Description

Commercial transactions

QUESTION ONE

Chester Transporters Limited (CT L) has been your client since you assisted its four members incorporate it in 2011. Charles the Managing Director, has approached you with the following information:

CTL has been going through a rough patch over the last one year and is unable to raise funds from its usual financiers. Charles and some of the other directors believe that CTL can trade its way out of the quagmire if funds were sourced by means other than credit.

Charles believes that he may have found the solution in Nobert:, an old friend who runs a business similar to CTVs and who has shown an interest in equity. Nobert has made a few demands in relation to his investment in CTL., the key one being appointment to the Board.

Ellen, one of the directors is not: keen on the proposal to bring Nobert on board and insists that CTL should explore atl other possible options. She and Nobert have had a long running feud over property in their rural area and do not see eye to eye. The other directors feel that she is being unreasonable.

Charles seeks your advice on the following matters:

How can Ellen be removed from her position as director and what steps might she take to resist the removal or to assert her rights? (14 marks)

(b) Ellen and one other director have travelled abroad on a two week business trip leaving Charles and Timothy as the only two directors in town. Charles is considering the option of hit-n and Timothy calling a general meeting immediately to pass an ordinary resolution appointing Nobert.

Advise on the validity of that meeting.                            (6 marks)