Company Law consultancy Case Study Example | Topics and Well Written Essays - 2500 words

Company Law consultancy - Case Study Example They do not appear to have done this. Perhaps the company is on the look out for better information from concept to delivery. Whatever may be the reason, Sam and Paul, as majority shareholders, are not using the right way of handling business situations. The action against Larry cannot be seen in isolation because other minority shareholders, that is, Carl, Mark and Jennifer too have their own problems with Sam and Paul. Thus, there is the possibility that the action against Larry is just a tip in the iceberg of Sam and Paul's strong-arm policy aimed at disciplinary measures or removal of the minority shareholders. Sam and Paul have also not talked to Larry and given him the opportunity to explain his position. Sam and Paul have simply come to the conclusion that it is not possible to carry on with Larry because his service has proved expensive. Hence, in Sam and Paul's view, the company has to discontinue with Larry's services. Nonetheless, Averno Ltd is an established corporation. A corporation is described as a person in a political capacity created by law, to endure perpetually. For non-binding external actions or transactions, corporations enjoy the same latitude as private individuals. But it is in the internal affairs that one sees advantage or disadvantages in the corporation. Sam and Paul's actions do not appear to augur well for Averno. Larry now has the legal option to file a suit as minority shareholder in accordance with the rule in Foss versus Harbottle (A summary of the law on minority shareholder protection) Under the case of Foss versus Harbottle, Larry can file a suit as representing Averno Ltd and carry the case to its logical end. There appears to be undue haste on the part of Sam and Paul to have signed an exclusive contract with Megabit Consultancy Ltd. In the first place, they have not adhered to the important provision of its Articles of Association. Secondly, they have placed themselves precariously in a situation where they could be jumping from the proverbial frying pan into the fire. There is no mention about Megabit's rates. Obviously, their rates are attractive as compared to Larry's rates. Nonetheless, the fact that Larry is a shareholder in Averno does not seem to have made any impression on Sam and Paul. It is pertinent to note that Sam and Paul ought to have signed up with Megabit after consulting Larry. There is a clause in the Articles of Association that mentions Larry is the consultant for information technology in Averno. Sam and Paul ought to suitably amend this c lause after calling a special meeting. If the company means business and wants to excel in the sphere of information technology be it networking, web designing, databases, maintenance, application, projects, or procurement, then it must follow the rules and ensure that the relevant point is amended in its Articles of Association (ITC - The Information Technology Consultancy). Sam and Paul must call a meeting of the board and have a special resolution passed to the effect that Larry's services are not needed anymore. It remains to be seen how they wish to induct Megabit.