untitled

Practice questions 327

If the case were to come to court today, which of the statutory duties in ss. 171–177 might

the directors of Regal have breached? What might the consequences of any breach be?

2 Ace Ltd has three shareholders; Arthur, Cherie and Edward. Each of the shareholders holds
100 ordinary shares. For the past five years Arthur and Cherie have been elected as the com-
pany directors. Arthur has been the company secretary for six years. Edward considers that
the affairs of the company are not being run as well as they might be. Edward thinks that the
company should pass a special resolution to alter the articles to make each of the three
shareholders company directors for life. Arthur and Cherie have not commented on this
suggestion. Advise Edward of the following matters:
(a) Whether he can propose a resolution that the articles be altered in the way which he
wants.
(b) The support he would need in order for the resolution to be passed.
(c) The extent to which he can influence the way in which the company is run.

3 (a) Complete Table 11.2 to show the rights which usually attach to shares and debentures.

(b) Compare the rights of ordinary shareholders, preference shareholders and debenture

holders. Are preference shares more similar to ordinary shares or to debentures?

4 For several years Fred and George were the sole partners in a successful building firm.
Ten years ago they formed a limited company. Fred and George were the only two directors.
The company had an authorised share capital of 100 £1 ordinary shares, and George and
Fred each took fifty of these. Two years ago George’s son, Tony, was appointed a director
of the company and George and Fred each transferred ten shares to Tony. Last year Fred

subsidiary were sold for £3.80 each. Both Regal and its directors had therefore made a

handsome profit.

HeldThe directors had to account to Regal for the profit they had made. It was only

because they were directors of Regal that they gained the opportunity to make the profit.

On dissolution, will they own any

surplus assets of the company?

(yes /no/maybe)

Entitled to vote at company

meetings?

(yes /no/maybe)

Are they paid interest?

(yes /no)

Relative priority of payment on

dissolution?

(Paid 1st /2nd/3rd)

Preference

shareholders

Ordinary

shareholders

Debenture

holders

Table 11.2