INSTRUCTION:

Answer the question below. Your answer should be supported with relevant Articles / Sections from Statute Law/ Legislation and Case Law/Cases.

Question 1

The objects clause of Bunga Raya Ltd, a company incorporated in 2020, provide that the business of the company is to design and create websites for hospitals. The company's two directors, Mo and Pam, own 25 per cent of the company's shares, with the remaining shares split equally between three private investors (Cheryl, Jim, and Daryl). Cheryl, Jim, and Daryl are concerned that the company could become burdened by debt, so they pass a special resolution directing the board not to borrow any capital unless first approved by an ordinary

resolution. Bunga Raya's business prospects are not good and the directors believe that the company will need an injection of capital if it is to continue trading. Cheryl argues that the company should expand its business by designing and creating websites for any corporate client, not just hospitals, and if the directors agree to this, she will lend the company 100,000.

A meeting is convened, but Jim and Daryl do not believe that the company should take on

more debt, although Jim does believe that the company should not limit its client base to hospitals. Accordingly, Jim and Daryl vote against the loan. Believing the loan to be in the interests of the company, the board accepts the loan and use it to expand their business by taking on corporate clients. The expansion of business is a success and Bunga Raya begins to make a profit. However, Daryl believes that the company should stick to its original aim of only designing websites for hospitals, and argues that, in not doing so, it is acting outside

the scope of its constitution. The board, Cheryl and Jim become tired of Daryl's complaints and insert a provision in the articles, which provides the majority with the power to compulsorily purchase the shares of any minority member. They exercise this power and expel Daryl as a member.

Questions

Advise Daryl.(25 marks)