assessment question
1. Siddiq, Boris and Therese are shareholders and directors in Taking Control Ltd. In practice Boris has been making most of the decisions relating to the operation of the company. Therese has been unwell for some time but has retained her post as director. While she no longer takes an active role in decision making when matters come to a vote she always votes in support of Boris. Siddiq has been advised by Boris that at the next meeting of the directors he plans to propose that the company should donate £10k to a community knitting group. Therese has already indicated that she will vote in support of this. Siddiq has also discovered that Boris is proposing to drop legal action to enforce a debt owed to the company by another company in which his sister is the sole shareholder and director, on the basis that aggressive litigation will damage the reputation of Taking Control Ltd. Boris has recently set up another company, Challenging Adventures Ltd. Siddiq is worried about the potential for conflicts of interest.
Advise Siddiq about the liability of his fellow directors.
2. Arleta and Shami have been working together in a catering business for the last four years. Their clients are mainly financial services companies in the
docklands. After the EU referendum they started to worry about the impact that Brexit is going to have on their thriving business. In August 2016 they decided to set up a company with limited liability; Grub For Money Ltd. Before the company was set up Arleta who founded the original business had allowed Shami to take an increasing role in running the business. When the new company was created both Arleta and Shami were appointed as directors. Arleta’s brother, Vladimir and Shami’s sister Daphne also became shareholders. Valdimir has now been made a director and a promise was made to Daphne to make her a director too but this has not been acted upon. The stress of the business has resulted in Shami taking a low profile. Vladimir has done a good job taking on her role. Arleta is keen not to go back to the old ways as she has built a good working relationship with Vladimir and has become concerned about Shami’s abilities to do the job. Because of this Arleta is also reluctant to make Daphne a director. A downward turn in business is also a factor influencing her decision. Arleta wants to remove Shami from the post of director and bring to an end the discussion about Daphne’s move to take on a similar post.
Advise Arleta on any rights and remedies that Shami or Daphne may have against the company.
