Medico Investments (Pty) Ltd Case Study - Law Assignment Help

Assignment Task

The Medico group, through Medico Investments (Pty) Ltd (Medico), and a medical insurance company, Medi-Insure Ltd (Medi-Insure) embarked on a joint venture to establish a hospital using a dormant company, Dormo (Pty) Ltd.
You are given the following information:
1. The main business of Medico Investments (Pty) Ltd is the establishment and management of hospitals while Medi-Insure Ltd is a financial services group, that, inter alia, offers medical insurance.
2. Medico and Medi-insure concluded a shareholders’ agreement which recorded that Dormo was formed to operating a hospital, known as the Medico Medical Institute.
3. The shareholding in Dormo is as follows: 74 percent is held by Medico and 26 percent by Medi-Insurance. Medico accordingly subscribed for 444 shares and Medi-Insurance subscribed for 156 shares.
4. Medico and Medi-Insurance provided security up to maximum of R6 million, in proportion to their respective shareholdings in Dormo, to finance the medical and hospital equipment.
5. Medi-Insure lent R1 million to Dormo on loan account, with interest accruing at an interest rate of prime rate plus 2%. The capital amount and the interest will be repaid when the board of directors of Dormo resolve that sufficient funds, which is in excess of amounts required for its business purpose, is available.
6. If there are further funds required by Dormo for its working capital and medical equipment, Medico and Medi-Insure will, will by agreement, provide the necessary security for those funds, in proportion to their respective shareholding in the company.
7. Medi-Insure being a medical aid and medical insurance company provides an exclusive pipeline of patients to Dormo.
8. Dormo leases the hospital building from Medico.

Question:
(a) Draft the March 2020 comprehensive legal opinion, setting out the various financing arrangements and the legal issues arising from the financing arrangements.
(b) Set out the revisions, if any, in a November memorandum to the March 2020 opinion.

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