Prism Pte Ltd has a Board of Directors comprising Adele, Ben and Carey. Adele and Ben...

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Prism Pte Ltd has a Board of Directors comprising Adele, Ben and Carey. Adele and Ben are Executive Directors while Carey is a Non-executive Director holding a full- time job as an accountant. Although Adele and Ben run the business on a day-to-day basis, they always consult Dave on major issues and defer to Dave's opinion on how the company should act on these issues. Dave was the managing director of the company for many years, and but had to step down in 2010 when he was declared a bankrupt due to his personal debts. Three months ago, Adele and Ben proposed at a Board meeting that the company act as guarantor in respect of a bank loan granted to Dave. They explained that Dave who had just been discharged from bankruptcy was trying to restart his own business and needed a guarantor to secure a bank loan. They felt that the company should support Dave by providing the guarantee so that the company can continue to tap on Dave's vast experience. Carey disagreed with this move but she was outvoted and the Board resolution was passed. Separately, Carey is also concerned about an upcoming Board meeting where the stated agenda is to discuss ACRA's queries on the company's register of controllers. Currently, the company only has one shareholder which holds more than 25% of the voting power in the company and the details of that corporate shareholder are listed in the register. The other shareholders of the company do not each hold more than 25% of the voting power in the company. Carey seeks advice on the following: (a) Is there a breach of the Companies Act in respect of the above facts? (80% of marks) (b) What should she do if she is unable to attend the Board meeting because of her own work commitments ? (20 % of marks) Prism Pte Ltd has a Board of Directors comprising Adele, Ben and Carey. Adele and Ben are Executive Directors while Carey is a Non-executive Director holding a full- time job as an accountant. Although Adele and Ben run the business on a day-to-day basis, they always consult Dave on major issues and defer to Dave's opinion on how the company should act on these issues. Dave was the managing director of the company for many years, and but had to step down in 2010 when he was declared a bankrupt due to his personal debts. Three months ago, Adele and Ben proposed at a Board meeting that the company act as guarantor in respect of a bank loan granted to Dave. They explained that Dave who had just been discharged from bankruptcy was trying to restart his own business and needed a guarantor to secure a bank loan. They felt that the company should support Dave by providing the guarantee so that the company can continue to tap on Dave's vast experience. Carey disagreed with this move but she was outvoted and the Board resolution was passed. Separately, Carey is also concerned about an upcoming Board meeting where the stated agenda is to discuss ACRA's queries on the company's register of controllers. Currently, the company only has one shareholder which holds more than 25% of the voting power in the company and the details of that corporate shareholder are listed in the register. The other shareholders of the company do not each hold more than 25% of the voting power in the company. Carey seeks advice on the following: (a) Is there a breach of the Companies Act in respect of the above facts? (80% of marks) (b) What should she do if she is unable to attend the Board meeting because of her own work commitments ? (20 % of marks)

Answer rating: 100% (QA)

a Yes there is likely to be a breach of the Companies Act in relation to the facts stated above Acco... View the full answer