Is a contract that has been made by the promoters of a company binding upon the company when it is incorporated?

1. Mike, Pat and Ann run a restaurant together called “Just Eats”. All 3 are Directors and shareholders in the company trading as “Just Eats”. They are all experienced in the restaurant business and their restaurant was run on an informal basis. Last Month, Mike and Pat decided to remove Ann from their Company. Ann has heard that she may have been oppressed and seeks your advice about ‘lifting the corporate veil’ in order to wind up the company. Advise Ann about her position and whether she has any remedies. In you answer, refer to legislation and case law that may assist. (25 marks)

2. Global Ltd is a company that makes and sells electric cars, and was set up in 2008 by environmental campaigner David. David is also one of the directors. The articles of the company state the company is for the development, production and sale of electric vehicles. Since the company was set up, millions of pounds have been invested in research. At the start of 2015, the research department coincidentally discovered a method to make diesel engines 10% more efficient. Due to the amount of money invested, David and the other directors agreed that they should start producing diesel cars. Anthony is a shareholder in the company and a green activist. Having heard the recent news about diesel car emissions, he is against the company producing diesel cars as are a number of other shareholders. Anthony has come to you for advice, including whether they can prevent the company producing diesel cars and whether any action can be taken against the directors. (25 marks)

3. Michael, Terry and John have decided to set up party and joke shop business. This business will supply all type of party paraphernalia, fancy dress costumes, party decorations and novelty joke items. To begin, the company will only consist of the three of them and Michael has been selected to be the company’s director. As Michael has never been a company director before he wants your advice on what are his legal obligations as a director. They decide to set up a company but before they have all of the required documents together needed for the Companies Registration Office (CRO) they decide to first establish a shop. They find a suitable premises and signed a five year lease. They have also hired carpenters to fit out the shop and have ordered in stock for sale in the shop.

(a) Is a contract that has been made by the promoters of a company binding upon the company when it is incorporated? (10 marks)

(b) Explain the role and duties of a company director under the Companies Act, 2014. (15 marks)

4. Mary is seeking advice on investing €50,000 in shares. Mary is confused about the meaning of ordinary shares, preference shares and debenture stocks. Advise Mary about the following: a. risk of investing in ordinary shares

b. return on investment c. the ability to influence the company d. the rights of the shareholder e. how shares may be transferred (25 marks)