Question 1

Desmond was appointed director and managing director of Candore Limited. The terms of his service contract provided that he should hold office for eight years and this term was also stated in Candor's Articles of Association. The other directors decided that Desmond should be removed from those positions and they placed such a resolution before shareholders at a general meeting and it was duly passed. Desmond is certain that his removal would be in breach of the Articles of Association as well as his contract and intends to seek legal advice.

A. Draft a statement for the board of directors explaining whether shareholders had authority to pass the resolution. Also, suggest what legal redress Desmond might have. (12 marks)

B. Submit TWO (2) duties and TWO (2) rights of a partner. (8 marks)

Question 2

The PSB is well established accountancy and consultancy firm that has been providing services throughout the Caribbean since the 1970s. On 2018 January 01, the firm agreed to make a floating charge of $100M over its fixed assets. This floating charge, registered on 2018 January 17, contained a clause providing that it would crystallise in the event of any default or enforcement proceedings against the company.

On 2018 January 14, PSB refurbished its offices. In order to finance this interior design project, PSB withheld money due to the government and obtained a loan from KC Bank for $50M. Said loan was secured over some of the office furniture. This charge was registered 2018 January 17. On 2018 March 15, John, supplier of the office furniture demanded payment. Following the advice of the company's financial director, the board secured the amount owing to John by a fixed charge over the company's assets. The financial director also advised the board that PSB would have been unable to honour its financial obligations in the coming months.

A. Relate the difference between fixed and floating charge. (4 marks)

B. Outline the THREE (3) rules governing priority of charges and state how charges would be prioritised in the case. (6 marks)

C. Explain 'crystallisation of charge' and say when charges in the case would crystallise. (6 marks)

D. What are the rules with respect to registration of charges by the Companies Act? (4 marks)