Below is the format of the exam for 384CLS Company Law – ensure you read it very carefully. The first, compulsory question is being released earlier than normal; the general areas for the optional questions – choose one – are being released to allow us and you to concentrate on the exam topics.
Time allowed: 2 Hours.
• You MUST attempt Question 1 in Section A and ONLY ONE question from Section B.
• You may use an UNANNOTTATED Statute Book
• Please use the marks indicated to carefully allot your time during this examination
Section A You MUST attempt this question
1) Trump PLC [“T”] is a successful maker of cartoon films and videos with a full listing on a recognized United Kingdom stock exchange. Its Articles of Association were drafted specifically for it, although no specific regulation in the articles is relevant here.
Members of the Green family hold 60% of the shares in T equally; they are Daniel Green [“D”], who founded the business many years ago; his wife Gloria Green [“G”] and their adult children, Harry Green [“H”] and Juanita Green [“J”]. All of the family are also executive directors of T. There are four other directors, two are executive and two are non-executive directors. D is chairman of T.
Recently its directors have become very concerned about an unwelcome series of acquisitions of a few of its shares by a rival company, Clinton AG [“C”] a listed company based in Germany.
Accordingly, the board of T has just resolved to amend T’s articles by requiring all shareholders who also own shares in any European based cartoon film and video business to transfer their shares to D and G.
J was recently offered an “incentive payment” by Glass Eye Lens and Cameras Ltd [Glass Eye”], a well-known maker of video cameras, as part of negotiations J was having with them on behalf of T for the purchase by T of video cameras. Having considered her position J has now asked Glass Eye to cover the travel and hotel costs she has incurred during many days of negotiations with them.
Meanwhile H, who often has personal money-worries because of a very lavish personal lifestyle, has been trying to purchase a new studio for future T productions. He has been doing this at the specific request of the T board. Last week H realised that an old television studio building in a run-down part of London, would be suitable for T. On making his report to T’s board the directors instructed him that the price was far too high for T to contemplate at present.
H also realized that the old studio would make a suitable area for some new expensive apartments, which, if developed by him alone might end his money worries. Consequently he applied for planning permission for apartments and, at the same time, put in a bid to buy the old studio in his own name. H has also applied to his bank for a very substantial loan to help with his proposed purchase.
Advise:
i) X and Y, who are two shareholders in T PLC on the proposed alteration to T’s articles; [25 marks]
ii) The board of T PLC in respect of J’s position, that has now just been brought to their attention by Glass Eye; [20 marks]
iii) The board of T PLC who have just been asked by H’s bank to supply a reference for him in support of his loan application. [20 marks]
Total marks for Section A: 65 marks.
The question, therefore, covers, respectively, the rules relating to the alteration of a company’s articles of association; the common law and statutory duties on directors accepting third party benefits; and the Corporate Opportunity doctrine
Section B
Answer only ONE question from Section B
EITHER:
A. Critical discussion of sections 994-996 of the Companies Act 2006 in relation to shareholder remedies with respect to unfairly prejudicial conduct.
[35 marks]
OR
B. Critical discussion of sections 677-683 of the Companies Act 2006 regarding the provisions on financial assistance for acquisition of shares in public companies.
[35 marks]
Total marks for Section B: 35 marks.