Explain, with reasons, whether any shareholder resolutions need to be passed in order to implement the proposals for the company to purchase the Doncaster premises from Mani and to change the articles

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BUSINESS LAW 1 COURSEWORK

 

INSTRUCTIONS The total word count for all questions should NOT exceed 2000 words. Any words over this total will not be marked. (So the total of each part A, B and C altogether should not exceed 2000 words.) OSCOLA Referencing At the end of the essay, you will need to provide a bibliography in chronological order. List any statutes, cases and textbooks used. (The bibliography is not included in the word count.)  For this Assessment you will be assessed against these Assessment Criteria: Demonstrating knowledge and understanding of relevant legal principles and rules. Presenting an answer, advice or opinion using an appropriate structure, including analysing factual materials to identify relevant legal issues, applying the relevant law to the facts, reaching a logical conclusion or, where appropriate, evaluating a range of solutions to give advice or an opinion. Selecting relevant primary and secondary sources to support an answer. Critically evaluating topics, arguments and cases with reference to policies and abstract concepts and expressing sustainable views on areas where the law appears to be controversial or uncertain. Expressing an answer, advice or opinion clearly and concisely, using correct grammar and spelling and using appropriate technical legal language where relevant.

Questions

PartA

You are Zac Trainee, a trainee at NewLaw LLP.

Please read the attached email (Document A) from your supervising solicitor, Samantha Supervisor, and then draft a memorandum as instructed in this e-mail. 

Part B

This is a continuation of the facts in Part A.

The joint meeting mentioned in Part A, Document A took place. However, following the meeting, Josefina, Mani and Pete changed their minds about incorporating a LLP and decided to run their business through a private limited company instead. The company has not yet been incorporated; the plan is to incorporate as soon as possible. The registered office will be the unit in Sheffield, and Josefina, Mani and Pete will be directors and shareholders.

The only matter undecided is the name of the company. Pete and Mani want to call the company ‘Sheffield Babywear Ltd’, but Josefina would rather that the company was called BabyFina Clothes Limited.

Please advise about any legal issues in relation to the choice of these names.

Part C

This is a continuation of Parts A and B

PLEASE ASSUME IT IS LATE JUNE 2023.

The company was incorporated under (and trades under) the name Fina Babywear Ltd (“the Company”) and has been trading successfully for some time. A new investor was found, Tina Wang, and further capital was raised by issuing and allotting shares to her. She also joined the board as a Marketing Director.

Details of the shareholdings, directorships and articles of association are set out in Document B.

Read the facts below and Document B.

The Company is growing, and the directors have discussed briefly that the Company should purchase further premises. Mani Raja is prepared to sell to the Company a further freehold unit situated in Doncaster which he owns, independently valued at £850,000. Also, the board has found special article 2 to be very restricting on Mani’s ability to negotiate contracts for the organic cotton on behalf of the Company. Pete has called a board meeting next week on Wednesday 5^th July to discuss and, if agreed, to ensure that the proposals to purchase the new premises and change the articles are implemented as soon as possible. All are in agreement about the purchase of the new premises, but Pete thinks the special article should be amended, suggesting the limit be changed to £25,000. Mani wants it removed in its entirety.

Pete will vote against the removal of the article. He is unlikely to be able to change Mani’s views and Tina usually supports Mani. Josefina is undecided and might bepersuaded to agree with Pete and amend rather than remove the article; she wants to listen to the arguments for and against.

If shareholders need to be involved in the decision-making process, the Company usually prefers to obtain shareholder resolutions by holding a general meeting on short notice, and all notices are sent by email. They would like all matters to be dealt with on the same day and all will be in attendance.

Please advise:

1 Explain, with reasons, whether any shareholder resolutions need to be passed in order to implement the proposals for the company to purchase the Doncaster premises from Mani and to change the articles.

2 Please produce a chronological plan showing the company procedural requirements for calling and holding the general meeting to implement the proposals.

You are NOT required to include in your plan any of the procedures for the calling and holding of any board meetings

Where appropriate, your chronological plan should explain briefly, with reference to the facts set out above, whether any resolutions are likely to be passed and any administrative requirements. Please include in footnotes relevant primary and secondary sources in support of the points of law and principles stated in your answer.

The total word count for all questions should NOT exceed 2000 words. Any words over this total will not be marked.

(100 marks)

Document A & B needed to answer the questions will be found below.

Document A (needed for Part A)

Document B (needed for Part C)

DOCUMENT A

(For use in Part A)

 

To:Z.Trainee@NewLaw.com

From: Sam.Supervisor@NewLaw.com 

Subject:Josefina Del Largo/LLP

Ref: SS/1234

Date: []

 

Dear Zac

I have met briefly with Josefina Del Largo who is hoping to set up in business with two friends, Pete Mayland and Mani Raja, designing and manufacturing baby clothes from organic cotton, sourced from sustainable and ethically farmed land. Pete is a CAD (computer aided design) specialist and engineer and will deal with all the technical issues of design and manufacture. Mani has the funds to set up the business and he also owns freehold premises; he owns a large unit on the outskirts of Sheffield which he is prepared to transfer to the business as part of his capital contribution. He also has the contacts in the cotton industry and will source and contract for the cotton. Josefina is the creative heart of the business and will produce all the drawings and colour boards and designs for the clothing to be inputted into the technical process.Pete and Mani have worked together on other projects for many years.

Pete and Mani each have separate legal representation and the details of their solicitors are attached.[Note to candidates: the details are not provided and are not relevant to the question]

Josefina is pregnant and her baby is due in 6 months’ time. She will work from home on her designs and meet the others on a face-to-face basis once a month.

They are planning to incorporate a limited liability partnership shortly and all three will be members. Mani will contribute £2.5 million pounds as capital to start the business, consisting of the unit in Sheffield valued at £1.5 million and the rest in cash. He will work part-time in the business.Pete will work full time in the business but cannot put in any capital at the moment. Josefina will also work full time until her baby is born. She will then need some time off and will return and work 3 days each week. She will put in £500,000 capital.

Josefina wants to ensure that all matters are agreed as soon as possible, and a meeting is planned for next week with the other parties and their solicitors to hammer out a written limited liability partnership (LLP) agreement. A name is yet to be chosen for the business, that is something to be decided at the joint meeting. [Note to candidates: you are NOT required to advise on any issues relating to the choice of name in your answer to Part A]

I am meeting with Josefina tomorrow to discuss what should go in the agreement. It has been agreed that we will prepare the first draft and circulate to all parties in advance of the meeting for their comments and any suggested amendments.

Can you please produce a memorandum for mein preparation for the meeting with Josefina outlining the key matters to be included in the LLP agreement and why?

Please ensure that you cite the law in full as I will also put your memorandum on the training file.

Many thanks

Samantha

Samantha Supervisor

Associate Solicitor

NewLaw LLP

Sam.Supervisor@NewLaw.com

 

DOCUMENT B

(For use in Part C)

 

FINA BABYWEAR LIMITED

SUMMARY FROM COMPANY SEARCH

 

Company incorporated	12th January 2023 Registered Office- unit 64, Four Dells Industrial Estate, Sheffield S123 678.
Auditors	French and Storey LLP
	Shareholders Number of £1 ordinary shares	Directors
Name
Josefina Del Largo	540(fully paid)	Artistic Director
Pete Mayland	160 (fully paid)	Operations Director
Mani Raja	2,700 (fully paid)	Chief Executive Officer /Chair
Tina Wang	100 (fully paid)	MarketingDirector

  

THE COMPANIES ACT 2006

PRIVATE COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION OF

FINA BABYWEAR LIMITED

 

1. TheModelArticlesfor private companies limited by shares, as amended by the following articles, shall apply toFina Babywear Limited (the “Company”).
2. A director of the Company must not, without the prior consent of the board of directors, enter into any contract if the value of the contract exceeds £10,000.
3. Adirector may vote and form part of the quorum on any resolution at a meeting of the directors, notwithstanding that it relates to a matter in which the director has an interest which conflicts or may conflict with the interests of the Company.
4. If any resolution is put to a general meeting for the removal of a director from office, then, notwithstanding section 284 of the Companies Act 2006, the shares of that director shall, on that resolution, carry on a poll five votes for every share held.