PART A
You are A.Trainee at NewLaw LLP. You have received the following email from your supervisor. Please read this and Document A and the Company Search reports in Document B
Prepare a memorandum giving advice on whether the Company can take any action against its former director Michael Rowlands for breach of his directors’ duties, and if so, which duty.
Please give all statutory/case law references as a footnote to the memorandum.
To: [email protected]
From: [email protected]
Subject: HiveLog Ltd dispute with director Michael Rowlands
Ref: SS/1234
Date: [ ]
Dear Trainee
I met with Mani Raja, an authorised representative of a new client HiveLog Ltd (Hive) yesterday. I attach my note of the meeting (Document A). Please research the issues as a matter of urgency and draft a memorandum of advice as to whether Hive can take any action against its former director Michael Rowlands for breach of his directors’ duties and, if so, which duty.
Please ensure that you cite the law, give all statutory/case law references as a footnote to the memorandum as I will put your memo on the training file.
Many thanks
Sarauniya Supervisor
Associate Solicitor
NewLaw LLP
[email protected]
PART B
This is a continuation of the facts in part A. Assume today is Monday 8th May 2023
After an extensive recruitment drive Hive has now found a new technology director to replace Michael, namely Dr James Gray, an expert in technology and all forms of data mining, data extraction and analysis. He is to be appointed as Director of Technology and Development and granted a three-year fixed term service contract; he is available to start immediately.
Hive wants to appoint him as a director and grant the service contract at the same time and as quickly as possible and before Mani goes away on holiday on Saturday 13th May. The proposed terms of the contract are now agreed in principle with Dr Gray, so the service contract can be finalised very quickly ready for all parties to sign and date. Do note that the service contract will contain a power of attorney clause in respect of various matters which means the contract needs to be signed as a deed by Hive.
Mani has called a board meeting for Wednesday 10th May and wants the appointment and the grant of the service contract to be concluded on Wednesday. All the board are able to be present at the board meeting. Surinder Gill a representative from Ellis Private Equity Ltd (EPE) with authority to act for EPE is also in the office on Wednesday in relation to other issues but can be available if needed to do anything in relation to the appointment and granting of the service contract. All directors and shareholders are in agreement about the appointment and the proposed terms of the service contract. Dr Gray has also been invited to the office on Wednesday and will be standing by to sign his service contract.
Please advise:
1. Which resolutions will be required to appoint Dr Gray and award the service contract? Please ensure you give any board and shareholder resolutions.
2. If shareholder resolutions are needed to appoint Dr Gray and award the service contract which shareholder procedure should be followed to propose the resolutions to shareholders? Please explain the rationale for your choice.
3. Please briefly explain the procedure you have chosen above at 2, the voting requirements, and whether the resolutions will pass.
4. Please explain how the service contract will be executed.
There is no need to give a full chronological procedure plan, you are not required to detail any internal or external filing needed.
PART C
This is a continuation of the facts in parts A and B . It is one year later.
Dr Gray on behalf of Hive is working with another company Link Ltd,( its representative on the project is Viktor Laszio) and an entrepreneur Anika Sharma (Anika) on a business project to develop new blockchain technology.
No agreement was ever signed in relation to the project, but the parties have nevertheless been working together to develop the project. The parties are working together on the following terms:
1. They have agreed to combine their know-how and expertise to develop, produce and distribute the new technology. Some of the technology is already at testing stage.
2. Each legal person has its own area of responsibility in respect of the development of the products. Anika made a considerable capital contribution at the outset and Dr Gray on behalf of Hive has contributed know-how in the early stages of development and is key in terms of research and development, Link Ltd ‘s particular expertise will only be required in the later phases of development, but Link Ltd is included in all discussions and has contributed capital. Hive has not contributed capital, but when working on the project they all work from a building provided by Hive.
3. Dr Gray as a representative of Hive and Viktor Laszio a representative from Link Ltd and Anika meet on a monthly basis to discuss progress and to take decisions affecting future development strategy.
4. The parties propose to share equally any profits or losses of the project which may arise as a result of the production and sale of the products, or the sale/licensing of any intellectual property that may arise from the development of the technology.
Mani as CEO of Hive is excited about the project but is concerned about the fact that no agreement was drawn up and has sought your advice, although they never intended more than a contractual relationship Mani is concerned that they may have inadvertently created a partnership.
Please advise as to whether Hive has entered into a partnership with Anika Sharma and Link Ltd to develop and sell this technology.
