Question 1
In a medium sized public company, there are six directors, three executive and three non- executive. David one of the executive directors is chairman of the board of directors he also acts as the chief executive officer of the company. The other executive directors Sam and Peter seem to spend much of their time quarrelling with each other. The non executives seem to do very little and one often misses board meetings. The company is not very profitable, but the directors have voted themselves large increases in fees and salaries.
There is a clause in the articles appointing David as a director for life, and exempts him from any wrongdoing by the board.
Some shareholders are unhappy with the position of the company and seek your advice. They do not wish to sell there shares in spite of the poor dividends.
Advise the shareholders. ( 25 marks)
Question 2
The duties a director owes to a company are similar to the duties owed by an agent to his principal. Discuss. (25 marks)
There is a clause in the articles appointing David as a director for life, and exempts him from any wrongdoing by the board.
Some shareholders are unhappy with the position of the company and seek your advice. They do not wish to sell there shares in spite of the poor dividends.
Advise the shareholders. ( 25 marks)
Question 2
The duties a director owes to a company are similar to the duties owed by an agent to his principal. Discuss. (25 marks)
Question 3
Part A
Upon incorporation of a company it will be granted a status as a separate legal person. Explain this principle with reference to case law. Under what circumstances will this general principle not apply? ( 15 marks)
Part B
Jack Nicholas is employed as a director of sales by Timber Ltd. whose main object is to retail construction equipment. His contract of employment states that in the event of him leaving the company he cannot solicit their customers for a period of three years. During Jacks’ employment he was engaged in a market research on the company’s behalf which showed that there was a high demand for their product in the state of Texas. The company was considering expansion to this location. While Jack and the market research team were in this location conducting further research he left the team unsupervised and went to visit tourist attractions in the state for three days out of the week they were scheduled to be in Texas.
After five years with the company, Jack resigns stating his reason as irreconcilable differences. Upon his resignation he decides to start a company with his siblings called “Timber for You Ltd” which was engaged the retail of construction equipment and located in Texas.
A salesman for “Timber for You Ltd” was given a customer list by Jack, and from which he obtained some customers of Timber LTD. “Timber for You Ltd ” made high profits since its incorporation. Now in their second year of business it received a law suit from Timber Ltd.
Advise Timber Ltd on any action they can take and the remedies available to them. (10 marks)
Part A
Upon incorporation of a company it will be granted a status as a separate legal person. Explain this principle with reference to case law. Under what circumstances will this general principle not apply? ( 15 marks)
Part B
Jack Nicholas is employed as a director of sales by Timber Ltd. whose main object is to retail construction equipment. His contract of employment states that in the event of him leaving the company he cannot solicit their customers for a period of three years. During Jacks’ employment he was engaged in a market research on the company’s behalf which showed that there was a high demand for their product in the state of Texas. The company was considering expansion to this location. While Jack and the market research team were in this location conducting further research he left the team unsupervised and went to visit tourist attractions in the state for three days out of the week they were scheduled to be in Texas.
After five years with the company, Jack resigns stating his reason as irreconcilable differences. Upon his resignation he decides to start a company with his siblings called “Timber for You Ltd” which was engaged the retail of construction equipment and located in Texas.
A salesman for “Timber for You Ltd” was given a customer list by Jack, and from which he obtained some customers of Timber LTD. “Timber for You Ltd ” made high profits since its incorporation. Now in their second year of business it received a law suit from Timber Ltd.
Advise Timber Ltd on any action they can take and the remedies available to them. (10 marks)
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