Africa. The business has grown and diversified under the leadership of 4 generations and is now in a position to expand beyond being recognised as a family business. The CEO (Hash Ali) and the MD (Sikh Singh) formulated a proposal to convert the business from a close corporation into a private company. After extensive turbulent deliberations amongst the family members the management team under the feadership of the grand patriarch made
Hash-Singh CC trading under Kop lee Foods is a food manufacturing company based in Julius industrial Park situated in Rustenbure. The company was founded in 1942 by the offspring of the Gani family who was sent as indentured labourers to South Africa. The business was built with the vision of establishing the spirit of entrepreneurship for the family to be firmly entrenched in the mainstrearn economy of South Africa Vision: To be the country's most admired business in the providing of affordable food products within South Africa, Mission: To be the leading food manufacturer that provides alfordable products that contributes to the alleviation of poverty and food security within South Africa. The business has grown and diversified under the leadership of 4 generations and is now in a position to expand beyond being recognised as a family business. The CEO (Hash Ali) and the MD (Sikh Singh) formulated a proposal to convert the business from a close corporation into a private company. After extensive turbulent deliberations amongst the family members the management team under the feadership of the grand patriarch made the decision to register the new company under the name of Lekkerbek Foods (Pty) Limited. The motivation for the proposal was that one of the senior members of the close corporation has recently married a person from an indigenous South African royal family from Rustenburg. The strategy for the proposal was to provide 20 percent of the share capital to African blacks who have been working within the family business for the last 50 years. The son of Hash Ali & Sikh Singh, who is the accountant with a bookkeeping qualification, has recommended that 50 000 shares of par value of R1 each be issued to the existing members of the close corporation at premium of 50 cents per share. He also proposed that 10 000 ordinary shares be issued at premium R1 to a trust registered for the African Black employees. The external Professional Accountants, Azma & Zuane Inc., informed the board that the Companies Act 71 of 2008 no longer permits companies to have shares of par value and thus recommended that the shares must be converted to share of no par value. Mr. Rajah Singh, the Head of the Accounting Department, informed the shareholders that they must implement the recommendation of the Professional Accountants as it means that they will get their money back. The share capital must be reduced to zero based on the principle of no par value shares.
(a) Discuss whether the interpretation and advice given by Mr. Rajah Singh about the change to no par value shares is accurate and correct in terms of the provisions of the Companies Act.
(b) Record the
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