Deepika comes to you for advice. She is setting up a company with two friends, Amir...

 

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Deepika comes to you for advice. She is setting up a company with two friends, Amir and Rizwan that will sell organic coffee nets. Deepika, Amir and Rizwan are to have 33 shares each and all three are to be directors and involved in the running of the company. They have agreed that Deepika is to be the Managing Director for life, that she is to have a veto on any board decision concerning on whether the company should issue new shares. The friends have also agreed that all of them are to remain directors of the company permanently. Deepika also wants to insure that the company cannot change its business without her consent. Advise Deepika as to whether she can ensure that she has these rights by setting out these terms in the articles of association and what problems including these terms in the articles of association might present, if any. Deepika comes to you for advice. She is setting up a company with two friends, Amir and Rizwan that will sell organic coffee nets. Deepika, Amir and Rizwan are to have 33 shares each and all three are to be directors and involved in the running of the company. They have agreed that Deepika is to be the Managing Director for life, that she is to have a veto on any board decision concerning on whether the company should issue new shares. The friends have also agreed that all of them are to remain directors of the company permanently. Deepika also wants to insure that the company cannot change its business without her consent. Advise Deepika as to whether she can ensure that she has these rights by setting out these terms in the articles of association and what problems including these terms in the articles of association might present, if any.

Answer rating: 100% (QA)

Deepika can indeed include these terms in the articles of association to ensure she has the desired rights and control in the company However it is im... View the full answer