Claw Tips & Hints Tutorial Week 4 October 2009 Semester

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      3. Woolworth and his close-knit family currently own all the shares of Groceris2Us Pte Ltd (“GRU”). Woolworth wants the memorandum and articles of association of GRU to be amended to ensure that he cannot be removed as the managing director of GRU without his consent. After the memorandum and articles are amended, Woolworth and his family want to offer a majority share in GRU for sale to the general public. (adapted from a past year exam question, cross-topic) REQUIREDa. Advise Woolworth how the memorandum and articles of GRU may now be amended to prevent Woolworth’s removal as managing director without his own consent after the sale of the majority share to members of the public. (8 marks) The new s.26A CA allows the insertion of entrenching provisions into a company’s memorandum and articles of association. (1 mark) An “entrenching provision” means a provision of the memorandum or articles of a company to the effect that other specified provisions of the memorandum or articles cannot be altered in the usual manner provided by Act - ie. a special resolution. (2 marks) An entrenching provision can be inserted at any time into the memorandum and articles but only by unanimous shareholder agreement, ie. if all the members of the company agree. (1 mark) Warrick would therefore have to obtain the unanimous approval of his close-knit family (1 mark) to amend GRU’s memorandum and articles of association to provide for the following:  1. Warrick to be GRU’s managing director until he himself chooses to vacate his office; and (1 mark) 2. Warrick’s own consent to be a precondition for the removal or amendment of the provision containing point 1 above. This would make it impossible to amend point 1 by the usual 75% majority (special resolution), hence entrenching it. (2 marks) b. Describe briefly to Woolworth some amendments that he would need to make to GRU’s memorandum and articles of association before any public offering of shares in GRU can be made. You do not need to discuss the issuance of prospectuses (a later topic). (5 marks)  Warrick should have special resolutions passed (1 mark) to amend GRU’s memorandum and articles of association to remove the following:- “Pte” from GRU’s name, any restrictions on the transfer of shares in GRU, andthe limit of 50 members that would be in the articles by virtue of GRU’s current status as a private limited company (Pte Ltd). (3 marks) The above would convert GRU into a public company. (1 mark) End of tutorial questions Week 3.  

      3. Woolworth and his close-knit family currently own all the shares of Groceris2Us Pte Ltd (“GRU”). Woolworth wants the memorandum and articles of association of GRU to be amended to ensure that he cannot be removed as the managing director of GRU without his consent. After the memorandum and articles are amended, Woolworth and his family want to offer a majority share in GRU for sale to the general public. (adapted from a past year exam question, cross-topic) REQUIREDa. Advise Woolworth how the memorandum and articles of GRU may now be amended to prevent Woolworth’s removal as managing director without his own consent after the sale of the majority share to members of the public. (8 marks) The new s.26A CA allows the insertion of entrenching provisions into a company’s memorandum and articles of association. (1 mark) An “entrenching provision” means a provision of the memorandum or articles of a company to the effect that other specified provisions of the memorandum or articles cannot be altered in the usual manner provided by Act - ie. a special resolution. (2 marks) An entrenching provision can be inserted at any time into the memorandum and articles but only by unanimous shareholder agreement, ie. if all the members of the company agree. (1 mark) Warrick would therefore have to obtain the unanimous approval of his close-knit family (1 mark) to amend GRU’s memorandum and articles of association to provide for the following:  1. Warrick to be GRU’s managing director until he himself chooses to vacate his office; and (1 mark) 2. Warrick’s own consent to be a precondition for the removal or amendment of the provision containing point 1 above. This would make it impossible to amend point 1 by the usual 75% majority (special resolution), hence entrenching it. (2 marks) b. Describe briefly to Woolworth some amendments that he would need to make to GRU’s memorandum and articles of association before any public offering of shares in GRU can be made. You do not need to discuss the issuance of prospectuses (a later topic). (5 marks)  Warrick should have special resolutions passed (1 mark) to amend GRU’s memorandum and articles of association to remove the following:- “Pte” from GRU’s name, any restrictions on the transfer of shares in GRU, andthe limit of 50 members that would be in the articles by virtue of GRU’s current status as a private limited company (Pte Ltd). (3 marks) The above would convert GRU into a public company. (1 mark) End of tutorial questions Week 3.  

      3. Woolworth and his close-knit family currently own all the shares of Groceris2Us Pte Ltd (“GRU”). Woolworth wants the memorandum and articles of association of GRU to be amended to ensure that he cannot be removed as the managing director of GRU without his consent. After the memorandum and articles are amended, Woolworth and his family want to offer a majority share in GRU for sale to the general public. (adapted from a past year exam question, cross-topic) REQUIREDa. Advise Woolworth how the memorandum and articles of GRU may now be amended to prevent Woolworth’s removal as managing director without his own consent after the sale of the majority share to members of the public. (8 marks) The new s.26A CA allows the insertion of entrenching provisions into a company’s memorandum and articles of association. (1 mark) An “entrenching provision” means a provision of the memorandum or articles of a company to the effect that other specified provisions of the memorandum or articles cannot be altered in the usual manner provided by Act - ie. a special resolution. (2 marks) An entrenching provision can be inserted at any time into the memorandum and articles but only by unanimous shareholder agreement, ie. if all the members of the company agree. (1 mark) Warrick would therefore have to obtain the unanimous approval of his close-knit family (1 mark) to amend GRU’s memorandum and articles of association to provide for the following:  1. Warrick to be GRU’s managing director until he himself chooses to vacate his office; and (1 mark) 2. Warrick’s own consent to be a precondition for the removal or amendment of the provision containing point 1 above. This would make it impossible to amend point 1 by the usual 75% majority (special resolution), hence entrenching it. (2 marks) b. Describe briefly to Woolworth some amendments that he would need to make to GRU’s memorandum and articles of association before any public offering of shares in GRU can be made. You do not need to discuss the issuance of prospectuses (a later topic). (5 marks)  Warrick should have special resolutions passed (1 mark) to amend GRU’s memorandum and articles of association to remove the following:- “Pte” from GRU’s name, any restrictions on the transfer of shares in GRU, andthe limit of 50 members that would be in the articles by virtue of GRU’s current status as a private limited company (Pte Ltd). (3 marks) The above would convert GRU into a public company. (1 mark) End of tutorial questions Week 3.  

     

     

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    Claw Tips & Hints Tutorial Week 4 October 2009 Semester - Presentation Transcript

    1. Tips & Hints“tutorial how-to-do … cher?”
      Tutorial for Week 4 on the Teaching & Learning Schedule
    2. Tutorial How to Do…
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      Discussion
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    4. Tutorial How to Do… Qn 1(a)
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