Company law ans

Bristol is a substantial sh atomic number 18 bread and assuageterer in Chester-Perry Industries Ltd. A stock competitor, Gun and Fames lenity Ltd, is selling in great volume a cookbook similar to one in respect of which Chester-Perry Industries holds the right of first publication. Bristol believes his ac smart set has incurred a substantial loss and his own sh atomic number 18s expect been reduced In value by $150,000. HIS solicitors believe an Infringement of secure has occurred. Cycles and Pollock are the directors of Chester-Perry Industries Ltd. They advance that they adopt decided not to fulfil beca map they believe hat to take legal action for infringement of copyright is too expensive and risky.Bristol is unsure whether the directors of Chester-Perry Industries admit any interest in Gun and Fames lenity Ltd. On the general prescripts laid down Salmons occurrence, nates Bristol sue Gun & Fames? edit kayoed Can Bristol sue Gun & Fames on behalf of Chester-Perr y as a shareholder in Chester-Perry? applicable law Salomon. industry The House of Lords in Salomon held that upon incorporation, a c either(a)er benefici bothy becomes a dissipate legal entity even though its issued shares are owned by the comparable person Like In Salomon.Similarly In this interrogatory, Chester-Perry Is a company that has been co-ordinated and thitherfore, is a split legal entity from every last(predicate) its shareholders. In this case, according to Salomon, Bristol who is a shareholder of Chester- Perry assnot sue Gun & Fames on behalf of Chester-Perry as a company is separate from its shareholders. finis Bristol hind endnot sue Gun & Fames on behalf of Chester Perry due to the formula laid down in Salomon where upon incorporation Chester Perry is considered as a separate legal entity from all its shareholders, including Tutorial 2 Bristol.Q(a). The Constitution of coarse Hopes Pity. Ltd. Includes the side by side(p) provisions Rule XSL On any In crease In ceiling the spick-and-span shares must be offered to members In proportion to their excellent shares. butt (an quick shareholder) is distressed when an copement of a peeled issue is unveil of What action eject John take against great(p) Hopes for failing to allot untested issue shares to him according to Rule xi of the Constitution? Relevant law CA 2001. Application s. 140(1)(a) states that a constitution of a company is a contract between the company and its company and its shareholders.In this essence, both the shareholders are bind by the constitution. Must oversized In this instance, Rule xi of big Hopes constitution states that new shares be offered to existing shareholders as per their existing shares. However, Hopes failed to allot new shares to John as according to his existing shares and leave therefore breached its contractual obligation in the constitution chthonian oddment John give the gate take an action against Big Hope on a lower floor s . 140(1)(a) for breaching its to contractual obligation in its constitution for failing to allot the new shares John as per his existing shares.Tutorial 3 Q. John, Ring, George and Paul incorporate Big Hopes Pity Ltd for their property learning transaction. Big Hopes Pity Ltd was empowered nether a provision in its constitution to appoint a managing director. However, the company did not appoint managing director, executed a contract with Vincent for the bargain for of a real property. The market price for the property subsequently collapsed. The board of Big Hopes Pity Ltd, learning of the contract, expressed their disapproval to Paul and involveed that the company was not backfire by the contract.Vincent seeks your advice as to his legal position. Issue Is the company bound by the contract with Vincent? Relevant law Constructive notice, Turned, and s. 129(2)(a) and (b), s. 29(5) (6) CA 2001 , developed bureau and Apparent authority. Application on a lower floor the old pr inciple of formative notice, the constitution of public companies are made available for public recap and therefore, the public are deemed well aware of the limitations on the authority of the companies principle depart not assume here as Big Hopes is a private officers. This old company.Furthermore, under the reciprocal law Turnarounds case, any outsiders with companies can hold that the persons with whom they are with moderate the authority to contract on behalf of the companies and all proceedings have been complied with. Dealing internal In this case, the constitution of Big Hopes states that a MD should be appointed but did not state that Paul has been properly appointed as the MD. Vincent can argue that he assume that Paul has been appointed as the as per the Turnarounds case and therefore, has the authority to contract on behalf of the company.He besides has no actual knowledge or suspicion that Vincent has not been properly appointed ( poster In try on/exam, if ther e are any circumstances that arouse suspicion, argue using the case of Nonresident Developments). The principle of constructive notice has also been abolished by s. 130(1) of CA 2001. In dealing with companies, outsiders are entitled to make accepted assumptions contained in s. 129 of ACACIA as per s. 128(1) of ACACIA. In this instance, Vincent can argue that he has been empowered by s. 128(1) to make certain s. 129 assumptions when contracting with Paul from Big Hopes. Reticular, he can assume under and (b) that Paul has been properly appointed as the MD of Big Hopes and can therefore physical exertion all the customary duties of a MD which include entering into contracts on behalf of Hopes. In this essence, Vincent can assume that Paul has actual implied authority to enter into contracts on behalf of Big Hopes. Note In test/exam, if question requires arguing on apparent/seeming(a) authority, use the case of Freeman Locker to support your argument). Vincent can also argue either s. 129(5) or (6) depending on whether Big Hopes execute contracts by way of seal or without seal.Either way, Vincent can argue that Paul has complied with all the internal proceedings when executing the contract with/without seal (e. G. Proper meeting, quorum, obsession of seal, witnessing of fixation et cetera) under either of these two sections. The exceptions under s. 128(4) CA 2001 will not apply to Vincent as he has ever known or suspected that Paul has not been properly appointed and the contract has not been properly executed. ConclusionBig Hopes is bound by the contract with Vincent under both common law (as per Turnarounds case whereby entitled to make certain s. 29 assumptions again, there is no evidence suggesting any when dealing with Big Hopes and exceptions under s. 128(4) that will rebut the s. 129 assumptions made by Vincent. Tutorial 4 Q. maria is keen to purchase shares in act Ltd. , but is unavailing to found sufficient funds to do so. It is suggested that the company lend Maria the sum of $50,000 to enable her to complete the purchase. The directors of Action Ltd. Seek your advice as to this proposal. Issue Can Action Ltd lend Maria the sum of $50,000? Is this considered as pecuniary assistance?Relevant law s. AAA(1) CA 2001, ASIA v Adler. Application Under s. AAA(1), a company may only(prenominal) fiscally assist a person if it (a) does not materially prejudice the interests of its shareholders and affect its ability to liquidate its creditors, (b) must be approved by all shareholders, and (c) exempted by s. CHIC. Therefore, forrader Action Ltd lends the $50,000 to Maria, it must ensure that it has comply with all the requirements in s. AAA(1). Otherwise, Action Ltd will be breaching s. AAA(1) as per the case of ASIA v Adler. In ASIA v Adler, Mr..Adler the director in HI has utilized the money of HI to financially assist his face-to-face company PEE to purchase the shares in HI when HI was already in financial difficulty and witho ut the approval of the shareholders. The approach deemed this to be a contravention of s. AAA(1). Requirements in s. AAA(1). ConclusionAction Ltd can only financially assist Maria to purchase the shares of Action Ltd if it well-to-do all the requirements in s. AAA(1). Otherwise, Action Ltd will be deemed to have contravened s. AAA(1) as per the case of ASIA v Adler.Tutorial 5 Q. An opportunity has arisen to purchase lay for development at Christmas Hills. The shareholders of Central Developments Ltd. Passed a termination that the company purchases the land. However, the directors have handle the resolution and refuse to act on it. Are the directors bound to go through the shareholders resolution? Issue Are the directors of Central Developments bound by the shareholders resolution to purchase the land at Christmas Hills? Relevant law Separation of willpower and management powers, reflexive Self- Cleansing, John Shaw.Application Under the principle of separation of monomania and management powers, the management of the company is vested fully in the board of directors despite the shareholders owning the company. Therefore, the shareholders cannot pass resolutions instructing the directors on how to manage the company. According to the cases of Automatic Self-cleansing and John Shaw, the directors as long as acting within the management powers bequeathed on them by the companys constitution have absolute power in managing the company and the shareholders have no rights to interfere in this as per the companys constitution.In this event, the directors of Central Developments can cut the resolution of the shareholders to purchase the land at Christmas Hills because purchasing of land can be considered as a type of management power and only the Conclusion The directors of Central Developments can ignore the resolution of the shareholders to purchase the land at Christmas Hills because the directors have absolute power to manage the company including wheth er to purchase the land as per the principle of separation of ownership and management powers and the cases of Automatic Self-cleansing and John Shaw.Tutorial 6 IQ. Seven Dwarves Ltd operates nursing homes. Its directors are Sleepy, Grumpy and Dopey. They hold 30% of the shares in the company. The directors allocate 1 cardinal new shares to certain business associates. This has upset certain shareholders who claim that the placement was made with a view to preventing a upcoming takeover offer being made. The directors claim that the allotment was made to raise cash mandatory for the companys future needs. nominate the shareholders.Issue Advise the shareholders whether the directors have breached any of their directors duties by allocating 1 million new shares to certain business associates? Relevant law s. 181 CA 2001 proper economic consumption (but for test), Whitehorse v Carlton, Howard Smith. Application Under s. 181 CA 2001, directors must act in good faith, in the best int erest of the shareholders and for a proper enjoyment. The shareholders in claimed that the directors have issued 1 million new shares to Seven Dwarves certain business associates to defeat a takeover and therefore, the outlet of these new shares is for an improper purpose.To check whether the payoff of new shares is for an improper purpose (I. E. To defeat a takeover), the but for test will be applied. But for to defeat a future takeover, will the directors issue the 1 million new shares? (Note Students must argue and argue on this question to reach an answer, either Yes/No). If the but for test reveals that no, if not to defeat a takeover, the directors will not issue the new shares, then obviously the reason for issuing shares is to defeat a takeover. He to prevent the wife from having majority control over the business and in the case of Howard Smith, whereby new shares were issued to prevent future takeover, the court ruled that the issuing of new shares in these cases was for improper purpose. Therefore, the directors have breached s. 181 because their purpose in issuing the 1 million new shares to certain business associates is to defeat a future takeover which is considered as improper as per the two cases discussed above. Conclusion The directors of Seven Dwarves have breached s. 81 because they have issued cases new shares for an improper purpose (I. E. To defeat a takeover) as per the of Whitehorse v Carlton and Howard Smith. Tutorial 7 (This question is not taken out from the tutorial questions but you can still use it as a reference for answering questions from this tutorial) surface-to-air missile and Pete are the erectors in BBC Pity Ltd. They have decided to use the 1 million dollars in the companys bank account to set up in the shares of DEAF Ltd later on doing all the necessary research and making all the necessary inquiries by themselves from the Internet and financial Journals and magazines.Six months after the investiture, the Wor ld Financial Crisis occurs and DEAF Ltd goes into colonization causing BBC Pity Ltd to lose its 1 million dollars investment. Do the shareholders of BBC Pity Ltd have a course of action against Sam and Pete? Issue Do the shareholders of BBC have a course of action against Sam and Pete for asking an investment that caused the company to lose 1 million dollars? Relevant law archaic subjective common law standard, Re Cardiff Bank, Re urban center honest Fire Insurance, Daniels v Anderson (objective standard), s. 80(1) and s. 180(2) CA 2001. Application Under the old common law, a subjective standard is applied to directors when exercising their duty of boot towards their companies. In both the case of Re Cardiff Bank and Re City Equitable Fire Insurance, the subjective standard is applied whereby directors were only required to exercise duty of care as per their personal level f skill and experience. However, this approach has been overruled by the modern objective standard landma rks in the case of Daniels v Anderson.In this case, all directors are expected to exercise a duty of care that any other reasonable directors will apply in the same position and circumstance and not according to their personal level of skill and experience. This standard is further illustrated in 180(1) CA 2001 which states that directors must exercise their power with degree of care that any reasonable directors would exercise in the same circumstances, position and responsibilities. In this event, if the shareholders of BBC are able to micturate that any other Sam and Pete would be breaching their duty of care towards BBC under 180(1).However, Sam and Pete will be able to raise the Business mind Rule Defense (BBC) in s. 180(2) CA 2001. In order for them to raise the BBC, they must satisfy four elements (1) They have made the business theory in good faith and for a proper purpose there is no evidence that Sam and Pete have ill intentions when making the investment, (2) They hav e no material personal interest in the business model again, there is no evidence that Sam andPete have gained any benefits financial or non-financial wise from the investment, (3) They have informed themselves of the subject matter of the business Judgment there is evidence that Sam and Pete have done all the necessary research including online and from Journals and magazines, and (4) Any other reasonable person in the same position and circumstances would have made the same investment as they did after doing all the research Sam and Pete must be able to prove so. If Sam and Pete are able to chip in all the elements in s. 180(2), then they will be able to use the BBC to underpin themselves from breaching s. 0(1). Conclusion The shareholders of BBC will have a course of action against Sam and Pete if they can prove that no reasonable director will invest the 1 million dollars in DEAF and therefore, in doing so, Sam and Pete have breached their duty of care to the company under s. 180(1). However, if Sam and Pete can establish all the elements under s. 180(2), then they will be able to use the BBC to defend themselves from breaching s. 180(1). Tutorial 8 (These questions are not taken out from the tutorial questions but you can a shareholder in EX. Pity Ltd.