CIMA Fundamentals of Ethics, Corporate Governance and Business Law BA4 Question # 35 Topic 4 Discussion

CIMA Fundamentals of Ethics, Corporate Governance and Business Law BA4 Question # 35 Topic 4 Discussion

BA4 Exam Topic 4 Question 35 Discussion:
Question #: 35
Topic #: 4

Alan, Ben, Chris and Debbie are the only shareholders in ABCD Ltd, each holding 100 ordinary £1 shares. Alan, who is the company's sole director, has recently learned that Ben, Chris and Debbie are intending to remove him as a director by passing an ordinary resolution. In consequence Alan sold his computer to the company in return for 1,000 ordinary £1 shares. The company was in need of a computer, which was of equal value to the 1,000 ordinary £1 shares.

 

Which of the following is correct?


A.

The share issue is valid and Alan may use his 1,100 votes to defeat the resolution proposed by Ben, Chris and Debbie.


B.

The share issue is invalid as it has had the effect of manipulating the voting structure within the company.


C.

The share issue is invalid as the shares should have been offered to all the existing members first.


D.

The share issue is valid as long as Alan has the necessary authority to issue shares.


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