The objects clause of Coven Ltd, a company incorporated in 2009, provide that the business of the
Question:
The objects clause of Coven Ltd, a company incorporated in 2009, provide that the business of the company is to design and create websites for charities. The company's two directors, Mika and Paula, own 25 per cent of the company's shares, with the remaining shares split equally between three private investors (Ceri, Jo and Deborah). Ceri, Jo and Deborah 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. Covenant Ltd'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. Ceri argues that the company should expand its business by designing and creating websites for any corporate client, not just charities, and if the directors agree to this, she will lend the company 100,000. A meeting is convened, but Jo and Deborah do not believe that the company should take on more debt, although Jo does believe that the company should not limit its client base to charities. Accordingly, Jo and Deborah vote against the loan. Believing the loan to be in the interests of the company, the board accept the loan and use it to expand their business by taking on corporate clients. The expansion of business is a success and Coven Ltd begins to make a profit. However, Deborah believes that the company should stick to its original aim of only designing websites for charities, and argues that, in not doing so, it is acting outside the scope of its constitution. The board, Ceri and Jo become tired of Deborah'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 Deborah as a member. Advise Deborah