A Company Law Problem Scenario

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Table of Contents Introduction Facts in the Scenario Identification of the Legal Issues Arising From the Facts in the Scenario Identification and Application of Appropriate Legislation or Case Law Conclusion Bibliography In Advising Jane Introduction Company law primarily discourses certain major sets of fundamentals that are integral in the structure of large companies. These principles mainly arise amid the management and the shareholder, majority shareholders and minority shareholder, and the controller of the company and the non-shareholder. Among these principles, it is widely prevalent that a company often suffers from the disputes between the shareholders.

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It is commonly believed that minority shareholders have to abide by the will of majority shareholders. It has been observed that protecting minority shareholders within the scope of corporate activity has emerged as one of the most difficult issues in the modern company law. However, there are certain legislations and rules articulated under common law which ensure the adequate protection of minority shareholders. Furthermore, there has been constant debate on the issues related with the exercise of director’s power. It has often been argued that directors of the company apply their power for proper purpose and in the best interest of the company. However, there are certain instances where directors rendering their fiduciary duty can be considered to violate certain specific laws. Correspondingly, this study intends to address the issue of related with the legal protection for minority shareholders and directors fiduciary duty pertaining to the case provided. Moreover, the study further intends to provide relevant advice to Jane.[1] Facts in the Scenario It has been observed from this case that directors of Wolf Toys Limited are allocated with powers to issue shares in their absolute discretion in such quantity and at such value as they shall determine under the company’s Article of Association. Notably, Tom and Ben the two directors of the company, is observed to hold 51% of the total company’s shares while Jane, the other director possessed 10% of the total shares. Tom and Ben who hold the majority of shares of the company decided to expand the business by buying another company which is involved in making soft toys. This decision was reached due to the continuing decline in soft toy market. However, Jane who holds 10% of the total shares disagree with this decision of Tom and Ben on the ground that this decision would not be in the best interest of the company and it would lead to disaster. Later, Tom and Ben discover a successful firm that had been involved in making of teddy bears but due to the insufficient fund availability within the company, it was not possible to make immediate bid for the firm. Thus, both Tom and Ben issued shares and placed it to known supporters to raise fund.

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