Instructions : All questions are compulsory
Each question is equal marks.
TASK: EC3015 Company Law Assignment
‘The reform of directors’ duties which has culminated in the new section 172 of the Companies Act 2006 represents a clear and welcome acknowledgement that the interests of a company’s shareholders cannot be allowed to triumph over the interests of other stakeholders in the company.’Discuss.
Critically assess the implications of the decision in Salomon v Salomon & Co Ltd1897 AC 22, in the House of Lords. What are the situations in which the courts will be prepared to pierce the ‘veil of incorporation’.
Flowers Ltd was incorporated in 1986. Its objects clause provides that the business of the company shall be the manufacture of plastic household furniture. Additionally the articles provide that the company may exceed a borrowing limit of £60,000 only if the Board of directors unanimously agree the transaction.
Although never formally appointed Managing Director, Barney, to the knowledge and with the full agreement of his co-directors, Ronda and Camilla, carries out the day-to-day management of Flowers Ltd. Barney, acting on behalf of Flowers Ltd, agreed that the company would manufacture and supply 5,000 plastic penguins for the Surfboard District Council beachfront. The company borrowed £70,000 from Y Bank plc to purchase the machinery to carry out this agreement. Barney and Ronda held a meeting to agree the loan and did not invite Camilla, who did not know anything of the loan. Owing to serious mismanagement the company incurred considerable losses and with only 1,000 penguins completed was found to be irretrievably insolvent and put into compulsory liquidation.Advise the liquidator as to the validity of the transactions engaged in by the company and the bank.
Question 4: EC3015 Company Law Assignment-City, University of London
Geof and his friend Alvin set up a partnership many years ago which specialized in selling household products. After years of success they converted the partnership to a company in order to allow Geof’s son Fred to become involved in the business. Geof, Alvin and Fred each holds an equal amount of shares in the company. Over time Geof and Fred have become tired of Alvin holding the company back with his risk averse approach and they remove him from the board. Alvin is extremely unhappy about this and subsequently discovers that Geof and Fred have been transferring assets out of the company into another company in which they have an interest.