One of the ways in which a company is accountable to shareholders is through the reports the board of directors present at the Annual General Meeting. Shareholders are able to evaluate the company’s performance and if needs be, take action against the company and/or specific directors. Q.3.3.1 Explain what matters must be discussed at an AGM in terms of the Companies Act. Q.3.3.2 Your students enquire whether there are any consequences for the board or particular directors if the financial report raises a number of questions around authorisation, wasted expenditure, gross mismanagement of the company’s affairs, and avoidable financial losses. The students ask whether the shareholders, if they are unhappy with a particular director’s conduct, may approach the court to have the director declared “unfit” for appointment as a director. Explain the process to declare a director delinquent or to place her/him under probation . Provide the following in your answer: • Indicate whether or not a shareholder may apply for a court order. • Set out the grounds upon which the application may be made in this instance. • The order sought for the particular application. • The effect of the order for the particular application.
One of the ways in which a company is accountable to shareholders is through
the reports the board of directors present at the Annual General Meeting.
Shareholders are able to evaluate the company’s performance and if needs be,
take action against the company and/or specific directors.
Q.3.3.1 Explain what matters must be discussed at an AGM in terms of the
Companies Act.
Q.3.3.2 Your students enquire whether there are any consequences for the
board or particular directors if the financial report raises a number
of questions around authorisation, wasted expenditure, gross
mismanagement of the company’s affairs, and avoidable financial
losses. The students ask whether the shareholders, if they are
unhappy with a particular director’s conduct, may approach the
court to have the director declared “unfit” for appointment as a
director.
Explain the process to declare a director delinquent or to place
her/him under probation .
Provide the following in your answer:
• Indicate whether or not a shareholder may apply for a court
order.
• Set out the grounds upon which the application may be made
in this instance.
• The order sought for the particular application.
• The effect of the order for the particular application.
Step by step
Solved in 4 steps
