15 & 16 - Internal Disputes Flashcards
Before removing a director from office, what must be checked?
- Articles (there may be a bushell v faith clause or some other power to remove D)
- Shareholder Agreement (may require unanimous consent to remove D)
- D’s service contract
What is the first level for shareholders wishing to remove a director?
s.168 - special notice to Board requesting to put removal of D on agenda of an upcoming GM (28 clear days before GM)
What is level 2 for shareholders wishing to remove a director?
s.303 request for GM from shareholders holding not less than 5% of paid up voting share capital
What is level 3 for shareholders wishing to remove a director?
SH call their own GM - s.305(1)
Shareholders repping 50% of those who issued the s.303 request
What is a Bushell v Faith clause in the articles?
Gives directors who are also SH s weighted voting rights when they are trying to be removed
What approval is required at GM to remove a director
ordinary resolution
what is s.260 action?
Derivative actions - SHs bring a claim on behalf of the company against D for an actual/proposed act/omission involving negligence, default, breach of duty, breach of trust
Foss v Harbottle
where a wrong has been done to the company, the proper claimant is the company
basis for s.260 derivative claims
What is PILON and what is its main advantage
Payment in lieu of notice clause = allows employer to dismiss employee with lump sum without sufficient notice.
Main advantage = post termination obligations - restrictive covenants - are still enforceable
What is a garden leave clause
requires employee to stay at home during notice period - cannot work for competitors
What claim would a dismissed employee bring for breach of contract?
Wrongful dismissal
What claim would a dismissed employee bring under statute?
Unfair dismissal - ERA 1996
What is a settlement agreement
- Formal settlement agreement in writing between company and employee
- can exclude employee’s right to pursue matter in Employment Tribunal (for unfair dismissal)
What is a minority shareholder
shareholder holding less than 50%
(Remedies for minority shareholders:) What is the difference between s.33 action and s.994(1) action?
s. 33 = SH can sue the company if membership rights have been infringed. Gets damages.
s. 994(1) = SH can claim unfair prejudice in a personal capacity against the company, e.g. negligence/mismanagement, breach of legitimate expectation that would be involved in management. Most common order = D to sell its shares to the company
