Articles Association and Memorandum of Association Essay
Eastway Plc was incorporated in 2010.
Its objects clause provides that the business of the company shall be the
manufacture of passport chips.
Articles of Association = company may exceed a borrowing limit of £80,000
only if the Board of Directors unanimously agrees to the transaction.
Although never formally appointed Managing Director, Damien, to the
knowledge and with the full agreement of his co-directors, Chris and Ellen carry
out the day to day management of Eastway Plc.
Damien acting on behalf of Eastway PLC agreed that the Company would
manufacture and supply 10,000 high speed flash memory chips for the
Uttlesford District Council.
The company borrowed £100,000 from Barclays Bank to purchase the machinery
to carry out this agreement.
Damien and Ellen held a meeting to agree to the loan and did not invite Chris
who did not know anything of the loan.
Owing to serious mismanagement the company incurred considerable losses and
with only 2000 memory chips completed was found to be irretrievably insolvent
and put into compulsory liquidation.
Advice the shareholders to the validity of the transactions engaged in by the
Company and the Bank.
, Introduction
There are several issues at hand, among them are as follows:
1) Eastway Ltd has an objects clause that provides that the business of the
company shall be the manufacture of passport chips. The company had
entered into a transaction to manufacture and supply 10,000 high speed
flash memory chips for the Uttlesford District Council.
= The issue here is weather this is an ultra vires transaction?
Common la
CA 06
Even if u were to enter into a transaction that goes against OC, OC still valid
worst case scenario here, you can remove. them as directors and the 171 but the transaction will
remain valid so for all intents and purposes, there is no breach of objects cross
2) Eastway’s Articles of Association provides that it is not to exceed the
borrowing limit of £80,000 unless there is consent from the board of
directors. The company had obtained a loan of £100,000 but did not obtain
the consent of one of the directors (Chris).
= There is a need to discuss a breach of the articles of association on this point.
3) Damien the MD ( never formally appointed) agreed that the Company would
manufacture and supply 10,000 high speed flash memory chips for the
Uttlesford District Council.
= The issue here is of ostensible authority.
Eastway Plc was incorporated in 2010.
Its objects clause provides that the business of the company shall be the
manufacture of passport chips.
Articles of Association = company may exceed a borrowing limit of £80,000
only if the Board of Directors unanimously agrees to the transaction.
Although never formally appointed Managing Director, Damien, to the
knowledge and with the full agreement of his co-directors, Chris and Ellen carry
out the day to day management of Eastway Plc.
Damien acting on behalf of Eastway PLC agreed that the Company would
manufacture and supply 10,000 high speed flash memory chips for the
Uttlesford District Council.
The company borrowed £100,000 from Barclays Bank to purchase the machinery
to carry out this agreement.
Damien and Ellen held a meeting to agree to the loan and did not invite Chris
who did not know anything of the loan.
Owing to serious mismanagement the company incurred considerable losses and
with only 2000 memory chips completed was found to be irretrievably insolvent
and put into compulsory liquidation.
Advice the shareholders to the validity of the transactions engaged in by the
Company and the Bank.
, Introduction
There are several issues at hand, among them are as follows:
1) Eastway Ltd has an objects clause that provides that the business of the
company shall be the manufacture of passport chips. The company had
entered into a transaction to manufacture and supply 10,000 high speed
flash memory chips for the Uttlesford District Council.
= The issue here is weather this is an ultra vires transaction?
Common la
CA 06
Even if u were to enter into a transaction that goes against OC, OC still valid
worst case scenario here, you can remove. them as directors and the 171 but the transaction will
remain valid so for all intents and purposes, there is no breach of objects cross
2) Eastway’s Articles of Association provides that it is not to exceed the
borrowing limit of £80,000 unless there is consent from the board of
directors. The company had obtained a loan of £100,000 but did not obtain
the consent of one of the directors (Chris).
= There is a need to discuss a breach of the articles of association on this point.
3) Damien the MD ( never formally appointed) agreed that the Company would
manufacture and supply 10,000 high speed flash memory chips for the
Uttlesford District Council.
= The issue here is of ostensible authority.
