There were 5400 shares in Fiji Shuttle Company Ltd and the plaintiff, Mr. Naidu, owned 2404 of them. The company was in the business of purifying and storing liquids. The constitution of the company stated that only a three-quarter majority could remove the directors. It said the general power of management was vested in the directors 'subject to such regulations as might from time to time be made by extraordinary resolution'. They were also explicitly allowed to sell company property. The words 'regulations' referred to the articles of association. So, the articles could be changed by a three-quarter majority of votes. It did not say anything about issuing directions to the directors.

Mr. Naidu wanted the company to sell its assets to another company. At a meeting he got 3004 of the shares to vote in favor of such a resolution, with his friends. The directors were opposed to it. They declined to comply with the resolution. So, Mr. Naidu brought this action in the name of the company, against the company directors.

Required:

With reference to Companies Act of Fiji 2015, explain whether the court ruling would be in favor of the shareholders or the company directors. (5 marks)

Case Study 2 (5 Marks)

Tomas and Alberto are trustee of a trust. The trust property includes shares in a private company that were transferred to the trustees on the creation of the trust. The settlor had been involved in starting up the private company and did not want the shares sold. The shares in the private company held in a trust by Tomas and Alberto accounted for 30% of the issued voting shares of the company. Because Tomas and Alberto held shares in their capacity as trustee, they received notice of a shareholder's meetings. When they attend the shareholders meeting, they became aware that the company had significant potential but, due to internal conflict between the other shareholders, the company's potential could not be fully achieved. Tomas and Alberto have convinced one of the other shareholders who holds 25% of the voting shares of the company to sell his shares. If Tomas and Alberto can acquire those shares, they will have sufficient control over the company to make changes they believe will produce significant gains for the company. The trust fund includes substantial property other than the shares in the private company and there are more than adequate funds to acquire the additional private company shares as part of the trust property. Tomas and Alberto want to buy the shares for themselves so they can personally profit from the potential gains they believe they can make by exercising control over the company.

Required:

With reference to Companies Act of Fiji 2015, critically evaluate the plan of Tomas and Alberto. (5 marks)

Case Study 3 (10 Marks)

Nad's Handicraft Company Limited is in the business of selling handicrafts to tourists. It has been in operation for the past five years and has been making about $50,000 income every year. However, during the coronavirus pandemic and closure of international borders, the business has not been able to make enough income. The company also could not afford to pay the business rent every month. The directors and shareholders of the company were in a dilemma. While the directors of the company believed that the business should close down due to minimal income, the shareholders of the company believed that the business should remain in operation and wait for things to get normal. Creditors on the other hand, filed a lawsuit against the company for it to be wound up.

Required:

1. With reference to Companies Act of Fiji 2015, list five situations under which a company can be wound up. (5 marks)

1. Explain if the creditors in the above case would be successful in their claim. (5 Marks)

Case Study 4 (10 Marks)

Tim had $5,000 cash at bank and upon advises from his friends and doing some research on internet, Tim decided to invest his money in a public company by purchasing some shares. However, after 4 months, Tim received a call from the company that he was required to sell his shares back to the company. Tim was confused as he did not have any such plans. Tim was totally unaware that he had to sell his shares back to the company. Upon query with the company, the caller informed Tim to read the contract that was given by the company to him when he purchased the shares.

Required:

1. Explain the possible type of shares that was issued to Tim in the above case. Also state any four conditions of such shares. (5 marks)

1. Further to the above case, Tim's shares were not fully paid up. With reference to Companies Act of Fiji 2015, explain whether the company would be successful in purchasing Tim's shares. (5 marks)