Company Law - Practice Paper 1

Jade is the managing director and 60% shareholder of Cascade Events Ltd. She enters into a contract with Sunrise Catering Ltd, a company wholly owned by her husband, for catering services at twice the market rate. She also takes a personal loan of £100,000 from Cascade Events Ltd without board or shareholder approval. The company's articles require board approval for loans to directors exceeding £10,000. Ryan, who holds 25% of the shares, wants to challenge these transactions. Advise Ryan.

Discuss the role and effectiveness of the unfair prejudice remedy under s.994 Companies Act 2006. To what extent has it become the dominant remedy for minority shareholders, and what are its limitations?

NovaTech Ltd manufactures electronic components. The board discovers that one of its directors, Sam, has been secretly running a competing business, ElectroRival Ltd, for the past two years. Sam has diverted three major clients from NovaTech to ElectroRival and has used confidential pricing information obtained from NovaTech. Sam argues that his service contract with NovaTech does not contain a non-compete clause. Advise NovaTech Ltd on the legal position.

Examine the distinction between fraudulent and wrongful trading under the Insolvency Act 1986. How effective are these provisions in holding directors accountable for trading while insolvent?

Evaluate the statutory pre-emption rights regime under ss.561-577 Companies Act 2006. Does it adequately protect existing shareholders from dilution, and is the mechanism for disapplication appropriately balanced?