Monday 26 August 2024
Dear Subscriber,
I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question: AlphaTech Ltd. is a private company with a board of directors that has recently come under criticism from a group of shareholders who are dissatisfied with the company’s performance. The shareholders believe that the directors are not acting in the best interests of the company and should be removed. They decide to call for a general meeting (GM) to vote on a resolution to remove two of the directors. The company’s articles of association do not contain any special provisions regarding the removal of directors, so the shareholders plan to proceed under the standard rules of the Companies Act 2006. What percentage of the votes cast at the general meeting is required to pass the resolution to remove the directors under the Companies Act 2006?
- 50% of the votes cast
- 75% of the votes cast
- 75% of the total number of shares
- 100% of the votes cast
- 50% of total number of shares
Study Material: For more on the topic of this week’s question see the video linked here and if you are looking for a relevant* title, see here.
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Answer and feedback to last week’s question: Emily, an elderly woman, is persuaded by her nephew, Robert, to transfer the ownership of her house to him. Robert tells Emily that it will be easier for him to take care of her if he owns the property. Emily, who relies heavily on Robert for daily care and has no close family members, feels pressured to agree to the transfer despite her reservations. She signs the necessary documents, transferring the house to Robert without receiving any independent legal advice. A few months later, Emily regrets her decision and seeks to challenge the validity of the transfer, claiming that she was unduly influenced by Robert. Which of the following legal principles or actions is most relevant in determining whether the transfer of the house can be set aside?
- Emily must prove that Robert physically coerced her into signing the transfer documents.
- Emily can claim that the transaction was made under duress and demand that the property be returned.
- Emily must demonstrate that there was a relationship of trust and confidence between her and Robert, and that the transaction calls for an explanation.
- Robert can argue that the transfer was a gift, and Emily has no right to challenge it once completed.
- The transaction can only be set aside if Emily can show that Robert committed fraud in obtaining the property.
Correct Answer: 3. Emily must demonstrate that there was a relationship of trust and confidence between her and Robert, and that the transaction calls for an explanation. Feedback: In cases of undue influence, particularly under English law, Emily must show that there was a relationship of trust and confidence between her and Robert, and that the nature of the transaction is one that calls for an explanation (i.e., it is not readily explicable by the relationship between the parties). If undue influence is established, the court can set aside the transaction. Physical coercion (Option 1) is not necessary to establish undue influence; it focuses more on the exploitation of a position of influence. Duress (Option 2) involves threats and is distinct from undue influence, which is more about the abuse of a relationship of trust. The argument that the transfer was a gift (Option 4) does not preclude a challenge if undue influence can be proven. Fraud (Option 5) involves deceit and is not appropriate on the facts presented. Thus, the correct approach is for Emily to demonstrate the relationship of trust and the unusual nature of the transaction, which could lead the court to presume undue influence and potentially set aside the transfer of the property.
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All the best
Dr Ioannis Glinavos
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