Survival Services Ltd was formed in 2017. It is a company producing short
films. It has two shareholders: Alistair who owns 15% of the shares and Willis
who owns the remaining shares. The two shareholders are the company’s
only directors. Each has a four (4) year service contract. No shareholder
resolutions were ever passed to approve those contracts. Survival Services
Ltd’s Articles of Association
= if either shareholder wishes to sell their shares, they must offer them first
to the other shareholder at a price to be determined by independent
accountants.
Survival Services Ltd’s Articles of Association
= Alistair shall be entitled, at a board meeting, to veto any significant change
or expansion in the company’s business.
Dube Plc wishes to take control of Survival Services Ltd.
Dube Plc has offered to purchase Willis’ shares at a very generous price and
Willis has indicated that he intends to accept this offer without first offering
his shares to Alistair.
Willis has told Alistair that he is going to call a shareholders’ meeting to
amend the Articles of Association and remove the provisions above and
remove Alistair as director.
W will then sell his shares to Dube Plc and Dube Plc will expand Survival
Services Ltd to include the producing of documentaries featuring endangered
species.
Alistair says he will not attend any shareholders’ meeting.
,Advise Alistair as to whether:
a. He can prevent Willis selling his shares to Dube Plc without first
offering them to him.
b. He can prevent his removal as a director.
c. He can rely on Section 994 of the Companies Act 2006 or Section 122(1)(g)
of the Insolvency Act 1986.
There are a few issues at hand:
1) Survival Services Ltd’s AA
= if one shareholder were to leave the company, shares must be first
offered to the other.
= Alistair has a veto power, and is able to veto any major changes made to
the company.
Dube Ltd intends to buy over shares that belong to Will, and Will has
indicated that he intends to sell the shares to Dube, without first offering
them to Alistair.
This is a clear breach of the AA.
2) If Dube Plc takes over Survival Services, it will expand the company’s
business from short films to producing documentaries.
This may be considered a breach of the objects clause.
, 3) Will intends to call for a shareholder meeting and amend the AA, thus
removing Alistair’s veto power, the preemption clause and Alistair as a
director.
4) There is also the issue of a service contract for Alistair and Will. (4) year
service contract for Alistair and Will who were the only shareholders and
directors of the company, however no shareholder resolution was
passed to approve these contracts.
a) Advise Alistair If Alistair can prevent Willis from selling his shares to
Dube without first offering them to him.
(1) Survival Services Ltd’s Articles of Association
= if either shareholder wishes to sell their shares, they must offer them first
to the other shareholder at a price to be determined by independent
accountants.
pre- emptive clause ; if u are to resigned as a director or shareholder, then u
must offer your shares to the other shareholders
Alistair can enforce the company’s AA under S 33 CA 2006.
films. It has two shareholders: Alistair who owns 15% of the shares and Willis
who owns the remaining shares. The two shareholders are the company’s
only directors. Each has a four (4) year service contract. No shareholder
resolutions were ever passed to approve those contracts. Survival Services
Ltd’s Articles of Association
= if either shareholder wishes to sell their shares, they must offer them first
to the other shareholder at a price to be determined by independent
accountants.
Survival Services Ltd’s Articles of Association
= Alistair shall be entitled, at a board meeting, to veto any significant change
or expansion in the company’s business.
Dube Plc wishes to take control of Survival Services Ltd.
Dube Plc has offered to purchase Willis’ shares at a very generous price and
Willis has indicated that he intends to accept this offer without first offering
his shares to Alistair.
Willis has told Alistair that he is going to call a shareholders’ meeting to
amend the Articles of Association and remove the provisions above and
remove Alistair as director.
W will then sell his shares to Dube Plc and Dube Plc will expand Survival
Services Ltd to include the producing of documentaries featuring endangered
species.
Alistair says he will not attend any shareholders’ meeting.
,Advise Alistair as to whether:
a. He can prevent Willis selling his shares to Dube Plc without first
offering them to him.
b. He can prevent his removal as a director.
c. He can rely on Section 994 of the Companies Act 2006 or Section 122(1)(g)
of the Insolvency Act 1986.
There are a few issues at hand:
1) Survival Services Ltd’s AA
= if one shareholder were to leave the company, shares must be first
offered to the other.
= Alistair has a veto power, and is able to veto any major changes made to
the company.
Dube Ltd intends to buy over shares that belong to Will, and Will has
indicated that he intends to sell the shares to Dube, without first offering
them to Alistair.
This is a clear breach of the AA.
2) If Dube Plc takes over Survival Services, it will expand the company’s
business from short films to producing documentaries.
This may be considered a breach of the objects clause.
, 3) Will intends to call for a shareholder meeting and amend the AA, thus
removing Alistair’s veto power, the preemption clause and Alistair as a
director.
4) There is also the issue of a service contract for Alistair and Will. (4) year
service contract for Alistair and Will who were the only shareholders and
directors of the company, however no shareholder resolution was
passed to approve these contracts.
a) Advise Alistair If Alistair can prevent Willis from selling his shares to
Dube without first offering them to him.
(1) Survival Services Ltd’s Articles of Association
= if either shareholder wishes to sell their shares, they must offer them first
to the other shareholder at a price to be determined by independent
accountants.
pre- emptive clause ; if u are to resigned as a director or shareholder, then u
must offer your shares to the other shareholders
Alistair can enforce the company’s AA under S 33 CA 2006.
