Newsletter 3

Monday 25 September 2023

Your weekly SQE Prep Quiz has arrived

Dear Subscriber,

Question:

Myriam is a shareholder of a public limited company and holds 2% of the shares in the company. Myriam is an environmental activist and seeks to influence sustainability measures in all her public and personal engagements. She is deeply dissatisfied with the company’s environmental policies and wants to bring this to the attention of the board, as she thinks that the company could easily do a lot more to contribute to the fight against climate change. Which of the following options is available to the shareholder?

1. Myriam can call a general meeting to discuss the environmental policy.
2. Myriam can raise the issue at an annual general meeting.
3. Myriam can request a copy of the company’s environmental policy under s.527 of the Companies Act 2006.
4. Myriam can demand that the company takes specific action to address the environmental policy.
5. Myriam can initiate legal proceedings against the company.

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Relevant Reading: Watch the video linked here for a presentation of the duties of directors. For relevant sections in a text see ReviseSQE Business Law and Practice, Chapter 3. You can obtain the text by following* this link.

Answer and feedback to last week’s question: Last week’s question was as follows: David is a director of a private limited company. He receives a personal discount offer from one of the company’s suppliers (a travel company) for a holiday package to the Maldives. He accepts the offer and books the holiday using the company credit card. Which of the following is true? A. David is not required to disclose the holiday to the other directors as it is a personal matter. B. David can use the company credit card for personal expenses as long as he reimburses the company. C. David is in breach of his duty to act in the best interests of the company under s.170 of the Companies Act 2006. D. David is in breach of his duty to avoid conflicts of interest under s.175 of the Companies Act 2006. E. David’s actions are permissible as long as the holiday does not exceed the value of £500.

The correct answer is D. A director is required to avoid situations in which they have, or could have, a direct or indirect interest that conflicts, or may conflict, with the interests of the company (s.175, Companies Act 2006). By using the company credit card to purchase a personal holiday from a company supplier, David has put himself in a position of conflict of interest. C looks like a plausible answer but references the wrong statutory provision. The other potential answers are wrong.

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You will hear from us again next week.

All the best

Dr Ioannis Glinavos

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