Download Shareholders - Company Law - Exam and more Exams Corporate Law in PDF only on Docsity! PRIFYSGOL ABERYSTWYTH UNIVERSITY SUPPLEMENTARY DEGREE EXAMINATIONS 2011 DEPARTMENT OF LAW AND CRIMINOLOGY COMPANY LAW (LA31310) Time allowed ONE AND A HALF hours Answer TWO questions – all questions carry equal marks Candidates are not permitted to bring any books, notes or any other materials into the examination. 1. What do you understand by the concept of capital maintenance and what is its rationale? Discuss legitimate ways in which legal capital can be reduced. Illustrate your answer with reference to at least three cases. 2. Answer both parts of the question: (a) 54% of the shareholders in Signora plc are upset with the managing director of the company for entering into a risky contract that has resulted in a substantial loss to the company. What are the remedies, if any, available to the shareholders and what protection would the managing director have in relation to any action taken by the shareholders. (b) Miyad Pharmaceuticals plc has been running at a loss since the appointment of Sienna, Martin and James as directors of the company two years ago. During this time Sienna and Martin rejected several proposals to set up collaborative research ventures with various universities, some of which were subsequently taken up by a rival pharmaceutical company. James had argued in favour of the collaboration but when he felt that his ideas were ignored, he resigned as a director and set up his own company which has entered into a collaborative venture with two universities. These ventures have all been very profitable. It turns out that Sienna and Martin were not aware of how the pharmaceutical market works and the risks associated with the industry. Advise the shareholders on any actions they or the company may take against the directors. 3. “The minority shareholder in a public company has little chance of taking action in respect of breaches of directors’ duties, despite the reforms introduced by the Companies Act 2006.” Discuss. 4. Explain how ordinary partnerships are different from companies, and in particular, why despite the many advantages of the corporate structure – the vast majority of small businesses are still run as partnerships. Also discuss, with reference to decided cases, why courts are sometimes prepared to lift the corporate veil.
