Posted: May 9th, 2015

Q2. The articles of Pharma plc include the following:

Q2.
The articles of Pharma plc include the following:
1.    (1)  The company shall be involved in the development and supply of pharmaceutical drugs.
2.    (2)  Each director shall be appointed for a term of ten years.
3.    (3)  As soon as a dividend is declared it will be paid to all members.
4.    (4)  The dividend paid on Class A shares will be double that paid on Class B shares.
5.    (5)  Class A shareholders will be paid before Class B shareholders.
6.    (6)  Kenny is appointed as the company’s environmental advisor.
The following events have occurred:
(a) It is discovered that Baljit, who has served as a director for five years, has on several occasions passed company secrets to a rival business. The members would like to amend Article (2) to read “…ten years, unless removed sooner by a vote of the members”. Baljit is objecting to this alteration.
Advise Baljit.
(b) Class B shareholders (who are in the majority) have recently voted to alter Article (4) to reduce the dividend paid to class A shareholders to the same as that paid to Class B shareholders. Some of the Class A shareholders are objecting to this alteration.
Advise the objecting class A shareholders.
(c) Charlie, a member, has recently discovered that the company has started to manufacture some beauty products and wishes to stop the company from engaging in this activity.
Advise Charlie on whether he can do so.
(d) Pharma plc has just declared a dividend to be paid in debenture bonds. Roxy, a member would like her dividend to be paid in cash.
Advise Roxy.
(e) Kenny, the environmental advisor, is in dispute with Pharma, arguing that he has not been paid. Pharma argue that he was employed as an unpaid advisor.