Company Law

Company Law Assignment

Course: Higher Diploma of Accounting and Finance Subject: Company Law Name：Tu Xiangyun (Fiona) Student number: 27354 Lecturer: Mr. David Submission Date: 26th June 2009

Assignment 1 1.(a) Tan and Tong can't validly carry out their proposal,Article is an internal regulations which is detailed rules on how company is going to run.An entrenching provision is defined in 26a(4) as provision of the memo or articles stating that other provisions may not be altered in the manner provided by the Act or may only be altered by

a specified majority greater than 75%,or where other specified conditions are met.The entrenching provision in the quesion is that article 24 can only be amended by a shareholder's resolution passed by a majority of not less 95% votes of the class of shareholders of identified in Articles.So if Tan and Tong want to amend the article 24,they need to achieve 95% of votes in TT,but they together only hold 80% of the ordinary shares,their proposal is hard to come ture.

(b)Can not,from the Section 39,subject to this act,the memorandum and articles shall when registered bind the company and the members thereof the same extent as if they respectively.Raffles Hotel v Malayan Banking tell us the article not constitute a contract between co and outsider,Land bank is not a member of TT Pte Ltd,the article can't bind it,and also did not confer upon it any enforceable right,so Land bank can't enforce this right.

2.(1)Articles 14 is found only in the Articles of Association,Base on the section 26,the articles could altered by special resolution,a resolution shall be a special

resolution when it has been passed by a majority of not less than three-four of members.Tan and Goh can't amend the article and remove Ramash from the Board of Directors,because they ony have 60% of ordinary shares,if they can ask June who owns 20% votes join in their group,therefore they could achieve their plan.

(2)Article 14 has been incorporated in the Memorandum of Assciation,Base on the section 26,the memorandum could altered by special resolution,a resolution shall be a special resolution when it has been passed by a majority of not less than three-four of members.As long as Tan and Goh got more than 15% votes from June,they could remove Ramosh.Rely on the 60% of ordinary shares of theirs that are not enough to amend the artcle 14.

(3)Article 14 can only be amended by a shareholders' resolution passed by a majority of not less than 95% of the votes of the shareholders.An entrenching provision,is defined in S26A(4) as a provision of the memo or articles stating that other provision may not be altered in the manner provided by the Act or may only be altered by a

special majority greater than 75% or where other specified conditions .Tan and Goh only have 60% votes in total,so Tan and Goh can not amend the article in order to remove Ramash unless they owns 95% of ordianry share in TT.

(b)United Bank cannot enforce this right until become members of TPL.From the case Raffles Hostel vs Malayan Banking,we could know the article could not consitute a contract between Co and outsider.United are not members and also not bound by articles,so it have enforeable right to appoint a director to the Board of TPL.

3.(a)Apparent authority arises where the agent appears to the outsider world to have authority representing the company to the world,regardless of the actual agreement between the company and the agent.For example,In Freeman & Lockyer case,K had no actual authority to employed P.However,he acted throughout as MD to the knowledge of the Board who thus impliedly represented to

the world that K had the authority of a MD.So if a director act as MD in board and are not appointed yet.The director don't have actual authority and has apparent authority.

(b)The company bound by the lease,because following the indoor management rule,the indoor management rule states that a person dealing with the company in good faith is entitled to assume that there has been due compliance with all matters of internal management and procedure required by the corporate constitution.Sara is a director often made decisions on her own without conferring with the other directors on the board,even though the board of directors didn't appoint her and give her actual authority,as same as the case Freeman & Lockyer,Sara have apparent authority and could represent the board to enter into such rental and lease agreements. 4.Two contracts are binding on the company.Following the indoor management rule which states a person dealing with the company in good faith is entitled to assume that there has been due compliance with all matters of internal management and procedure required by the corporate

constitution.Monony & East Holy Ford tell us the director who don't have actual authority,but always act as MD,so the director has apparent authority to deal with other company.Beng is a director,he alway use his apparent authority with other companies,then the Ex-book and factory don't need to check whether Beng has actual authority,he could represent the board of Arqus Pte Ltd,even though board articles don't allow allocate the authority when the transaction amount exceeds of $20,000. Assignment 2 1a> Company can’t give the loan to John. Managing Director tells John that according to sec 126: The company act enables member to seek a remedy from the Court where such members have been oppressed. The remedies are varied and may include derivation action. This is a personal action by the member though it may result in the court granting a remedy to pursue an action on behalf of the company. In the case of John, he want to obtain a loan from the company to purchase a house in Australia for his

children. This is only used for his private purpose. If the company gives the loan, that breaks the law. b> That is breach of his director’s duties. In the section 157(2) An officer of a company shall not make improper use of any information acquires by virtue of his position to gain directly or indirectly, an advantage for himself or another person, or to cause detriment to the company. In this case, the vendor of the land, WU Pte Ltd, is in fact controlled by John’s father in law and Ron was given a vintage car in his father in law collection for his efforts, this means Ron gains an advantage for himself, so that real breaks the law. Under sec 156, a director who is interested on a contract or proposed contract with the company is required to declare that interests, and its nature to the BOD. Disclosure should be as soon as practicable after the relevant facts have come to the knowledge of the director. The articles cannot modify this duty. In this case, John did not disclose the relationship between the vendor and himself. So this is breach of his directors’ duties.

c> Sec 216(1): Any member or holder of a debenture of a company may apply to the court for an order under this section on the ground that: 1>

the affairs of the company are being conducted or the power of the directors are being exercised in a manner oppressive to one or more of the members including himself, in disregard of his or her interests.

2>

Some act of the company has been done or threatened which unfairly discriminates against or is otherwise prejudicial to one or more of the members

The section thus provides practical resource to the minority who may feel oppressed by the majority. A complainant may apply to the court for leave to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company, under sec 216A(2).

2. This is a pre-incorporation contract. This means before the company contract arrives, Mock is a promoter.

Sec 41: The company does not exist before promoter signs, the company can ratify and accept the obligation and accept the contract. The ratification of the contract may be done expressly or impliedly. The company expressly ratifies a contract when at the board of directors meeting or the general meeting, the company passes a resolution to adopt the contract. 41(1)：If company agree them with be bound by the agreement 41(2): Doesn’t want to accept the personal liable. In this case, Mock met Robin and sign the agreement without the consideration and did not be passed by the company at the board of directors meeting or general meeting. That means the contract did not be ratified before the company formed. So the promoter becomes personally liable on any contract.