Question
DOCUMENT B..e@assesslaw.com From:rafael.ferrante@assesslaw.com Re:Rianne Akindele - Company procedure Date: Assume today's date Dear Trainee I have now heard from Rianne that the success of Keepsake
DOCUMENT B..e@assesslaw.com
From:rafael.ferrante@assesslaw.com
Re:Rianne Akindele - Company procedure
Date:Assume today's date
Dear Trainee
I have now heard from Rianne that the success of Keepsake & Clean Ltd ('K&C) has meant that the company has outgrown its current storage facilities and they urgently need to acquire more storage space.
Emily has been approached by her nephew, Deven, who has recently purchased a warehouse just outside Worcester. This was a speculative investment, and he has told Emily that he would be willing to sell the warehouse to the company for 105,000, advising her that, at this price, the property was 'a real bargain'. He says that, as a result, he had a lot of interest in the warehouse. He recommended that if the company was interested, they should act quickly to ensure that they do not lose the deal.
Emily has called a meeting of the directors to be held in two days' time, when she knows that all the directors will be in the office, to consider the purchase of the warehouse. Emily has already discussed the purchase of the warehouse informally with the other directors. She has persuaded Rianne and Ben that the purchase would provide a prompt solution to their storage problem, they would save money on estate agents' fees and, in her opinion, they should follow Deven's advice. It appears that Rianne and Ben will support the purchase of the warehouse at the full asking price of 105,000. Janice, however, considers that, rather than simply relying on what Deven says, they should spend more time exploring the market and looking at other warehouse premises, and so will vote against the purchase at any meeting.
K&C have budgeted for the purchase of a new storage unit. The company has sufficient cash reserves but were they to buy the new storage unit outright, this would deplete those reserves. To avoid this, Rianne has recently approached their bank for a small unsecured loan of 5,000 to enable the company to purchase a new automatic bottle filling machine. The bank has sent K&C a loan agreement, setting out the terms of the loan agreement for approval. Rianne wants the loan agreement to be discussed at the same time as the purchase of the warehouse.
As the company has only fairly recently been set up, the directors are not yet familiar with all the procedures to be followed for decisions to be validly reached, and so Rianne would like some advice on this. I would therefore like you to produce a report on the procedure to be followed in order to implement the purchase of the warehouse and the loan agreement (which is a simple contract, not a deed) so that I can advise Rianne on what will be involved.
Kind regards
Rafael
Rafael Ferrante
Partner
Assume for the purposes of this question that it is the next year. Rianne, Ben and Emily eventually decided to set up a company, Keepsake & Clean Ltd ('K&C'). It now manufactures hand washes, sanitisers and surface cleaners. It has been highly successful and now has four shareholders and five directors. In the event, Emily's nephew, Deven, did not join the business, but when the company was incorporated, he agreed to invest in the company, purchasing 25,000 ordinary 1 shares. Janice Jensen, an accountant, was appointed as finance director and also invested in the company.
Details of the shareholdings and directorships are set out inDocument C.
Read the attached e-mail from Rafael (Document B) and produce a chronological plan showing the company procedural requirements which must be satisfied in order for the company to:
purchase the warehouse from Deven; and
enter into the loan agreement.
Where appropriate, your plan should also explain briefly, with reference to the facts set out in Rafael's e-mail, whether any resolutions are likely to pass and any administrative requirements.
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