Two best friends, Mickey and Donald, incorporated a company called Mousketeers Holdings Pte Ltd (MH). MH was the holding company for a diverse range of businesses. Both Mickey and Donald held 48 shares each in MH with 3 shares held by Minnie, Mickey’s wife, and 1 share held by Daisy, Donald’s wife. Only Mickey and Donald served as directors of the company.

The constitution of MH stated that both Mickey and Donald (i) cannot be removed as directors by MH’s shareholders; (ii) need to provide their consent for the appointment of additional directors; and (iii) may decide the powers of such appointed directors. The
constitution further provided that any company payment voucher for amounts exceeding $10,000 must be signed by both Mickey and Donald before the amount can be paid.

One year ago, Mickey and Donald had a terrible fight with each other and stopped being friends. Things became rather difficult at MH because Donald would refuse to sign off on the payment vouchers even though they were necessary for the business. As a result, MH was owing money to several service providers. Mickey and Minnie wanted to convene an extraordinary general meeting to pass an ordinary resolution to (i) remove Donald as a director and (ii) allow Mickey to sign the payment vouchers and pay the service providers accordingly.

Advise Mickey and Minnie on the following:

(a) S157A(2) of the Companies Act provides that “the directors may exercise all the powers of a company except any power that this Act or the constitution of the company requires the company to exercise in general meeting.” Explain how the powers of a company are shared between the board of directors and the members and if Mickey and Minnie could remove Donald as a director.

(b) Discuss if and how the reserve powers of management may vest in MH’s shareholders.

Support your answers with relevant statutory provisions and case law.

Answer rating: 100% (QA)

The powers of a company are shared between the board of directors and the members The board of direc... View the full answer