Dipogiso and Kitso owned a business involved in property development. They decided to incorporate their business. Before the company was incorporated, Dipogiso and Kitso bought a piece of land in Gaborone West for P200,000·00. They also bought a block of fl ats in Tsholofelo. The advertised price for the fl ats was P600,000·00 but Dipogiso and Kitso negotiated with the vendor and paid P450,000·00 for them on account of their poor state of repair. They further bought a house in Extension 12 on behalf of the unborn company for P40,000·00 with the intention that the house should be used as offi ces of the company.The company was incorporated as Conman Properties (Pty) Ltd. Dipogiso and Kitso sold the land to the company for P400,000·00; the fl ats for P800,000·00; and the house for P50,000·00. They paid themselves partly in cash and partly in shares in the company.They appointed their friend Nkwe, their accountant Sipho, and their secretary Violet as the directors. They disclosed to them that they had made a profi t of P410,000·00 on their sale of property to the company broken down as follows:P200,000·00 on the land;P200,000·00 on the fl ats; andP10,000·00 on the house.The directors assented to these profits.Richard is a shareholder in the company. He has discovered the above state of facts and is aggrieved.Required:Advise Richard. (10 marks)
