Tutorial 3 - 2015.doc - Tutorial 3 I \u2013 Identify the issue \u2018whether\u2019 L \u2013 Legal principles A \u2013 Application Arguments Assumption \u2018on the

Tutorial 3 - 2015.doc - Tutorial 3 I u2013 Identify the...

This preview shows page 1 - 3 out of 6 pages.

Tutorial 3 I – Identify the issue: ‘whether’ L – Legal principles A – Application, Arguments, Assumption: ‘on the facts’ (apply the laws to the facts given) C – Conclusion: ‘likely’ (used if there’s assumptions made) 1. Happening Place is a private company. Tuf Tan holds 45% of the shares in Happening Place Pte Ltd. Advise Tuf Tan and the directors as to the following: (a) The directors appoint Payne Soh as the company’s public relations officer (ie an employee). Payne Soh has a personal conflict with Tuf Tan on one occasion. As a result, at a requisitioned meeting of the members Tuf Tan manages to get a resolution directing the directors to fire Payne Soh. The directors refuse to obey. The issue is whether the directors have to obey this resolution passed by Tuf Tan. Shareholders have certain rights. (elaborate on what rights) The issue is whether the directors have to obey the resolution passed by Tuf Tan. Shareholders have a right to attend meetings and vote. According to section 157A, it is the directors who manage the company. Since the members passed a resolution directing the directors to fire Payne Soh, it should be followed. (assuming Tuf Tan and the members are equity shareholders and not preference shareholders) However, members also have a right to be treated fairly. Section 216(1) gives the member a right to apply to court if, among other things, the affairs of the company are being run oppressively or in disregard of the members’ interest. (applicable to the minority shareholders) There is unfairness towards an employee on the grounds of wrongful termination. No the directors do not have to obey? Tuf Tan is a shareholder and thus the resolution he passed is not valid. Therefore the directors need not obey the resolution. Tuf Tan can however remove a director by ordinary resolution (section 152). The directors do not have to fear Tuf Tan personally as he alone does not have the majority vote of 50%+1 to pass an ordinary resolution. However he is close to obtaining the majority and is likely to be able to do so as he was able to pass the resolution to fire Payne Soh. (b) Tuf Tan is also unhappy that one director’s mistress Lolli, has been appointed production manager (ie an employee) of the company’s factory. The issue is whether Lolli was appointed in the best interest of the company or for the director’s personal interest
Image of page 1
Under Director’s duties imposed by case law, directors have a duty to avoid conflicts of interest and to act in the best interests of the company. Also under section 157(1) of the Companies Act, the director must act honestly and use reasonable diligence in the discharge of his duties. The term “act honestly” covers a multitude of matters, such as that the director must act in the best interests of the company, must not place himself in a position of conflict of interests, and must not use his powers for improper purposes.
Image of page 2
Image of page 3

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture