Wallace, Gromit, Shrek and Olive have been in a traditional partnership for several years producing digitally animated films. The partnership is successful and is expanding rapidly. The partners seek your advice as to the possibility of forming a limited company to be called Nemo limited. On formation of Nemo limited Wallace and Gromit will each hold 30% of the voting ordinary share capital. Shrek and Olive will each hold 20%. They will all become directors of the new company. They raise the following issues: 1. What are the advantages and disadvantages of operating as a limited company rather than a traditional partnership? (20 marks) 2. Explain the importance of a shareholders agreement generally and why the four directors/shareholders should insist on one in this situation. (25 marks) 3. Wallace has just become a partner in a Limited Liability Partnership that is likely to supply equipment to the new company when it is formed. Advise Wallace as to his legal position. (15 marks) 4. Discuss the importance of the case of Foss v Harbottle in company law. (10 marks) 5. Discuss what is likely to constitute unfair prejudicial conduct by the majority and the possible outcomes if the application to the court on such grounds is successful under section 994 Companies Act 2006. (20 marks)
