On 1 July 2015, Monageng Limited concluded an agreement to purchase 75% of the ordinary shares in Selongo Limited.
The terms of the purchase agreement include, among other things, the following
• Monageng Limited will settle for the 75% of the ordinary shares by paying cash of R200 000 in addition to issuing 100
000 of its own 10% preference shares to the owners of the
75% ordinary shares on 30 September 2015. The price of the10% preference shares on 30 September 2015 was R2.50 each.
• Monageng Limited will only be able to appoint its directors to the board of Selongo Limited on 1 August 2015 after the year end date of Selongo Limited which is on 31 July 2015.
All the ordinary shares of Selongo Limited are entitled to vote at the company's AGM but preference shares are not entitled to vote.
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• LINDI LEGODI
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Which of the following statements are true?
21A)
(i) Monageng Limited is the acquiree (il) Selongo Limited is the acquiree (il) Monageng Limited is the acquirer (iv) Selongo Limited is the acquirer
O a. ( and (iv) only
O b. (ii) and (in) only
O c. (i) and (iv) only
O d. (i), (ii) and (ili) only
The correct answer is a. (i) and (iv) only.
Monageng Limited is the acquirer because it is purchasing 75% of the ordinary shares in Selongo Limited.
Selongo Limited is the acquiree because it is being purchased by Monageng Limited.