USING MAURITIUS / UK LAW

Advise Lady Baltimore on Whether Charlotte can set up another company with Vanilla after her resignation

[15 marks]

Gatodoux Lid is a company that runs a bakery. It is wholly owned by Lady Baltimore who has appointed Charlotte as its sole director. Lady Baltimore has also asked her friend Red Velvet to help Charlotte to manage the day to day operations of the bakery. Red Velvet is employed on a part time basis by the company. Gatodoux Lid has adopted a constitution upon its incorporation and the constitution is duly registered with the Registrar of Companies. The constitution expressly provides that the activities of Gatodoux Ltd will be strictly confined to the making and selling of pastries and cakes. Furthermore, another clause of the constitution provides that any contract for the purchase of ingredients must be approved by the shareholder, that is, Lady Baltimore if the amount which is at stake exceeds the sum of Rs 30,000. Whilst filing some documents for the company, Lady Baltimore was astounded to discover that Gatodoux Ltd had entered into an agreement with Amandes Organiques Lid on 1 October 2020. As per the details of the said agreement, Gatodoux agreed to buy 40 kilograms of almonds and nuts for Rs 200,000 from Amandes Organiques Lid every month for a period of 3 years. The agreement was signed by Charlotte and Red Velvet on behalf of Gatodoux Lid. Lady Baltimore is very upset and angry as this agreement has been signed without her approval and she also feels that the price of the nuts and almonds is blatantly above the market price. When Lady Baltimore demanded explanations from Red Velvet over the agreement, Red Velvet mentioned that Charlotte informed her (Red Velvet) that Lady Baltimore had approved the contract. Charlotte on her part feels that as Lady Baltimore is not registered as a director of Gatodoux Lid, it was not necessary for her to obtain her approval in accordance with the Company's constitution. In the meantime, Charlotte is feeling dissatisfied about the way in which she is being treated at Gatodoux Lid. She feels that Lady Baltimore is very condescending towards her and does not acknowledge her efforts. She is thinking of tendering her resignation and opening another bakery, "Gatosucre" with her daughter Vanilla, as the majority shareholder and director of the company