PGDL/MA Law - Law of Organisations Oral Exam Notes - Distinction
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Law of Organisations
Instelling
University Of Law (ULaw)
Advance documentation + answer notes + answer tips for Law of Orgs oral exam that I scored a distinction on. I was thrown a real curveball on Part B, which I have written about in my notes.
Your supervising solicitor has asked you to review the following information relating to a company
who are currently experiencing some difficulties and require some advice.
FC Wolfscastle Limited (the “Company”) is a private limited company (with unamended Model
Articles) that runs a football club in the English Football League Championship. It is currently
experiencing a decline in both on-field performance and financial stability. They have recently
been relegated from the Premier League and are having to adapt to life in a lower division with
less revenue from sponsorship, broadcasting rights, ticket sales and general matchday revenue
due to a fall in matchday attendances.
For the above reasons, the board of directors of the Company are facing significant challenges.
One possible solution is for the Company to (1) appoint a new director to oversee the playing
side of the operations. The Company are hoping to appoint Emilia Sanchez, who is currently a
director of football for a leading club in Italy. Emilia has indicated her desire to join the board of
directors so long as they offer her a (2) 3-year fixed term service contract.
Tom Stone, who is a director, and has been in charge of the commercial operations for 20 years,
was recently tasked with seeking a new sponsor for the Company’s home and away shirts for the
2024/25 season due to commence in August 2024. Tom proposed that the Company enter into a
contract with a particular sponsor. In fact, (3) Tom did not conduct any research as to whether
this particular sponsor offered the best deal. The contract between the Company and the new
sponsor is not as lucrative as other members of the board would have hoped and, as such, this
new contract has placed additional financial hardship on the Company. Following this revelation,
the Company’s shareholders have lost all faith with Tom as a director (4).
The Company’s stadium, The Wolf Whistle Stadium, is currently in a state of disrepair with certain
sections of the stadium currently closed to supporters due to safety concerns. The board of
directors would like to purchase a plot of land (5) in order to build a modern stadium in the hope
that they can attract larger attendances and capitalise on the potential commercial opportunities
that a new stadium could provide. Tom Stone’s brother (6), Timothy Stone, owns some land near
to The Wolf Whistle Stadium that could be a suitable site for a new stadium. The land is valued at
£200,000 (7).
Below you will find a company factsheet as Document A relating to the Company.
Stephen Johnson, the chair of the board, has informed the firm that the Company has a policy of
passing shareholders’ resolutions by using (8) the general meeting procedure if possible.
Stephen has told us that all the directors will attend any board meetings and all the shareholders
will attend any general meetings.
Stephen Johnson, Tom Stone, Susanna Adlington, Dennis Blackshaw and Zoe Williams are in
favour of the proposals to appoint Emilia as a director, award her a 3-year fixed term service
contract and to purchase the land for £200,000. Bradley Hardwick and Barry Smith are against all
these proposals (9).
You have a meeting with your supervisor at the end of next week. You will be asked
questions regarding the issues raised above. Your supervising solicitor will expect you to
provide reference to specific authority when providing answers to the questions.
,The articles are adopted without amendments. Run-down of the decisions to be made:
Decision Appointing Service contract for Dismissing a director Purchase of Land
Emilia as new over 2 years
director
Power of Shareholders decision Directors
directors or Directors that will give directors Shareholders
shareholders OR power to enter into the
Shareholders contract
Shareholder’s consent
for the guaranteed
term for over 2 years –
terms of service of the
contracts etc are not
shareholders
decisions.
Type of Resolution BR to appoint Ordinary resolution: Ordinary Resolution BM to purchase land
Emilia as a
director Board Meeting 1- in GM only
Agree terms
of the contract that Tom be removed
with SH from office as a director
consent of the company.
Call GM or
circulate
written
resolution for
SH approval
GM-
SH consent
by way of
written or
ordinary
resolution
Board Meeting 2-
Enter into the
contract
Authorise a
director to
enter into the
contract.
Statutory Authority MA 17 – terms of s. 188 CA 2006 – s.168(1) CA 2006 Have general powers to
service service contracts over run a company (MA 3)
2 years must be Can be delegated - MA
consented to by the 5 → the directors can
shareholders. delegate their powers
MA 17 for deciding the as they see fit, so
terms of service employees will be
contract allowed to make
MA 19 specific power decisions within their
to decide on director’s job description
remuneration
, Part 1: Board Meeting (‘BM1’)
Calling
The BM can be called by any of the directors, usually the Chairperson.
Notice
The requirement of serving a valid notice for a board meeting are found in MA 9:
- The notice must be addressed to all the directors; does not need to be formal or in writing.
- Within reasonable time (Re Homer District); and this is interpreted on the facts.
- Must mention the time, date and place of meeting MA 9 (1) - (2).
- Mention the method of communication if not face to face MA 9(3).
Quorum and Directors’ interests
The quorum is two (Model Article 11). It seems that all the directors will attend so there will be no problem with this.
To approve the draft terms of the contract to purchase the land and purchase the land.
To approve the draft terms of Emilia’s fixed term contract, subject to obtaining the necessary members’
resolution to approve the fixed term contract (MA 19).
As the first BM will be convened only to discuss holding a GM, there are no declarations of interests required at
this time (s 177 CA 2006)
There is no impact on quorum and voting. Voting will be held by a show of hands, one director, one vote MA 7.
Declarations of Interest
- For the purchase of the land, Tom must declare his interest if the other directors are not already aware of it. It is
best practice to declare it anyway. The exceptions are:
Unless (s 177(6)):
a) It can’t reasonably be regarded as likely to give rise to a conflict of interest
b) If the other directors are already aware of it
c) It concerns terms of a service contract that have or are to be considered by a meeting of the directors
Board Resolutions and Voting
To approve the draft terms of the contract to purchase the land and purchase of land
To approve the draft terms of Emilia’s fixed term contract, subject to obtaining the necessary members’
resolution to approve the fixed term contract (MA 19).
The first board resolution will be to hold a general meeting to discuss the following resolutions:
- Awarding Emilia a 3 year fixed term contract (s 188)
- Appointing Emilia as a director (MA 17) – can be done in a BM as well
- Dismissing Tom as a director (s 168) – cannot be done as a WR
This will be passed by an above 50% majority. Nothing to suggest that this shouldn’t go through, with Stephen,
Tom, Susanna, Dennis and Zoe in favour and Bradley and Barry against – 5:2, it will go through, even if Tom
votes against, 4:3, it will go through.
Purchasing the new land. Likely to pass; Tom cannot vote; 6:0.
Should there be a tie in passing this resolution, the chair, Stephen, may have an extra vote to break the tie (MA
13).
Administration:
Minutes of BMs 2 (s.248/MA15) – keep at the registered office or (Single Alternative Inspection Location) SAIL,
for 10 years; failure to do so is an offence (s 248(3)).
Purchasing new land for the company
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