A1510 PERMITTED: None No calculator permitted in this examination. UNIVERSITY°OF BIRMINGHAM Birmingham Law School Non-Law Students BSc Accounting & Finance 2™ Year BSc Money Banking & Finance 3 Ye UG OCC. French 1* Year BSc Business Management 2" Year BSc Business Management with Communications 2" Year ‘BSc Business Management Year Industy 2°! Year BSc Intemational Business wih Language 2" Year [BSc International Business 2" Year Business Law A&B 08 13454 / 08 13455 ‘Summer Examinations 2008 “Time allowed: 2 hours ‘Answer THREE questions TURN OVER Page 1at610 PERMITTED: None No calculator permitted in this examination. 1. Examine the rights, obligations and powers of a director ofa limited company with particular reference to the new statutory duties imposed by sections 170- 177 Companies Act 2008, What sanctions may be imposed on a director who ‘acts in breach of these duties and who may take the necessary action? 2. Bearing in mind that the usual position in a limited company is thatthe views (of the majority shareholders will prevail, in what ways does the law protect the ‘minority shareholders from abuse or unfair treatment at the hands of the majority? 3 Explain the essential features of both a fixed and a floating charge and outline the ikely advantages and disadvantages of each to BOTH the lender AND the borrower. In what circumstances will floating charge crystalise? 4. Amalia and Bill wish to expend their successful printing compary and need to raise an additional £200,000 to finance upgraded printing machinery and a ‘new on-line printing service for their customers, They work well ogether and, ‘are good friends. Explain the factors they should take into account when decicirg whether the money should be raised by way of additional borrowing from their Bank (or elsewhere) or by way of issuing new shares to an outside investor they believe wishes to invest in shares in the company. What are the advantages ‘and disadvantages of each method? 5, The directors ofa limited company manage the business for the benefit of the ‘shareholders. The ultimate sanction for shareholders who are unhappy with the manner in which the business of the company is being conducted is to remove one or more directors from the Board. Explain the procedure for shareholders to remove a director from office and consider what options are available if the Board refuses or deciines to convene a General Meeting ofthe company for this purpose. TURN OVER Page 211540 PERMITTED: None No calculator permitted in this examination. 6. Arturus Limited is in financial diffculies. It has recently lost an important ‘customer to a competitor and anather customer has just gone into liquidation ‘owing it £160,000. Its liabilities now exceed its assets and there are severe ‘cash flow diffculies, Various creditors are threatening legal action. The directors believe, but are not absolutely certain, that they could get back on their fest again, given another six months or so without pressure or legal action by creditors, Consider what action might be taken by creditors (secured and unsecured) against the company and what steps the company itself might be able to take in that situation 7. Comestibles Limited has head-hunted a new Managing Director, David Jordan, from 2 competitor. He comes well recommended and is highly regarded in the industry. The company has agreed the terms of his Service ‘Agreement and proposes to issue 10,000 new shares of £1 each in the ‘company in consideration of an investment payment by David of £100,000. “The authorised share capital of the company is 200,000 ordinary shares of £1 each, all of which have already been issued to the existing shareholders. ‘What action and stops need to be considered and taken before the shares ‘can be issued to David? Assume that the statutory pre-emption rights apply and that they have not been modified in the Ailes of Association. END OF PAPER Pages