Fundamentals Level Skills Module

Corporate and Business Law (Botswana)

Tuesday 8 June 2010

Time allowed Reading and planning: Writing:

15 minutes 3 hours

ALL TEN questions are compulsory and MUST be attempted.

Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.

The Association of Chartered Certied Accountants The Botswana Institute of Accountants

Paper F4 (BWA)

ALL TEN questions are compulsory and MUST be attempted 1 State and explain the rules that govern the interpretation of statutes in Botswana. (10 marks)

In relation to the law of contract, explain the following: (a) the rules that govern the acceptance of an offer; (b) the rules relating to the revocation of an offer. (5 marks) (5 marks) (10 marks)

State and explain the remedies available for breach of contract. (10 marks)

In relation to employment law: (a) explain the meaning of constructive dismissal; (b) state the remedies available in relation to a successful claim for unfair dismissal. (5 marks) (5 marks) (10 marks)

Discuss the legal principles that govern the liability of partners towards third parties. (10 marks)

In relation to the law of delict, explain the elements of passing off. (10 marks)

In relation to the law of agency, explain how an agency relationship can be established in the following ways: (a) by agreement; (b) by ratication; (c) by estoppel; (d) by necessity. (2 marks) (2 marks) (3 marks) (3 marks) (10 marks)

Dipogiso and Kitso owned a business involved in property development. They decided to incorporate their business. Before the company was incorporated, Dipogiso and Kitso bought a piece of land in Gaborone West for P200,00000. They also bought a block of ats in Tsholofelo. The advertised price for the ats was P600,00000 but Dipogiso and Kitso negotiated with the vendor and paid P450,00000 for them on account of their poor state of repair. They further bought a house in Extension 12 on behalf of the unborn company for P40,00000 with the intention that the house should be used as ofces of the company. The company was incorporated as Conman Properties (Pty) Ltd. Dipogiso and Kitso sold the land to the company for P400,00000; the ats for P800,00000; and the house for P50,00000. They paid themselves partly in cash and partly in shares in the company. They appointed their friend Nkwe, their accountant Sipho, and their secretary Violet as the directors. They disclosed to them that they had made a prot of P410,00000 on their sale of property to the company broken down as follows: P200,00000 on the land; P200,00000 on the ats; and P10,00000 on the house. The directors assented to these prots. Richard is a shareholder in the company. He has discovered the above state of facts and is aggrieved. Required: Advise Richard. (10 marks)

Liyanda, who is 65 years old, has just retired from his employment with a pension and a lump sum payment of P200,00000. He is keen to invest his money, but has absolutely no knowledge of business or investment. He does not wish any great risk to be involved in his investment and he also would like to have ready access to cash if the need arises. Required: (a) Explain the meaning, and suitability for Liyanda, of the following: (i) (ii) (iii) (iv) ordinary shares; preference shares; debentures secured by a oating charge; debentures secured by a xed charge.

(6 marks)

(b) Advise Liyanda as to whether it would make any difference to him if he invested in: (i) a private company; (ii) a public company; (iii) a public company listed on the stock exchange.

(4 marks) (10 marks)

[P.T.O.

10 Tsodilo Mines Ltd is a company which mines nickel. Themba and Tumi are two of the directors. The board of directors is offered land adjoining one of its present quarries in Mahalapye with a view to working it, but they decide that the company is in such a bad nancial state that it cannot afford the land. Themba and Tumi, while remaining directors of Tsodilo Mines Ltd, subsequently form another company, Kagiso Investments (Pty) Ltd, which purchases the land for P700 00000. It is later discovered that the land is very rich in platinum. Tsodilo Mines Ltds fortunes are suddenly reversed and it purchases the land from Kagiso Investments (Pty) Ltd for P2 000 00000. Themba and Tumi do not reveal their interest in the matter. After Tsodilo Mines Ltd has been working the new mine for six months, the other directors discover what has taken place. Required: Advise the directors of Tsodilo Mines Ltd as to the legal position. (10 marks)

End of Question Paper