The Legal Environment of Business: Text and Cases (MindTap Course List)
10th Edition
ISBN: 9781305967304
Author: Frank B. Cross, Roger LeRoy Miller
Publisher: Cengage Learning
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Question
Chapter 17, Problem 1BS
Summary Introduction
Case summary:A limited liability company was formed by three persons namely J, L and T contributing proportionally. J contributed 60 percent whereas L and T contributed 20% , respectively in its capital formation. The profit share of the company was not decided priorly which resulted in a dispute over the distribution of profits.
To find: The law applicable to the resolution of a dispute regarding the distribution of profit in an LLC.
Summary Introduction
Case summary:A limited liability company was formed by three persons namely J, L and T contributing proportionally. J contributed 60 percent whereas L and T contributed 20 % , respectively in its capital formation. The profit share of the company was not decided priorly which resulted in a dispute over the distribution of profits.
To find: The result of not having a specific LLC statute in most of the states.
Summary Introduction
Case summary:A limited liability company was formed by three persons namely J, L and T contributing proportionally. J contributed 60 percent whereas L and T contributed 20 % , respectively in its capital formation. The profit share of the company was not decided priorly which resulted in a dispute over the distribution of profits.
To find:The ways in which the dispute has been avoided.
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Matthew Mark and Luke, three auto mechanics, were delighted to start an auto repair businessand decided that they would incorporate a private company to do so. It was to be called Mechanics Ltd. They were short on capital however, so they approached ABC Ltd, a public company, to be a shareholder in their private company. John, the Company Secretary and Accountant for Mechanics Ltd decided that he will not file accounts, because it was a private company. John came to you privately to find out if he is on good ground in not filing accounts.
1. You are required to tell John if he was correct in his decision or not, and give reasons foryour answer, directly from the Companies Act.
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Dennis is the oldest among the four shareholders and is in the poorest health. He is concerned that upon his death his wife will be stuck with the shares, because there will be no market for them. However, he would like her to be able to use the proceeds from selling the shares for living expenses. For their part, Able, Baker, and Carter like Mrs. Dennis, but are not interested in being co-owners of the business with her. And they certainly do not want her to sell Dennis's shares to an unknown third party. So, they four have agreed that upon Dennis's death, Mrs. Dennis will be obligated to sell one third of the shares to Able, one third to Baker, and one third to Carter. Able, Baker, and Carter agree to buy the shares at a price figured according to a predetermined formula. What kind of transfer restriction is this?
Multiple Choice
Option agreement
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Matthew Mark and Luke, three auto mechanics, were delighted to start an auto repair business and decided that they would incorporate a private company to do so. It was to be called Mechanics Ltd. They were short on capital however, so they approached ABC Ltd, a public company, to be a shareholder in their private company. John, the Company Secretary and Accountant for Mechanics Ltd decided that he will not file accounts, because it was a private company. John came to you privately to find out if he is on good ground in not filing accounts.
You are required to tell John if he was correct in his decision or not, and give reasons for your answer, directly from the Companies Act.
At the same time, Luke is very disgruntled that the company is planning on going into the business of selling auto parts as well, and said that this is in breach of the Memorandum of Association's Objects Clause which states: "To repair, service and provide diagnostics to all types of motor vehicles, and to…
Chapter 17 Solutions
The Legal Environment of Business: Text and Cases (MindTap Course List)
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