Write a report addressed to Shirley providing advice covering all the issues that they have raised as mentioned above.

Company Law

Assessment task details and instructions

Task details:

Shirley Potter is a longstanding client of your firm who has just instructed you in relation to a new matter. Until six months ago, Shirley was a director of a company called Westlands Publishing Limited. The business was set up by Shirley and two of her university friends, Peter Carter and Michelle Owusu over ten years ago, operating initially as a partnership. Six years ago, they decided to incorporate the business as a company, and each received 100 shares and they were all appointed as directors. There is no shareholders agreement, none of the directors had service contracts and the articles are standard model articles with no amendments.

All went well with the business until the summer of 2020 when Shirley fell out with Peter and Michelle over a business deal. Peter and Michelle decided that they wanted Shirley removed from the board of directors, and so they proposed and passed a resolution pursuant to s.168 of the Companies Act 2006 to remove her as a director (the procedural requirements of s.169 were fully adhered to). Prior to her removal as a director, income was paid out to Shirley, Peter and Michelle by way both of directors’ salaries and share dividends; in the past 3 tax years Shirley received a minimum of £10,000 per annum in share dividends. At a board meeting last month, Peter and Michelle took the decision to stop paying dividends and instead to increase their own directors’ salaries by 25%.

Not only does this mean that Shirley is receiving no income from the company which until now has been her primary source of income, but she is also concerned that the payment of such high salaries will be unsustainable and lead the company to lose money and possibly become insolvent. These fears have been exacerbated by the fact that Shirley found out last week that the company has lost a lucrative contract with one of its biggest customers due to Peter and Michelle’s mismanagement. Shirley is very concerned that not only has she lost her main source of income but that also the value of her shares is falling rapidly as a result of the company’s worsening financial position.

Write a report addressed to Shirley providing advice covering all the issues that they have raised as mentioned above.

Instructions:

In this report-style assignment you are expected to take a broad view of the issues arising from the instructions. You will need to consider in depth all possible remedies available under the Companies Act and in other statutes as well as relevant case law. As this is a report-style assessment, you should write in a professional and accessible style, whilst maintaining the required academic rigour. You are very much encouraged to use sub-headings and numbered paragraphs where necessary to provide structure and clarity to the report.

Read carefully both the written and online guides to the Oscola referencing. Improper referencing results in lower marks.

Your answer must be word-processed using Microsoft Word. All assessments must be written in Arial or Calibri font, 12pt with 1.5 spacing. Please put page numbers at the bottom of your script.

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