384CLS: Company Law - The Legal Principles Relating to Registered Companies - Law Assignment Help

Assignment Task:

Task:

Assessment Information
This assignment is designed to assess learning outcomes:
1. Critically evaluate the legal principles relating to registered companies
2. Critically evaluate and review the conceptual underpinning of various statutory provisions and common law rules governing registered companies
3. Critically evaluate and review information from a range of sources and utilize that ability to analyse real and hypothetical situations involving registered companies
4. Use highly specialist research skills to critically review and consolidate a body of knowledge and to critically evaluate the shortcomings and deficiencies of existing company law and suggest possible reforms (where applicable).

Compulsory
Problem Question (60%) Op-Tech Ltd (‘the company’) is a high-tech company incorporated in England on 1 st October
2018. It manufactures night-vision equipment for sale to the military around the world. The company was formed to take over the business that had previously been run as a partnership by its two founders Alex and Peter. To save costs, Alex and Peter purchased a ‘shelf company’ that had articles in the standard form and then changed its name to ‘Op-Tech Ltd’. Both men were immediately appointed directors of the company. They transferred the entire business of the partnership to the company in payment for the 500 shares with a nominal value of £1,000 each that the company issued to each of them. The business was independently valued at £1m as at the date of transfer (1 st October 2018).

The company has recently experienced a rapid expansion in its order-book but has been unable to secure a bank loan to finance the expansion. It has, however, been approached by Gilmorehill Private Equity LLP (‘GPE’), which has expressed an interest in investing in the company. GPE’s proposal is to invest £2m in the company as follows:

1. GPE to subscribe £1.5m for the issue to it of a new class of ordinary shares (B shares) with the holder of the shares to have the right to appoint a director. GPE propose a  subscription price 20% above that paid by Alex and Peter to reflect the recent growth
in the business. The ordinary shares held by Alex and Peter would be re-designated as A shares.
2. GPE to subscribe £0.5m for a new issue of 5% redeemable preference shares with a nominal value of £1. These shares will carry no votes and can be redeemed at par by the company at any time after the second anniversary of their issue.
3. GPE is prepared to grant Alex and Peter ‘tag along’ rights should GPE sell its ordinary shares, but in return they must accept that GPE will have ‘drag along’ rights in respect of such a sale.
a. You are asked by Alex and Peter to advise them as shareholders in respect of these proposals. You are required to set out your advice in a memorandum (with a word-limit of 2,000 words) accompanied by a draft of the amendments to the articles of association that would be required to give effect to GPE’s proposal.
b. In your advice, you should also consider whether Op-Tech Ltd should become a public company in order to issue shares to GPE.

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