describe in board terms what must be disclosed by directors in a directors report for a publicly listed company ?
briefly explain three ways in which companies may increase their share captial using existing shareholders ?
describe the two ways in which a company may enter into a written contract ?
what are the three things that can happen when a voluntary administration ends?
Corporate Law and Regulation
Morris, John and Paul are directors and shareholders of Newry Property development company which owns and operates a tavern. Morris and John are brothers. John and Paul are friends and partners in an accounting firm. Morris is an unemployed artist and sole parent of three young children. The total number of issued shares in NPD is 6,000 ordinary shares. Each shareholder has 2,000 shares. All the shares are fully paid. NPD has been very successful but has not paid any dividends to its members for the last two years.Profits have instead been invested in further development projects. Morris’ wife has recently died and he is very short of money to look after his family. He approaches John and Paul and asks them to consider whether NPD could begin to pay dividends again to its members. John and Paul refuse to consider Morris’ request as it would upset the “long-term goals of NPD”.Morris is upset by this response and announces that he wants to sell his shares. John and Paul refuse to buy him out and demand that Morris resign as a director because he has lost his objectivity.Morris resigns reluctantly. He asks to see NPD’s most recent set of financial statements. John and Paul refuse to provide the information. Morris discovers accidentally that NPD has been paying large“management fees” to John and Paul’s accounting firm. Morris consults you as his legal adviser. He wants to know:
(a) Should he bring a derivative or personal action against John and Paul? What factors should he take into account in making this decision?
(b) If he brings a personal action, should he bring it under the general law or make an oppression claim under s 232? What factors would influence your recommendation?