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LAW45415: Fundamentals of Corporate Law
Resit Summative Essay Title

Answer Part A AND Part B, which carry equal marks:

PART A
Wildsports Ltd runs a number of extreme sports centres. Alice owns 60% of the company’s
shares. Bayo and Charu each own 20% of the company’s shares. The three shareholders
are the company’s only directors. Charu is a qualified accountant. The shareholders agreed,
informally, when the company was incorporated, that each shareholder would be entitled to
be a director of the company for their lifetime.
At a board meeting in November 2023, Charu tells her fellow directors that the company has
been offered the chance to buy a golf-course which is for sale in Durham. She reports that
she has ‘given the golf-course’s accounts a quick look over’, and that it appears to be very
profitable. Bayo has taken part in many extreme sports events, but struggles to understand
any discussion about business. She tells Charu that if Charu thinks the purchase will be
good for Wildsports, then she (Bayo) will support Wildsports’ buying it.
Alice speaks out strongly against the proposal. She points out that Wildsports has no
experience of managing a golf-course, and is concerned that the vendor of the golf course is
a relative of Charu. She says she will ‘do whatever it takes’ to ensure that Wildsports does
not buy the golf-course.
Alice has now told the other directors she intends to remove them as directors, since they
are clearly quite incompetent. The other directors are refusing to speak to Alice, and say
they will not attend any shareholders’ meeting of the company.
Advise Alice on each of the following matters:
(i) Whether she can prevent Wildsports from purchasing the golf-course. Will the amount of
the purchase price make any difference to your answer?
(ii) Whether she can remove the other directors, and whether doing so will incur any costs
for the company or for her, Alice.
(iii) Assume now that she fails to prevent the purchase of the golf-course. The golf-course
turns out to be very unprofitable, and its purchase is a disaster for Wildsports Ltd, which
loses a great deal of money in consequence. Would any of the directors be in breach of
their duties for causing this loss to the company?
(iv) Assume now, instead, that Alice’s arguments against the purchase of the golf-course
convince the other directors to abandon their plan to make Wildsports purchase it. However,
Alice then approaches the owner of the golf-course, and arranges to purchase it for herself.
Alice makes a large personal profit by doing so. Advise Alice whether she has breached
any duty she owed to Wildsports.

PART B
Does the ‘derivative claim’ in the UK need reform and, if so, how?

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Page 2 of 2

Word Limit: 3,000 words
(excluding footnotes and appendices, bibliography, contents,
tables of cases and title pages)

Submission deadline: 7 August 2024 12noon (midday) UK time

Essay formatting: minimum 11 point legible font (eg Arial or Times New Roman),
with minimum 1.5 line spacing and 1 inch margins. Place your
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