Topic Title: A case study on “Perfection Co. Ltd.

Course Title: Business Law and Ethics

Course Code: MBA-505
Section: 02

Submitted to: Abu Md. Mustafa Kamal, MBA, LLB (Honors)

Submitted by:

Name ID
Bany Ahmed 2021-1-95-101
 A case study on “Perfection Co. Ltd (Company Law)”

1. Prepare a summary of the case in your own language.

Ans:
This case about a private limited company, named “Perfection Co. Ltd”. They are mainly an
event coordinating organization. They started their operation on 11th February 2017 with two
shareholders. Later, they included another shareholder with 10% share. They also appointed two
directors and 10 event planners. Later, another person joined as director.
Their operation was going alright till September 2017. But an unwanted incident occurred when
a client had some complaint about their service. One of their planners was accused of poor
arrangements and misrepresenting the company’s reputation during his consultation with the
client. Due to the ongoing case against the company, Their Company had to bear the huge loss.
But the directors tried to hide the situation of the company from shareholders and altered the
financial statement. The shareholders were in dark about the situation and intended to
incorporate a subsidiary company to diversify the business. But creditors were concern that their
interest might be decreased.
Unfortunately, all the shareholders died in an accident. One of the shareholder’s brother wanted
to sell the company to a public company but their directors opposed saying that the company
doesn’t exist as all shareholders died.
In short, this organization was facing some legal issues from the beginning. I think they did not
have proper knowledge about the legal concerns of company and contract law.

2. Identify the legal issues that are involved with the case.
Ans:
There are several legal issues involved in this case. In most of the situation, there is no clear
indication or explanation about some factors. I have highlighted those legal issues below-
1. The main legal issue I found, in this case, is that the directors have altered the
financial statement and tried to hide the financial situation with the shareholders.

2. The directors have thought that the company does not exist as all the shareholders
died.
 3. They tried to oppose the sale of the company to a public company as they thought the
company does not exist.

4. From My perception, I think they have not maintained the legal personality separated
from its member. Mr. Asif is acting as a trustee of the company. I think it is beyond
his authority.

5. The company was not registered or formed by following the rules of the company
formation law.

6. Ms Jahanara has not cleared the payment for her share but still holding 10% share
and she broke her commitment.

3. Prepare your opinion with legal justifications.

Ans:
I have identified some legal issues in this case which I have mentioned in question no 2. I am
giving the reasons why I think there is regal issues on those points. The reasoning is given
below-
 
1. There is no clear explanation in the company act about the alteration of the financial
statement. But from my perception, this is fully illegal and unethical. Many business
decision depends on the financial statement. Shareholders wanted to incorporate in a
subsidiary company because they were unaware of the current situation of the
organization. So, alteration of this information has a huge impact on the company.

2. The directors considered that the company’s existence can be dissolved as all the
shareholders died. But a company is a juristic person with perpetual succession and a
common seal. So, a company never dies. It continues to exist even if all the human
members are dead. It is created by a process of law and can be put an end to only by a
process of law. Members may come and go but the company can go on forever.

3. A company is regarded as an entity separate from its members. But here one of their
event planners was held legally responsible and asked to compensate for the poor
arrangements and misinterpretations. He is an agent of the company. So, the charge
should be against the company not against the representative.
 4. There was mentioned that Mr. Asif who is a brother of a shareholder was acting as a
trustee. But there is no clear indication that he was a promoter or a shareholder of the
company. I think he was acting as trustee as his brother died and he thinks that it is in
his right to be a trustee.

5. In this case, we have not got any indications that the company was registered or
formed by following the rules of company formation. There are several steps of
company formation. As that process is not mentioned, I think the company was not
formed following all the rules.

6. One of their shareholders, Jahanara, have purchased the 10% share and promised to
pay BDT 1 million. She did not pay the money but still hold that share. There is no
statement about this in the law. But from my understanding, the shareholder should
pay the full amount.

Conclusion:
In this case we have seen that there were several legal issues involved in this company.
Company’s reputation and financial status hampered because of the legal issues. So, it is
important for a company to understand the law properly or at least hire a legal consultant.