On 10 September 2014 Leonard Rickety orders 20 tons of specially cut timber from Timberot plc and signs the contract ‘for the proposed Mashup Plc and without responsibility on the part of Leonard Ricketty’. Mashup plc is formed on 1 October 2014 and that is the date appearing on its certificate of incorporation. Mashup plc adopts the 2008 model articles for public companies with only one modification which states that ‘any alteration of Regulation 22 (Termination of director’s appointment) requires 90% of members voting in favour’ in a general meeting. Mashup plc plans to manufacture garden fence panels.
On incorporation, Mashup plc has five shareholders: Leonard, Anil, Bashir, Cecily and Dinesh. They all have 10000 £1 fully paid shares each and each share carries one vote. Hugo and Ian are the only directors and they happen to be quite wealthy but they have no shares in Mashup plc.
On 2 October, all five shareholders sign a shareholders’ agreement to which Mashup plc is also joined as a party. Clause 5 of the shareholders’ agreement states that parties to the agreement shall not vote in favour of amending or removing Regulation 4 (Members’ reserve power) of the articles of association unless they all agree in writing to do so.
On 6 October, Mashup plc contracts with Toolrust Ltd who agree to supply tools to be used in the manufacture of garden fences. On 14 October the Registrar of Companies issues Mashup plc with a trading certificate. On 16 October Toolrust Ltd try to deliver the tools but Mashup plc rejects the delivery and refuses to pay for the consignment. When the 20 tons of timber arrives from Timberot plc in November, Mashup also rejects delivery and refuses to pay.
Notice is given of a Mashup plc general meeting and items on the agenda include two proposed resolutions to alter the articles of association. One is to add the following termination ground to Regulation 22: ‘if any director resides more than 50 miles away from the Mashup plc’s main place of business.’ The other proposed resolution is to remove Regulation 4 of the articles. Leonard, Anil, Bashir and Cecily all intend to vote for both of the proposed resolutions at the general meeting but Dinesh wishes to prevent these resolutions from being passed.
Advise Timberot plc, Toolrust Ltd and Dinesh.
Candidates are not required to discuss ss994-996 Companies Act 2006 for the purposes of this coursework.
OSCOLA (oxford referencing)
Preferred language style UK English