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Company Law (Articles Of Association (Case (2. Who can sue to enforce the…
Company Law
Articles Of Association
Defintion:
Internal rules of the company which govern the relationship between the shareholders, company and board of directors. Hickman V Kent
Q:
- whether one member May enforce this contractual right again is another member directly or whether he nonetheless must proceed to do so only through the companies or compel the company to take action .
- S33 CA 2016 ,
- But case law
- wood v essa - held it was a contract inter se and can be enforced against another shareholder directly
Elley v Positive Government Security Life Assurance Company - enforceability of any provision in a company’s memorandum
This principle is firmly entrenched by the lead authority of Hickman v. Kent and Romney Marsh Sheep Breeders
Rayfield v. Hands declared articles to be multi-party contracts therefore meaning that the provisions were contracts between the individual shareholders also capable of being enforced.
Case
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1. A contract inter se
whether s33CA2006
Salmon v Quinn - Farwell LJ -contract was unenforceable between members.
C/f Rayfield v hands- There was a contract inter say which was directly enforceable by one member against another
Outsider rights
Whether everything contained in the articles and falls within s33
Eley
Salmon
Globalink Telecom
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Part 10 CA 2006
S 171 - S 177
powers
success
independent judgment
reasonable care skill and diligence
conflict of interests
benefits from 3rd parties
declare interest in proposed transaction / agreement
Within powers
- (a) act in accordance to company’s provision
- (b) only exercisepowers for the purpose for which they are conferred
Re Smith & Fawcett - directors must not exercise powers for any collateral purpose.
Extrasure travel insurance v scattergood
Hogg v Cramphorn
Piercy v S Mills
Howard Smith v Ampol Petroleum
Promote success of the company
- A director must act in the way he or she considers in good faith,
- In doing so ,
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What type of directors
- Executive : Full time
- Non - Executive : Part time
De Facto
- Not formally appointed
- but nevertheless acted as a director
Shadow
S 251 (1) CA 2006
- a person in accordance with whose directions or instructions the directors are accustomed to act.
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Minority protection
Grounds for petition
Substratum has failed
- est commercial object for which the company formed has failed
Fraud
- company is formed to perpetrate a fraud
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GR : Remedy denied
Exception
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S 994 CA 2006
A member of the company may apply to court on the grounds that the company affair are being conducted in a manner unfair and prejudicial to the interests of the member or members generally
2 requirement
- Interests as a member was affected
- In a manner that was unfair and prejudicial
SLP
A company really exist ,
can sue / be sued
hold its own property
liable for its own debt
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FossVHarbottle - The Proper claimant rule
- Prevent multiplicity of legal proceedings
- Principle of majority rule
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Derivative Claims
S263(2)
- 3 criteria that operate as what might be called mandatory bars. Permission must be refuse if the court is satisfied that
1.
2.
3.
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Fraud on the minority
Fraud
- Cook v Deeks
- Burland v Earle -Fraus was defined as when the majority the endeavouring directly or indirectly to appropriate to them self money property advantages which belong to the company or other shareholder
- Daniels v Daniels
- Pavlides V Jensen
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