Murphy is an accountant at Stacklets (Pty) Ltd., a subsidiary of BIGI (Pty) Ltd. He has been assisting the compliance department with the Annual Integrated Report. To ensure that he has covered all aspects, he has been attending meetings across the group. He meets Deon at a number of meetings, and they decide to go for drinks after a 6-hour board meeting at Boxies Ltd., another subsidiary of BIGI (Pty) LTD. Deon can’t hold his liquor and starts spilling information about the company. He explains how he knows Stacklets is about to acquire some lucrative stock in solar systems and their share price is going to go through the roof, so he has purchased additional shares with all of his savings. Murphy tries on a number of occasions to change the topic, but Deon tells him about the CEO of Boxies LTD. who is having an affair with the wife of a major shareholder of BIGI (Pty) LTD. and that only a select few know about it. Answer the questions that follow: Q.2.1 Is Deon’s sudden purchase of additional shares in Stacklets (Pty) LTD permitted under the circumstances? Identify and briefly discuss Deon’s actions. Q.2.2 It turns out that Deon, while inebriated, spilled the beans about the affair to one too many people. The major shareholder found out about the affair, instituted divorce proceedings and requested that his broker sell all his shares in BIGI (Pty) LTD. This negatively affected the share price. Boxies LTD has realised that if they do not do something drastic soon, they won’t be able to survive past six months. They have decided to enter into compromise agreements with two of their major creditors. Explain the concept of compromise. In your answer, note the information to accompany a proposal of compromise.
Murphy is an accountant at Stacklets (Pty) Ltd., a subsidiary of BIGI (Pty) Ltd. He has been assisting
the compliance department with the Annual Integrated Report. To ensure that he has covered all
aspects, he has been attending meetings across the group. He meets Deon at a number of
meetings, and they decide to go for drinks after a 6-hour board meeting at Boxies Ltd., another
subsidiary of BIGI (Pty) LTD. Deon can’t hold his liquor and starts spilling information about the
company. He explains how he knows Stacklets is about to acquire some lucrative stock in solar
systems and their share price is going to go through the roof, so he has purchased additional
shares with all of his savings. Murphy tries on a number of occasions to change the topic, but
Deon tells him about the CEO of Boxies LTD. who is having an affair with the wife of a major
shareholder of BIGI (Pty) LTD. and that only a select few know about it.
Answer the questions that follow:
Q.2.1 Is Deon’s sudden purchase of additional shares in Stacklets (Pty) LTD permitted
under the circumstances? Identify and briefly discuss Deon’s actions.
Q.2.2 It turns out that Deon, while inebriated, spilled the beans about the affair to one
too many people. The major shareholder found out about the affair, instituted
divorce proceedings and requested that his broker sell all his shares in BIGI (Pty)
LTD. This negatively affected the share price. Boxies LTD has realised that if they
do not do something drastic soon, they won’t be able to survive past six months.
They have decided to enter into compromise agreements with two of their
major creditors.
Explain the concept of compromise. In your answer, note the information to
accompany a proposal of compromise.
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