UNIVERSITY OF TECHNOLOGY, JAMAICA. FACULTY OF LAW Final Examination, Semester 1 Module Name: Company Law Module Code: 1.83018 Date: December 2010 Theory/ Practical: Theory Groups: Year 3 Duration: 2 hours and 15 minutes Instructions: DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.‘Question 1 Directors have a primary duty to manage the company’ and not to answer to individual shareholders. Explain whether this comment is true. Question 2 There are few areas of corporate lar that have created judicial havoe in its interpretation, enforcement and application as the preincorporation contract. No set position has been established that best engages the rules of contract and eoxporate responsibility. Critically analyse this statement. Question 3 CCitcally discuss ANY THREE of the follow 8. Alcles of Incorporation 1b forms of business ownership, swith the se of ease law and statute, ©. Directors of « company 4. meetings of companies, ©. Ulli Vires doctrine and Rona Fide aSECTION 2 foods Lid for two years, although he has never been properly appointed « director of the company. The company has an ‘objects clause which states thatthe company shall manufacture and sell organic products. us articles of incorporation state thatthe remuneration of any director shall be settled by ‘the company’s shareholders in general meeting by ordinary resolution. Sales of the company’s products have declined in recent months and Sam decides drastic action is needed. He agrees with Ackee Lid to mi siacture a range of non-organic pies for them, The contract is initially for six months, but Sam expects to renew it when it ‘expres. I is also decided that Dave, a non executive director ofthe company, should take ‘0m 4 fulltime position asa sales director, o explore the opportunites for selling other, non-organic, products, Sam decides the co contract, at $6,000,000 per year, which Dave accepts, Josh, # minority shareholder ter either he, or the company itself, might challenge the salary payable to Dave, and the contract with any will give Dave a three year employer Organiefoods, has jut discovered the foregoing, He seeks your advice wh ‘Ackee Ltd. (including its renewal), Advise Josh, Question 5 David has been dealing with Funky Lid for many years but over the past year he has consistently had problems geting paid for services he has provided fo Funky, Funky has lays expressed satisfaction with David's work but David bas recenly received a letter hmm the $180,000 they hal agreed for work from Funky stating they would not be payin already completed by David as they were unhappy with the quality of work he provide, David has initiated legal proceedings to enforce his contract with Funky. Just befbre the Lid, decided for dispute with David occurred, Target Lid, the parent company of Punky srategi¢ group-related reasons to remove all the assets from Funky Ltd and close it down, Target Lid intends to do this without making any provision for the payment of $180,000 10 David should he win ‘ould be lifted in these circumstances, Diseuss whether the veil of incorporaQuest Anulrew, Brian, Colin, Diana and Blizabeth were the ditectors of Gemsales Pty Lid, « company engaged in the business of importing jewellery as wholesalers to ep the Focal market The company decided that as the market was becoming re competitive it needed to sed volumes of sales it would be able to lower ‘expand its business as it Fle with ine prices and be more competitive. In order to do so it obisined a $4 million dollar lo the Friendly Bank Ld, $3 million was used to buy more stock and $1 million was used to buy @ large new warehouse and showrooms from Traders Pty Lid col was not at the meeting that had made these decis 1 as he was in hospital recovering from a serious accident Elizabeth, as was her usual custom, had not atended the meting but s business and the getting ofthe loan, Diane who attended, said she did not know if she med the requis Aocumentation apres expansion of the ng tou greed and abstained from voting. Andrew and Brian both voted to go ahead with the ‘expansion and the getting ofthe loan, established contact with Viet At about this time Brians who was setting up 8 new ‘business as a retailer of jewellery. Vietor was looking for reliable suppliers, but said he ‘would not deal with Gemsales Pry Lid as he did not like Andrew, the Man ness oppor his ovwn business a5 a jewellery wholesaler and a contract was entered into between 1 Director Not wishing to miss out on sucha lucrative bu ity, Brian arranged to setup Vietor and Bri for the supply of jewellery ‘Six months later, Brian resigned as a director. At the same time it was lear the company had over-extended itself and was insolvent and could not pay the interest on its loans also became clear that Brian was @ major shareholder in Traders Pty Ltd and the other directors were unaware of this at the of the purchase of the warehouse and ovmrooms, Furthermore, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business Advise as to the Hability of the parties bot ‘Act ‘under common faw and the C ** END OF PAPER***