WS4 MCQ Flashcards
You act on behalf of an individual shareholder with a minority shareholding (10% of the company’s shareholding). The client has recently been unwillingly removed as a director of the company and dismissed as an employee of the company. Your client has been a shareholder in the company for 3 years (since the company was incorporated). The other 3 shareholders in the company are also the only directors in the company. The company is a small private company limited by shares (with unamended Model Articles).
Which of the following actions is both available to your client and most likely to be successful based on the information available?
A) Your client should pursue an unfair prejudice claim. The company is likely to qualify as a quasi-partnership. If successful, it is likely that the court would order the purchase of your client’s shares by the other shareholders or by the company.
B) Unfortunately there is no action that your client can take in these circumstances.
C) Your client should bring a claim under s 33 Companies Act 2006 for breach of their membership rights. The most likely remedy is damages.
D) Your client should bring a petition for the just and equitable winding up of the company.
E) Your client should pursue a derivative action on behalf of the company. The remaining directors of the company are likely to have breached their directors’ duties by deciding to dismiss your client as an employee.
A) Your client should pursue an unfair prejudice claim. The company is likely to qualify as a quasi-partnership. If successful, it is likely that the court would order the purchase of your client’s shares by the other shareholders or by the company.
A is a company director. Shareholders holding 7% (the ‘Shareholders’) of the share capital of the company have served notice on the company board of directors (the ‘Board’) of intention to remove A as a director. The next general meeting is due to be held in exactly one calendar months’ time. The company has articles in the form of unamended model articles.
Which of the statements below provides the best advice to the Board concerning the resolution to remove A as a director (the ‘Resolution’)?
A) The Shareholders do not represent sufficient of the voting rights of the company to have the right to call a general meeting to move the Resolution.
B) The Board has 28 days in which to decide whether to put the Resolution on the agenda of the next general meeting.
C) The Shareholders have not given sufficient notice to move the Resolution for the upcoming general meeting, therefore the Board do not need to put the Resolution on the agenda for this general meeting.
D) The Board can refuse to put the Resolution on the agenda of the next general meeting.
E) The Board should put the Resolution on the agenda for the upcoming general meeting, since if the Board does not do so, then the Shareholders can call a general meeting to move the Resolution.
E) The Board should put the Resolution on the agenda for the upcoming general meeting, since if the Board does not do so, then the Shareholders can call a general meeting to move the Resolution.
CORRECT:
The special notice period can be observed. Although technically the Board may refuse to place the Resolution on the agenda of the next general meeting, it would be unwise to do so as the Shareholders meet the 5% voting threshold to call the general meeting if the Board fails to do so within 21 days of notice of intention to remove a director.
