Company and commercial law
ASSIGNMENT QUESTION
Adam and Anna are directors of Alpha Ltd, a construction company. Linda is a majority shareholder of Alpha Ltd but she is not a director of the company.
Adam and Anna have been trying to secure a contract for the redevelopment of a business centre in London. Linda, however, does not support the project and she sends a letter to the other shareholders to express her concerns about the possible risks of the operation.
As a result, Adam and Anna feel that they have not the support of the shareholders and they decide to resign from Alpha Ltd. After their resignation, Alpha Ltd decides not to continue the negotiations for the redevelopment project.
Six months later, Adam and Anna incorporate their own company (Beta Ltd) and, in turn, conclude a contract for the redevelopment of the northern part of the business centre. The contract is estimated to be worth £ 5 Million.
When Linda finds out the estimated worth of the contract, she plans to take legal action against Adam and Anna.
Advise Linda.
GUIDANCE – POINTS TO CONSIDER
Relationship between shareholders and directors
The role and duties of company directors (e.g. section 175 Companies Act 2006)
Liability of directors for breach of their duties
Statutory derivative claims
Reference to relevant case law
INDICATIVE LIST OF SOURCES
All sources are available either on Kortext or on the VLE or via the online library. RELEVANT LEGISLATION
Company Directors Disqualification Act 1986
Companies Act 2006
UK Corporate Governance Code 2018
BOOKS, ACADEMIC ARTICLES AND POLICY PAPERS
1. General info on companies and their structure (e.g. the process of incorporation) Discuss the Constitution of the company
Consider the different types of resolutions (i.e. ordinary and special)
Explain that The directors are the primary power wielding organ of a company
Explain that Unsatisfied shareholders can act to remove the board under s. 168 CA 2006 (resolution passed by simple majority s. 282(1).
2. Discuss the role of directors in a company (e.g. as agents) and their relationship with both the company and shareholders.
3. Consider the fiduciary relationship and the duties attached to it (ss-170-177 CA 2006)
4. You may also focus on elements of corporate governance (e.g. s 172)
5. Consider the scope of s 175 with particular focus on the corporate opportunity
doctrine.
6. For instance, you will need to consider relevant case applicable to your scenario.
The present case scenario makes (reffers) to Companies Act 2006 (thereafter known as CA 2006) with the relevant ART TO DIRECTOR DUTIES.
Diurectors are considered to be agents of the company and they have different types of authority.
Use Harvard referencing system.
