CLAW$3501$

SECTION A

Instruction: Answer ALL ${?}_{(})$ questions from this section in the booklet provided.

A$.$ The main business of Little Rock Properties Limited is the acquisition, development and sale of residential real estate. The company has five directors. At a board meeting held on September $27,2017$ a proposal was presented for the purchase of a piece of land in an area adjoining an inner$-$city community. The price was low, but the location was felt to be averse to the development and easy sale of houses and as a consequence the board decided not to approve the purchase of land. On November $5,2017$ the land was bought by David and Samson, two of the directors of Little Rock Properties Limited and resold on December $30,2017$ at a profit of two million dollars. Having learnt of the actions of the board and the two directors, the shareholders of Little Rock Properties Limited are upset. They wish to know whether there has been any breach of fiduciary duty by the board of directors in failing to approve the purchase of the land and$/$or by David and Samson in respect of the purchase and sale of the property by them and, if so$,$ what remedies they have against them.

Advise the shareholders.

$(13$ marks$)$

B$.$ Pop Inc. is a successful; private company engaged in the manufacture and retail of steel pans. Its board of directors consist of Lucy, Mary and Jane. In $2018$ Lucy on behalf of Pop Inc., enters into a contract with Iron Works Ltd to acquire one thousand oil drums. These oil drums however are inferior quality and it has since been discovered that Lucy is a substantial shareholder of Iron works Ltd$.$

Advise Pop Inc.

$(7$ marks$)$