Mr Byfield in 2016 formed the Company called Fear No Pestilence Crop Sprayers Ltd. The core function
Question:
Mr Byfield in 2016 formed the Company called "Fear No Pestilence Crop Sprayers Ltd". The core function of this business was to spray crops from the air. Mr Byfield owned 3,000 of the Company's 4,000 shares. As a witty businessman one of his first acts as governing director was to appoint himself the only pilot of the Company at a salary of 4million dollars per year. The other directors contends that since Mr. Byfield owned 3,000 of the Company's 4,000 shares and he is also the governing director of the Company, a relationship of employer and employee could not exist between the Company and Mr. Byfield. In 2022 it was discovered that two directors, Mr. Wayne Anderson and Mr. Chris Zecher who were also shareholders of the Company called "Fear No Pestilence Crop Sprayers Ltd" had taken Monies from the Company, which it raised through large loans from various banking institutions. It is alleged that these funds were used to support the extravagant lifestyle of the directors and their wives. It was alleged also that they had spent the Company's money in hotels and restaurants. It was further reported that apportion of what they took was also spent on cars, yachts, home improvements, silver and antiques. Mr. Byfield attends your office and seeks your advice on the matters outlined above. By applying the rule of separate corporate personality, advise Mr. Byfield on the following points:
1. Whether a relationship of employer and employee could exist between the company and himself, considering he owns 3,000 of the company's 4,000 shares and he is also the governing director of the company. [10 Marks]
2. Whether as a matter of law, the two directors Mr. Wayne Anderson and Mr. Chris Zecher could be held liable for stealing from a company which they also owned.
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts