BVC Company Law Assignment Essay Example | Topics and Well Written Essays - 3000 words

BVC Company Law Assignment - Essay Example Tyler from the directorship of the company was valid or otherwise. 3. Winding up proceedings, based on a statutory demand in proper form, have been commenced against the company. The petition has already been advertised and the company’s bank accounts have been frozen. The company wrote to the creditor, when underlying debt was first demanded, stating that the agreement was that the creditor’s invoices were payable after 60 days. I have been informed that the petition was given to a junior employee, who did not understand what it was, and it was not until very recently that Mr Henderson heard of it and immediately contacted the instructing solicitors. They also contend that since the bank accounts are frozen, it is not possible for them to pay off the petitioning creditor. Summary of Advice 4. As a director, Mr. Tyler owed a duty to take reasonable care and caution when dealing with the company’s assets. By misusing the credit cards of the company, he had breache d his duty. The removal of Mr. Tyler can be justified on the basis of his mismanagement of the company’s funds and his general conduct during the period of his directorship. The only problem in this regard is Article 11 of the Articles of Association of the company, where it requires the passing of a special resolution for the removal or appointment of a director. Under CA 2006, a director can be removed by simple majority but with special notice. The brief is silent about the special notice. Thus, a special notice and a chance of hearing to defend against the removal is mandatory before taking the decision of removal Mr. Tyler. Thus, his removal without these prerequisites can be invalidated. In my opinion, although the current directors have a prospect of getting a court decision in their favour, if a claim is brought under unfair prejudice Mr. Tyler can stake a personal claim or derivative claim or a claim for the just and equitable winding up of the company. In my opinion , the best option available to the company and its directors is to offer to buy Mr. Tyler’s shares at a fair rate. 5. With respect to the winding-up petition, Mr Henderson would like to dispute the petition on the basis of his letter to the creditor, when they first demanded the payment explaining that under the company’s standard terms and conditions it has 60 days time lag after receipt of invoices. The petition can be disputed, as the company has a policy to pay its debts within 60 days of receiving the invoice, which can be discerned from the company’s previous transactions. The company can apply for an injunction or an application for the rejection of the insolvency proceedings, but there are chances that the court may issue an order against the company, which will result in additional costs being incurred by them. In my opinion, the best option available to the company is to make an application to the court for the assurance of a validation order so that t he company can pay its outstanding debts. As the company’s accounts are held at one branch and the bank has frozen the bank account, the company can ask for a validation order to allow it to use its accounts to pay off the debts. Removal of Mr Tyler from the Directorship 6. Mr. Tyler was removed from his capacity as a director of the company during the last year, when the other directors decided that Mr.