Question 1a

The articles of Spades Ltd. provide inter alia

i) Any shareholder appointed to the position of managing director shall hold the postion for life.

ii) Any shareholder who at any time wishes to transfer any or all of his shares shall first offer them to existing shareholders of the company who shall be obliged to purchase such shares at the original purchase price"

In September, Karen a shareholder, was appointed managing director of spades Limited

The Board of directors has taken a decision to dismiss Karen forthwith because of her poor performance on the job to date.

Joseph, a shareholder wishes to sell his shares and has received an offer from Peter who is not a shareholder to buy shares at a price well above the original price. Melissa an existing shareholder is adamant that she should be given an opportunity to purchase Joseph's shares at the original price. Joseph is the only shareholder who currently holds less than 5% of the shares of Spades Limited

Question 1B

The capital of Fever Grass Ltd. consists of fully paid up ordinary and preference shares. The governing regulations of Fever Grass Ltd. provide as follows: "17(a) Preference shareholders shall receive a cumulative preference dividend of 5% half yearly; and (b) Two votes shall be attached to each preference share issued." Due to an outbreak of the Pink Mealy bug disease, the production of bush tea has dramatically declined. The board of directors of Fever Grass Ltd. propose to alter clause 17(a) of the governing regulations to reduce the preference dividend from 5% to 2 % and to move a resolution to increase the voting rights of ordinary shareholders. Advise the preference shareholders