigators CC. Upon formation of the close corporation, they agree that their respective membership contributions will consist of cash only. Each member was required to contribute R200 000, and these amounts were duly recorded in the founding statement.

Apart from the monetary contribution, Lesedi also entered into a lease agreement in terms of which he rents out a building he privately owns to the close corporation for use as an office. Carol, a part-time student at UNISA, also enters into an employment contract with the close corporation. In terms of the contract of service she is required to be in the office to attend to the corporation's day-to-day business.

At a meeting of the members, Lesedi and Carol decide that due to a lack of profits generated from sales, the corporation will repay each member 10% of their respective contributions for their personal needs. They further agree that the corporation will make some payments to them in respect of their respective rental and employment agreements. Advise the members of Private investigators CC whether these payments meet the requirements in terms of the Close Corporations Act 69 of 1984.

(5)

5.3

Johan, Aubrey and Barbara are the members of ProperT CC. The main business of the close corporation is buying and selling of immovable property.

The close corporation wishes to buy a certain property for development and resale. Barbara, being fully aware of the fact that the close corporation wishes to purchase the property, buys it in her personal capacity for R2 million. She then sells it to the close corporation for R3 million. What duty could Barbara have breached under the circumstances and what does this duty entail?

(Indicate to whom the duty is owed and the scope of this duty).

(5)

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