Anaire AC Ltd is a company that makes and sells motor cycles, and was set up in
ID: 354065 • Letter: A
Question
Anaire AC Ltd is a company that makes and sells motor cycles, and was set up in 2008 by millionaire and environmental campaigner Mr Alyas. Mr Alyas is also one of the directors. The articles of the company state the company is for the development, production and sale of electric vehicles. Since the company was set up, millions of pounds have been invested in research. At the start of 2015, the research department coincidentally discovered a method to make diesel engines 10% more efficient. Due to the amount of money invested, Mr Alyas and the other directors agreed that they should start producing diesel motor cycles. Mrs Rima is a shareholder in the company and a green activist. Having heard the recent news about diesel engine emissions, she is against the company producing diesel motor cycles as are a number of other shareholders. Mrs Rima has come to you for advice, including whether they can prevent the company producing diesel motor cycles and whether any action can be taken against the directors.
Explanation / Answer
Since the articles of association of the company states that company is for the development, production and sale of electric vehicles, then any deviation from the business as mentioned in the articles of association is a breach of trust and fiduciary duty of the directors of the firm towards the minority shareholder’s.
The minority shareholder’s can form a group and file a joint petition in the court challenging the company’s decision and asking the court to stay the development of diesel cars by the company since this is in violation of the articles of the association of the company. They can also raise a motion in the Annual General meeting of the company against the directors for vote by the shareholder’s for violation of fiduciary duty against the shareholders.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.