01. Mic, an ACCA member, is the sole director of Red Ltd, a wholesaler of books. Last year he employed Nick, his solicitor, to act as Red Ltd's company secretary. Mic believed that Nick had all the necessary knowledge and experience needed to do the job. Whilst Mic was away on business, Nick entered Red Ltd into a contract with Green Ltd to buy a consignment of tablet computers that would be resold as electronic books. Mic was not happy about this and has decided to take action.
Which of the following statements concerning Nick is correct?
Is Red Ltd bound by the contract to buy the tablet computers?
Is Mic legally permitted to perform the role of company secretary of Red Ltd?
02. Ultron Ltd is a small private company. Although there are three members of its board of directors, the actual day-to-day running of the business is left to one of them, Ling, who simply reports back to the board on the business he has transacted. Although he has never been officially appointed, Ling refers to himself as the Chief Executive Officer of Ultron Ltd.
Six months ago, Ling entered into a contract on Ultron Ltd's behalf with Mung to produce some advertising material for the company. However, Ultron Ltd did not wish to proceed with the advertising campaign and the board of directors has refused to pay Mung, claiming that Ling did not have the necessary authority to enter into the contract with him.
Which of the following describes a director's express authority?
Which of the following describes the scope of a chief executive officer's implied authority?
Is Mung entitled to payment from Ultron Ltd in respect of the contract entered into by Ling and why?
03. Kim is a director of Sun plc, but he also owns a majority interest in Bot Ltd. Last year Sun plc entered into a contract to buy new machinery from Bot Ltd. Kim attended the board meeting that approved the contract and voted in favour of it, without revealing any link with Bot Ltd. At the same meeting the board of Sun plc decided not to pursue the development of a new product that had been offered to them by its inventor. Kim, however, liked the new product and arranged for it to be produced by Bot Ltd. It has proved to be a great success and Bot Ltd has made a great deal of money from its production.
What of the following TWO statutory duties has Kim most likely to have breached as a director of Sun plc?
A. Duty to promote the success of the company.
B. Duty to avoid conflicts of interest.
C. Duty to declare an interest in a proposed transaction or arrangement.
D. Duty to exercise independent judgement.
Identify whether the following statements are true or false. True False
A. Kim should have declared the full extent of his relationship with Bot Ltd.
B. Kim should have waited at least twelve months before taking on the production of the inventor’s product.
What remedy is Sun plc most likely to seek in relation to Kim’s breaches?
04. Lysol Ltd was established some five years ago to manufacture industrial solvents and cleaning solutions, and James was appointed as the managing director.
The company’s main contract was with Clean Plc, a large industrial conglomerate. The managing director of Clean Plc is a friend of James’s and has told him that Clean Plc will not be renewing its contract with Lysol Ltd as he is not glad with its performance. He also told James that he would be glad to continue to deal with him, if only he was not linked to Lysol Ltd.
Following that discussion James resigned from his position as managing director of Lysol Ltd and set up his own company, Clogard Ltd which later entered into a contract with Clean Plc to replace Lysol Ltd.
What of the following statutory duty has James most likely to have breached as a director of Lysol Ltd?
Which of the following are a remedy or not a remedy available to a company when a director is in a breach of his statutory duties?
A. Restoration of the company’s property.
B. An account of profits made by the third party.
C. Charging a substantial fine or imprisonment.
D. Recission of a contract where director failed to disclose an interest.