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Summary Essay plan for Articles of Association problem essay.
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Essay plan for Articles of Association problem essay.
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1. The purpose of this essay is to advise Daniel on four issues:1.1. The validity of the alteration;
1.2. Whether Sigrid can rely on S33 of CA 2006 to enforce the clause (a) to retain
his right to nominate a director;
1.3. Whether the sales manager can rely on S33 to enforce his right to receive
annual bonus of 5 percent; and lastly
1.4. On whether Claudia can rely on S33 to safeguard her position as the company
secretary for life.
2. Re: whether he can alter the articles of association
2.1. Law
2.1.1. S21
2.1.2. S283
2.1.2.1. The alteration must be done by special resolution and a general
meeting must be held. And the resolution must pass by a majority not
less than 75%
2.1.3. Common law restrictions will be dealt with three parts
2.1.3.1. Lindley MR in Allen v Gold Reefs
2.1.3.1.1. The alteration must be bona fide in the interest of the
company.
2.1.3.2. The alteration must be done for the benefit of the company
2.1.3.3. As a whole
2.1.3.3.1. As illustrated in Sidebottom v Kershaw where the alteration
was held to be entirely for the benefit of the company.
, 2.2. Application
2.2.1. On the facts of the current case, Daniel holds 75% percent of the shares
of the company, therefore the requirements under S21 and 283 are satisfied
as he already have the sufficient number of shares to pass the resolution. In
dealing with the common law restrictions on whether the alteration is bona
fide as provided by Lindley MR in Allen v Gold Reefs, in the current case
there was no article which concerns removal of a member thus it deems the
alteration bona fide. In dealing with the second and third restriction on
whether the alteration is for the interest of the company as a whole, the
current case provides that the alteration of articles includes: all directors are
to be appointed by the general meeting and the annual bonus payable to the
sales manager will be reduced to 2 percent. By altering the articles to
ensure that all directors are to be appointed by general meeting ensures that
the director appointed would be impartial and will act in the benefit of the
company as a whole, additionally by reducing the annual bonus of the sales
manager ensures that the company would keep more of its profit, therefore
this alteration is also entirely for the benefit of the company.
2.3. Conclusion
2.3.1. Therefore Daniel is advised that the alteration is a valid one.
3. Re: whether Sigrid can rely on s33 of CA 2006 to enforce clause (a) to retain his
right to nominate a director.
3.1. Law
3.1.1. S33(1)
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