The addition of a new shareholder in farming solutions limited has taken a different change. It is so since Jed is now a minority shareholder who opens his own business just after being a shareholder. The objective is to understand about duties of directors like henry, the law on the protection of the minority shareholders, in this case Jed. The different types of meetings held once a company has been incorporated are also of interest. It also aims to establish the rights of shareholders and debenture holders and the effect of the liquidation process on employees, directors, creditors, and everyone else involved in the company. By the end of this, it will be established the rights and duties of the people participating in the corporation as well.
Henry is a director of the farming solutions limited. It is his duty to have stewardship, accountability and good faith for the prosperity of the company. Henry is required to perform his duty as a director for the best interest of the company. It involves all the people affected by the company’s act. Considering the interests of creditors, employees, and the community is far much a long term best interest of the company. Hence, if Jed setting up a company of his own is good for the company, then henry has no choice but to keep the best interest of the company at par. Henry has a duty to the whole company not particular shareholders only. Although, maximizing the profits to stakeholders is the same as putting the company’s best interest. Then again, there are situations where the corporation’s interest and specific classes of stakeholders deviate. The common shareholder’s interest might lie recognizing a short-term gain on investment.
A statutory meeting is the initial meeting once the company has been incorporated. It should be conducted not before one month has elapsed and not after the six months of the starting of the company. It is held only once in the existence period of the company. It objective is to explain the essential facts to the members of the company. The annual general meeting is a regular meeting of the members of the company that is held after one year. The meeting gives and opportunity for the company’s members to share the affairs of the company should be managed. It is usually held for the following reasons: for the declaration of dividend, submission of accounts books, appointment of the auditor and appointment or reappointment of directors. The other kind of meeting is an extraordinary meeting. It is usually called for handling certain urgent decisions and cannot be deferred until the next annual general meeting. The class meeting is a meeting of a particular category of stakeholders. It normally has two categories of stakeholders; preference and equity shareholders. For none to discuss matters arising from one class, only the stakeholders of that specific category will attend it.
A minor shareholder can increase his share by buying them from the open market. For henry and mark to become a chief executive officer and a managing director respectively, they have to pass through a board of trustees that will verify this process. Jeb is a minority shareholder and hence he is protected from this by the law. A shareholder who is a minority in the company can bring a claim when the company is being managed in ways that are not fairly judicial some certain or all of the shareholders. These claims can be gotten in relation to any company. There are three types of claims that the minority shareholder faces. They include unfair prejudice petition, derivative claims and petition for the equitable and just winding up of a company.
The primary direction of relief for a minority shareholder is bringing unfair prejudice petition which is considered first. Every type of claim typically looks for a distinct remedy although the mutual theme is that they are ways to ensure that the minority shareholders get their precise value of their shares. The remedy for the unfair prejudice is that the majority shareholder can buy the shares of the petitioner at a price stipulated by the court. The solution accessible in a petition for equitable and just winding up is an order for the company to wind-up whereas the solvent ad distribution of the net assets to the shareholders of the company. The remedy pursued in a claim that is a derivative is the implementation of a claim against the company’s director bestowed on the company for the benefit of the company. It is with an aim to increase the value of the company's assets that are eventually available for the distribution of the shareholders.
The shareholders have a right to attend and vote at the general meeting. Typically, share each carries an election although, they could be non-voting share with several votes. Other votes carry the right to vote in particular situations. They can get a share of the profits of the company. The profits get to the shareholders by means of dividends of some amount paid on every share. Shareholders also have the right to final distribution when winding up. When a company is wound up, creditors are paid while the assets remaining are divided among the members. They also have the right to receive each an account's copy of the company.
A debenture is a loan contract in which the corporation is the borrower. It will deduce the loan terms, the borrowed amount, the terms of repayment, interest, charges incurred while securing the loan, and the provisions for insuring and protecting the property. Debentures are secured by the charges on the property of the company although, they do not have to be called bare debentures. They normally have distinct types of charges. It is not a must for it to be registered, although the charges securing them have to be registered. The rights of debenture holders are divided into two depending if they are secured or unsecured debenture holders. Unsecured debenture holders can file an application for the termination of the company. If the company is wound up, they have a right to claim the principal. They can sue the company for the interest and the principal. For the secured debenture holders, they can sue the company for selling the property. They can acquire a sanction to prohibit the company from selling property for the debenture to be redeemed. If the assets charged are not able to make the entire payment, they can sue the company for the payment balance.
The liquidation of a corporation has effects on several people involved. One of the people involved is the directors. A director of a corporation is any individual who holds the director position in a corporation. It may also include anybody who has not been made an official leader, but then again he can act in the same capacity. Directors typically stay in the company even after the liquidation of the company commences although they have limited powers. They have to collaborate with an official assignee for the company's affairs to be equitably and fairly resolved. It is mandatory for directors to fill in a statement of affairs document that contains the trading details of the company. They should also fill in a small description of the history of the company and comprehensive details elaborating on the reasons for the failure of the company. Other information includes the entire assets of the company, the information about the company’s shareholders and legal claims that are against or pending on the company. All this information has to be backed up by documents like financial reports, and bank statements.
When a company is liquidated, the creditors who are not secured cannot begin or proceed with the legal proceedings that were lined up against the company’s property or against the company itself. It cannot start or proceed to impose rights against the property of the company not unless they have been given authorization by the court. The creditors who are secure can impose securities in cases where the company is in default. Insolvency is normally viewed as a default. The creditors who are secure can sell and uplift any assets of the company that has security. If a secured creditor sells a security, they automatically become unsecured creditors in case of any deficit. In the event of a surplus, it has to be paid to the official assignee so that it can benefit all other creditors.
The liquidation of the company is severe and immediate. The trading companies are usually shut down. Since the liquidation date, the official assignee takes control and custody of the entire unsecured assets of the company and helps the creditors who are secure wherever necessary. The company's assets are gathered and then traded for the creditor's gain of the company. When the liquidation is through, the company is removed from the companies office register.
The company’s liquidation has severe repercussions on the employees. The liquidator will run the business and decide on how to take care of the assets of the business and for the creditors of the company benefits. The liquidator of the company will choose if the company can continue trading. If the trading is dismissed, they will be plenty loss of jobs. Therefore, it is the obligation of the workers to file a claim for the loss of wages, salary, redundancy or holiday pay that is outstanding. The claim will become a debt in the liquidation. As a worker, the claim for the salaries and wages not paid is preferential. It means it positioned before the unsecured creditors if only the money is available.
In conclusion, we can say that directors of the company are the key managers of that company. The overseeing and ensuring that the company is running smoothly and that the shareholders are in good terms with one another. The shareholders have some of the rights they are entitled too in the company. Debenture holders to have their rights depending if they are secured or unsecured debenture holders. The liquidation of the company has consequences for every member involved in the operations of the company.
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