Case Study: Company Law Essay

doubtfulness 1 The shares of first principle Limited, a private confederation are held by Ann and Andy Anderson and Bev and bobber Brown. The Andersons who together hold 90% of the troupe shares are concerned that the ships smart set is in need of further with child(p) but because of family difference, the Andersons are non willing to inject additional notes so long as the Browns are shareholders in the caller. They have wherefore decided to pass a closing which will enable the mass acquire compulsorily at full value shares of the nonage. Advise Bev and tail Brown.Bev and Bob Brown my advise to you is that the Anderson being the mass shareholder of first principle Ltd. corporation remove you Bev and Bob Brown by ordinary resolution of the caller-out in general meeting, and if you Bev and Bob was appointed by the articles you bay window be removed by a special resolution passed to transmute the articles. The Andersons decisions being major(ip)ity shareholder is bind ing on you the nonage shareholder whether you like it or not it is they who control the comp either ultimately. moreover Bev and Bob you clear require re put forwardative live up to against the Andersons for joke committed against you Bev and Bob as in the case Eastmanco.Ltd. V great London where they stultify the purpose for which the company was formed and deprive you the nonage shareholder of your existing prospects of obtaining takes. Being a member of first principle Ltd. you can pose vocalism action against the Company to protect your personal rights which you Bob and Bev enjoys. There have been a breach of duty owed to you Bob and Bev the minority shareholder cannot be ratified by a majority of shareholders.Question 2 Discuss the rule in Foss V Harbottle The rule in Foss V Harbottle illustrates the principle of majority control and minority protection.If a molest is make to the company then the only proper plaintiff to bring an action to redress the wrong is the c ompany itself and not a shareholder or any 1 else. Where the minoritys complaint is that some act has been done wrongly, which would nevertheless be lawful if there were an ordinary resolution in general meeting to authorize it, then the court will not interfere at the instance of the minority. The rule places the majority member in a very strong position over the minority as in the case Bamford V Bamford.The rule prevents the company from spending bullion on litigation to no ultimate purpose if an independent majority does not wish to pursue a claim. The rule may be used by majority shareholders to perpetrate fraud on the minority members especially if the majorities are also directors of the company. The rule is an inevitable consequence of a corporation is a separate legal entity. Therefore, if harm is caused to a company then only the company itself can show legal action. No one else, irrespective of their losses, will have the necessary power to take legal proceedings.Questio n 3Dave is minority shareholder in ABC Company Ltd. Andy, Bev and Carol are also major controlling shareholders and in addition, they hold the position of chairman, managing director respectively. Dave is aggrieved that i. The company has just sold 5 acres of land to Bevs cousin at half the cost the company paid for it ii. The company has recently engaged Andys uncle as its marketing director at an annual fee of $5 million. His value contract includes a provision that in the event of his death, his widow shall persist in to receive his annual salary by way of pension requital for the rest of her life.Andys uncle was in very poor health at the term of his appointment. Andy, Bev and Carol do not admit that anything improper has taken place. Advise Dave on the legality of Andy, Bev and Carols action and whether he can bring an action against them. Dave base on the actions of Andy, Bev and Carol you can bring an action against them as in the case Daniels V Daniels. The major sha reholders Andy, Bev and Carol owed fiduciary duty to the company and most act in good faith and in the best interest of the company and not in their own interest.The directors have been exercised in a manner that is unfairly prejudicial to the company and also breach of their fiduciary duties as in the case Kelmer V Baxter. Andy, Bev and Carol action are base on personal interest. The court can make an order to rectify the matters as in section 213A of the 2004 Company Act. The court can order for the company to regulate the company affairs by amending its articles against Andys uncle who was appointed as marketing director at an annual alary of $5 million and he was in very poor health at the conviction of his appointment. The court can regulate the company affairs by amending ABC Ltd. articles so that Andys uncle widow does not receive his annual salary by way of pension payment for the rest of her life later on he dies. The court can also order for compensation to the company f or the 5 acres of land that Bevs cousin buy at half price the company paid for it. Dave you can bring action against them in the court.Question 4 The articles of association of ABC Ltd. public company provides inter alia At a general meeting of the company, subject to any right or resolutions for the time being attached to any trend or classes of shares, on a show of hand, every member in person shall have one vote Marvin, a shareholder who was present at a meeting of the company voted but the directors refused to register his vote in connection with passing of a special resolution. Advise Marvin who wants to tie the directors to register his vote. Marvin base on information given above you take Representative action against the company to protect your personal rights as in the case Pender V Lushington.Being a member allows you to bring typical action against the company. The directors of ABC Ltd. owe fiduciary duty to you personally. Suing under representative action to prevent the company from acting contrary to its articles which states that At a general meeting of the company, subject to any right or resolutions for the time being attached to any class or classes of shares, on a show of hand, every member in person shall have one vote. You were present at the meeting and voted but they the directors refused to register your vote so you can bring them to court.