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l Fashion Face Ltd. (FF), the articles of association of which were in the form of ScheduleL- 2, had three directors: Adam, Ben and Cohen. At the beginning they each held 5% of the company's iss.-ed sharr '1. David the majority shareholder who found the company with the three directors held the remaining 85% shares. David was not on the board because his personal businesses had been keeping him very busy. The company's business growth had been slowing down. David thought that there were two major reasons for the company's bad performance. First, the knowledge of the directors'On ' fashion business had become obsolete. Secondly, because of lack of relevant managerial experience, the directors found it becoming more and more difficult to manage a growing company. Despite several protests by David, the directors refused to do anything to update their knowledge or improve their managerial competence. As recalled by David, one instance of the directors' bad decisions was that the company bought large stock of merchandise from a Swedish designer. In David's opinion, it was clear that Asians generally did not share the same taste of fashion of that designer in spite of her reputation in Europe. It turned out that David was right - the project to Promote and sell those designer cloths was a disaster. FF suffered a huge loss as a result, Another matter that 'ustrated David was that the company only issued new shares to the three directors. The new shares were issued to them at a good mtherefore FF did get new capital 11 genuinely needed to maintain its operations. Although David still managed to hold 70% issued shares and thus remained as the majority shareholder, he was very unhappy, because David knew that further issues of shares could make eventually him a WDMM had had enough of the bad management of FF. He submitted a written request to the directors, asking them to show him the minutes of the board meetings. David was willing to sign a condentiality agreement undertaking that he would not use the information from the board minutes for any use other than raising queStions at the annual general meeting (AGM), which was due to be held soon. On behalf of the board Adam refused David's request. Since then the relationship between David and the directors became very tense. David saw Adam as the source of all problems inside the M made up his mind not to reappoint Adam to the board at the coming AGM. He was prepared to give Ben and Cohen a second chance David was shocked when he received the notice of AGM. First, the audited nancial statements were not attached to the notice ofmeeting, which was used to be in previous AUMs. And, the directors' report no longer reported the future plans .' s of the company. Ther'board. of directdi's decided to conduct the AGM in London next month, claiming that all the four shareholders could attend an important fashion show arounlilthe same time. David was furious because Adam knew that he could not leave WKWE, forxthe meeting'r' (b) Advise David whether he could have any valid grievance on the arrangement of the AUM. in any case he does not want to give upihis voting rights at the AGMJ
