INSTRUCTIONS

Answer the Following Case Study making reference to relevant case law & Statute Submission Date & Time: Sunday, November $6,2022$ by $10$:$15$ pm

Duration of Test: $1$ hour$\_$& $30$ minutes $($Plus an additional $15$ MINUTES to upload$)$

Three months ago, Tom and his friend Jerry incorporated a private company with $1000$ shares under the name Pastry Delight Limited $($PDL$).$ Tom holds $400$ ordinary shares and Jerry $300$ ordinary shares and the remaining $300$ preference shares was owned by Richie and Cashey. Tom and Jerry are directors. Prior to the incorporation of PDL Jerry entered into a contract with Kingston Light Company $($KLC$)$ and signed on behalf of PDL$.$ He made the required deposit and advised KLC that the bills should be sent to the company. The company made one payment, but has not made any further payments. KLC is threatening legal action against Jerry for the outstanding payments. Jerry is contending that the Company is liable for the outstanding amount

Jerry has recently told Tom that he needs immediate cash so he will be selling his shares to Lucky, a neighbour, who has recently inherited over $$5m.$ He has also indicated that in order to expedite the process the company can enter Lucky's name in the Register as soon as payment is received. Tom has informed Jerry that such an action is not in keeping with the legal procedure governing the transfer of shares in a private company, but Jerry is insisting that it can be done.

In March $2021,$ the company made a profit and the Board of Directors recommended the payment of dividends which was later declared in the Company's General Meeting. The Board subsequently changed its mind and has decided to plough back the amount recommended into the business. Richie and Cashey are furious and have decided to take legal action to compel PDL to pay.

In an effort to raise additional funds for an upcoming project, Tom is contemplating creating a charge in favour of Lender's Ltd where PDL will be given the right to use the assets until the order is withdrawn. The company had created a previous fixed charge in favour of Finance Ltd$.$ which was validly registered within twenty$-$one $(21)$ days of creation. PDL is unsure of which charge will take priority of payment in the event of liquidation.

$(30$ marks$)$

Advise PDL on all the legal issues arising from the case.