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Fact Scenario Ivan was recovered from the car accident. Ivan and Jezebel decided to proceed with their original plan by incorporating an art gallery business
Fact Scenario Ivan was recovered from the car accident. Ivan and Jezebel decided to proceed with their original plan by incorporating an art gallery business through a private company limited by shares. In January 2023, Ibel Arts Gallery Company Limited ("Ibel Arts Gallery") was formed in Hong Kong. Ibel Arts Gallery had issued 800,000 ordinary shares of HK$1 each. Ivan and Jezebel are the only directors of Ibel Arts Gallery, and each hold 40% of the company's shares. Kate, a well-known oil painter holds the remaining 20% of the company's shares. The company relies the Model Articles for Private Companies Limited by Shares with the following article: Article 3: Any member who intends to transfer shares to a person who is not a member of Ibel Arts Gallery Company Limited must give notice of his intention in writing to the board. The directors reserve the right to refuse to register the transfer of shares by any member for whatever reason.' Both Ivan and Jezebel sought to maintain control over Ibel Arts Gallery in the hands of their family members. At a board meeting, both Ivan and Jezebel decided that the company would issue another 200,000 ordinary shares of HK$1 each to their family members. Kate was unhappy with this arrangement. She sold all of her existing shares to her boyfriend, Linton. However, Linton never confirms that the shares have been properly registered in his name. Ibel Arts Gallery delivered a good financial performance in the first half of the year. In September 2023, Ibel Arts Gallery paid a dividend to its shareholders. However, Linton did not receive any dividend. He claims that he has the right to receive dividends. Required: (a) Advise Kate on whether Ivan and Jezebel are in breach of any directors' duties. (b) Advise Ivan and Jezebel on whether they can enforce Article 3 of the articles against Kate. (c) Advise Ivan and Jezebel on any means by which Ibel Arts Gallery might prevent Linton from claiming the dividend
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