Company Law

Instructions: Answer the question in this section.

Question 1

Jamrock Treasures Ltd was incorporated in January 2007. The company has not been doing well financially and sometimes has difficulty meeting its expenses including paying its tour guides on time. The Board of Directors is made up of four persons including Gregory James and Esther Smikle. At the most recent Board meeting they discuss and approve the award of a contract to Smart Robots Ltd which has recently come to the market with a new product that will allow bus tours to be done by a programmed robot. This will have a very positive impact on the operational costs of the company. However, the Board of Directors when discussing the matter was unaware that Gregory James is a shareholder and a Board member of Smart Robots Ltd. Further at the meeting, Gregory James did not advise the Board of Jamrock Treasures of this fact.

Esther Smikle another Board member has been having nightmares for the last nine months and recently has been walking aimlessly in the Content District area. She has been spotted sometimes in the day but more frequently at night. When asked about her activities she responded that her cousin who died some years ago, has been advising her to search the Content area as she has left her wedding ring there and cannot find it and she has been given the responsibility of finding it and returning it to her.

The chairman of the Board of Directors and major shareholder of Jamrock Treasures, Kerry Smith, is your good friend and has asked you to join the Board as a Director. You accept but prior to your first meeting you have discovered all the above.

1. Prior to acceptance of the seat on the Board of Directors of Jamrock Treasures Ltd you investigated what are the duties of a director. ExplainFIVE (5)duties you discovered when you researched this issue? (15 marks)

1. You advise the chairman about the situations you discovered regarding both Gregory James and Esther Smikle. The chairman asks your advice on whether he can and should remove them from the Board of Directors. What is your response? Explain your reasons. (10 marks)