BLP

Question 1

Rover International Ltd v Cannon Film Sales

Answer 1

Once Company has been created, cannot ratify contracts made before its existence

Question 2

Russell v Northern Development Bank

Answer 2

Agreement outside Articles between shareholders in themselves on how to vote on resolution was enforceable insofar as merely private agreement;

BUT an agreement between the company and the shareholders was invalid since it fettered the company’s discretion;

Also, in case of ambiguity or conflict, Shareholders’ Agreement prevails over the Articles

Question 3

Browne v La Trinidad

Answer 3

Reasonable notice is necessary for a BM

Question 4

Pedley v Inland Waterways

Answer 4

Directors not bound to place removal resolution on the agenda for consideration at a forthcoming meeting

Question 5

Bushell v Faith (clause)

Answer 5

Permits director to have more votes per share, in order to prevent their removal by ordinary resolution

Question 6

Re a Company no 00477 of 1986

Answer 6

Interests of a shareholder who had risked his capital extended to legitimate expectation that he would continue to be employed as a director, so the company could not dismiss him since it would unfairly prejudice his interests as a member

Question 7

Ebrahami v Westbourne Galleries Limited

Answer 7

In cases of small private companies, also known as ‘quasi-partnerships’, shareholders may have legitimate expectation that they are involved in the management of the company; prevention of this may amount to unfair prejudice

Question 8

O’Neill and Another v Phillips and Others

Answer 8

Normally only a breach of articles will give grounds for unfair prejudice, although there are some equitable circumstances in which even if the articles have been complied with, the claimant can still have a remedy

Question 9

Appointment of administrative receivers - date

Answer 9

15 September 2003

Question 10

Exceptions to the rule in Foss v Harbottle (i.e. that company is proper claimant where wrong has been done to it)

Answer 10

• Majority exercise power in way to defraud minority
• Directors in breach of fiduciary duty, provided the breach is not ratifiable by the majority
• Company proposing to act ultra vires/illegally
• Company purports to pass OR where SR is needed

Question 11

Insolvency - statutory order of priority

Answer 11

1) Insolvency expenses of preserving and realising fixed assets
2) Creditors with fixed charges, in order of creation
3) Other insolvency costs and expenses
4) Preferential creditors, who rank and abate equally (e.g. wages owed to employees, limited to £800, plus holiday pay and pensions contributions)
5) Prescribed part fund (unless floating charge created prior to Relevant Date)
6) Creditors with valid floating charges, in order of creation
7) Unsecured debts - rank and abate equally
8) Statutory interest accrued since commencement of winding up
9) Shareholders

Question 12

Financial Assistance Rules for CA 2006 - in force

Answer 12

1 October 2008

Question 13

Conditions for settlement agreement with ex-employee

Answer 13

• In writing
• Relate to particular proceedings
• Identify independent adviser
• State that the adviser is covered by professional indemnity insurance
• State that the conditions regulating the settlement are met