Lenny and his sisters, Joy and Jenny incorporated a private limited company in May 2019,

under the name Beautiful Decor Limited (BDL) which specializes in interior decorating. The

company was incorporated with 1000 shares. Lenny holds 700 ordinary shares with Jenny and Joy

holding the remaining 300 ordinary shares equally. One month before the incorporation of BDL

Lenny entered into a contract with Designs Supplies Ltd for the supply of 500 yards of canvas

signing the contract in his own name. The canvas was supplied to the company upon incorporation,

and Designs Supplies Ltd is insisting that they have a legally binding agreement with BDL

In January 2020 the company made a profit and the board of directors decided to plough

back the profit into the business, since the company is in the process of embarking on a project.

However. Jenny is insisting that dividends be paid to the shareholders, and if not, she intends to

take legal action in her capacity as an ordinary shareholder to compel the company to pay dividends.

After several disagreements with Lenny, Joy has indicated that she will be selling her shares

to Jeff, an old school friend of hers, who is a prominent banker. Lenny is insisting that as an existing

shareholder, he should be given first option to purchase the shares that Joy is offering to her friend,

especially since this is a clause set out in the Articles. However, Joy is insisting that she can sell

her shares to whomever she wants since her shares are freely transferable.

. In an effort to raise additional funds for the upcoming project, Lenny is contemplating

creating a fixed legal charge over all BDL fixed assets in favour of Money Ltd. The company had

created a previous charge in favour of Wise Bank Ltd where they were given the right to use the

assets until the order was withdrawn. Both charges were validly registered. The company is unsure

of which charge will take priority in the event of liquidation.