Birds Limited has three directors: Peacock, Sparrow and Vulture. Explain the legal implication of each of the following situations:
a) - Appointment of directors is a power vested in the general meeting by the articles and directors have no power to appoint other directors let alone their own sons.
- The appointment of a director is effected by the passage of an ordinary resolution in a general meeting.
- Vultures wish to appoint his son a director is untenable since he has no power to do so.
b) - Since directors stand in a fiduciary position in relation to the company whose board they form, they are bound to avoid conflict of interest.
- In this case sparrow is bound to disclose the nature of his interest at board meeting failing which the contract is voidable at the option of the company. as was the case in Aberdeen Railway Co. v Blaikie Brothers. additionally, it is a criminal offence for which sparrow is liable to a fine not exceeding kshs.2,000.
c) - Removal of a director from office is a power vested in the general meeting by the companies act.
-Directors cannot remove one of their number from the office of director.
- In the case sparrow and vulture cannot remove peacock from directorship since they have no power to do so.
d) - Being a director of the company, peacock has the right to take part in the affairs of the company.
- Vulture and sparrow cannot legally exclude peacock from participating in the affairs of the company. - Peacock has the right to sue the other directors for an order to restrain them from excluding him from the affairs of the company.
- Additionally Peacock may petition for the winding up of the company on the ground that it is just and equitable to do so. As was the case in Re: Lundie BrothersLtd.
marto answered the question on February 6, 2019 at 06:45
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