Comply with dispose of enter into lodge at preside at

1. The resolution must be lodged at Companies House within 15 days.

2. According to the statutes, the chairperson must................................................ the EGM.

3. The EGM authorised the Board of Directors to repurchase and ........................................... not more than 50,000 shares in the Company.

4. All of the requirements of the Companies Acts 1985 and 1989 in respect of reduction of capital have been...........................................

5. The two corporations announced that they have.......................... a definitive merger agreement.

5. Language use: fixed phrases Match a word from each column to form three-word collocations as they appear in the unit.

example: convene shareholders’ meeting

convene ordinary capital

reduce proper meeting

pass share procedures

follow shareholders’ resolution

6. Vocabulary: word formation Complete this text using the noun form of each of the verbs in parentheses.

It is not uncommon for a company, or a group of companies, to undergo changes in corporate structure. The change may be due to the 1) takeover (to take over) by one company of another, the transfer of a whole or part of a company's 2).......................... (to undertake) to a new company, the 3)..........................(to merge) of two or more companies into a new company, or a split of one company into two or more companies. These corporate 4).......................... (to transform) are termed ‘5).......................... (to reconstruct) and amalgamations'. The terms are not actually defined in the Companies Act, but descriptions have been by case law. A reconstruction is a transfer by a company of its assets to a new company, or an 6).......................... (to alter) to the capital structure of a company or a group of companies. An 7).......................... (to amalgamate) is the 8).......................... (to unite) of two or more companies under common control.

7. Vocabulary: antonyms Match these words (1-8) with their opposites (a-h).

1. compulsory a formation

2. asset b. division

3. hostile c. pre-existing

4. oppose d. approve

5. purchase e. voluntary

6. consolidation f. liability

7. newly formed g. sale

8. dissolution h. friendly

Case Study. Company law

The facts of the case

Your law firm has asked you to review the following company law case and the relevant documents in preparation for a meeting with the other party's lawyer.

Read this description of the facts of the case. What is the legal issue here?

The Greenview Company, a public company incorporated under the laws of the country of Westland, owned a golf course. Some land adjoining the golf course became available for sale, and one director of the corporation informed the board of this availability. If Greenview bought the adjoining land and sold it together with the golf course, this would greatly increase the value of the golf course. In fact, on several occasions, the directors and stockholders had discussed the possibility of acquiring more land next to the golf course. Although the board and the stockholders expressed an interest in buying this land, it again did not take any immediate steps to purchase it. A few months later, two other directors of Greenview (not including the one who had informed the company that the land was for sale) decided to buy the land in their individual capacities. A few years later, the golf course and the adjoining land were sold as a package to outside investors for a high price. A large share of the profit went to the two directors because of their ownership of the adjoining land.

Now a group of disgruntled minority shareholders wishes to bring an action against the two directors for a breach of their duty of loyalty to the company through the theft of a corporate opportunity.

Task 1. Speaking

Divide into two different groups, with one group representing the shareholders and the other representing the directors being sued.

1. Prepare for negotiations with the other party, referring to the relevant legal documents. You should:

• identify the legal issues of the case and determine arguments for your side;

• list the strengths and weaknesses of your side of the case;

• decide which parts of the relevant legal documents most strongly support

• your case and can be used to argue against the other party's case;

• make notes for the negotiation: What are your goals? What are you willing to give? What are you not willing to give?

2. Pair up with a representative of the other party and negotiate a settlement.

3. Report the results of your negotiations to the class.

Task 2: Writing

Write a letter of advice to one of the parties (your choice), in which you outline the legal issues raised by the case, refer to relevant statutes and provide your opinion as to the likely outcome of the case.

Relevant legal documents

Text 1: excerpt from Section 202 of the Westland Corporations Act

(1) Every director and officer of a corporation in exercising their powers and discharging their duties shall

(a) act honestly and in good faith with a view to the best interests of the corporation; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Text 2: Westland Principles of Corporate Law, Section 5.05, Part 3

The Westland Principles of Corporate Law, published by the Westland Law Institute, is used as a guideline for the interpretation of corporate law in Westland. Part 3 of Section 5.05 deals with the duty of loyalty owed by a director to his company.

5.05 A director shall act in the best interests of the corporation. This includes the duty of loyalty and the duty of care.

(3) The duty of loyalty includes not taking advantage of a corporate opportunity. A corporate opportunity is a business opportunity that:

(a) a director or senior officer becomes aware of in his or her corporate capacity;

(b) a director or senior executive should know the outside party is offering to the corporation;

(c) a director or senior executive, who became aware of it through the use of corporate information, should know the corporation would be interested in;

(d) a director or senior executive knows is closely related to the corporation’s current or expected business.

Text 3: excerpt from a textbook on corporate law

Section 16.2 Corporate opportunity

The doctrine of corporate opportunity requires a corporate director to further the interests of the corporation and give to it the benefit of his uncorrupted business judgment. He may not take a secret profit in connection with the corporate transactions, compete unfairly with the corporation or take personally profitable business opportunities which belong to the corporation.

The basic test is a two-part test. The first part requires a determination of whether the opportunity falls within the line of business of the corporation; if this is so, then the second part examines the circumstances under which the director is nonetheless permitted to exploit the opportunity.

The 'line of business' test compares the closeness of the opportunity to the areas of business in which the corporation is engaged. Other factors may be relevant to this consideration, such as (i) whether the director became aware of the relevant opportunity as a result of his or her position, (ii) whether the director utilised property belonging to the company to take advantage of the opportunity, (iii) whether previous discussions were held regarding the opportunity within the corporation, and (iv) whether the opportunity was presented to the director as an agent of the corporation.

The second part of the test allows for a justification to relieve liability from an affirmative answer to the first part of the test. In this part, courts examine whether the director had a persuasive reason to take advantage of something which was in the company's line of business. Some examples of situations that courts have considered to be fair are that the corporation is incapable of taking advantage of the opportunity.