Eagle Marketing Consultancy - Case Study Example

COMPANY LAW No) (Lecturer) Shane should form a business that deals with marketing consulting services to make the maximum profit. Marketing consultancy is a type of service that the company offers to other firms that sell product and services to gain a larger market share. The marketing consulting firms develop innovative strategies that aim at successful selling and promotion of their client services to the target customers. Most new companies in the economy seek the consultancy from the consultancy services on the type of product that the company can venture in to make maximum profit. The company should be able to provide expertise advice to their clients to attract more customers in the economy. Marketing consultancy services that the company offers should be able to sell itself in themarket. The business should offer marketing plan, marketing strategies and marketing audit to the clients. Before Sane decides to take up the marketing consultancy service, he should conduct a market survey. Market survey will enable Sane to understand the market patterns to derive an expertadvice to theclients. A consultancy service is at individual level and requires high networking skills to attract more clients. The Sane, Meredith, Derek, and Cristina should have good public relation towards the people for the firm to gain publicity. Most companies nowadays go for consultancy services to get expertise knowledge and to reduce the cost of advertisement. Consultancy is tax deductible on the part of the client thus reducing the cost of production. The best company for the firm is a private company. Private company has two minimum and fifty maximum members unlike a partnership; a private company has limited liability to members who form it and has perpetual life. The company is distant from the owners who form the company, and is viewed as a legal person with rights like a natural law (Davies 2010). Marketing consultancy firm will be responsible for its debts and own property separate from the share holders. Private company is suitable for profit making firm’s because it has a less corporation tax as compared to a public company, which has a higher rate of tax. Companies Act and not their opinions guide the directors of a private company. The private company are of two types: limited by shares and limited by guarantee. The company that is limited by shares issue shares to the owner. The shareholder’s liability is limited the original shares during the formation of the company and did not pay for the shares. A company limited by guarantee owners are not refer to as share holders but members. There are no shares issued; the members contribute for the formation. A memberis limited to the total amount of money contributed to the company. Private company has more capital compared to a sole trader and partnership firms, which have less capital. All the members of the company contribute for the start-up capital. The company can also borrow money from the financial institution using the company assets as a security. The company name of the marketing consultancy firm is Eagle marketing consultancy limited. Thename of thecompany should unique to the company alone and need approval from the registrar of companies. After the approval of the name, Sane is required to file a memorandum of association and the article of association with the registrar companies. Memorandum of association is a document that explains external environment and the company. Article of Association states the company and employee relationships. The company solicit or should verify the two documents before presentation to theregistrar of companies. The documents should be properly dated and have the company seal and direct or signatures. Sane should state the total number of members of the company. The number of shareholders should not come below two and not more than fifty. The application letter and in the memorandum of association should be thesame. If the names differ, the registrar of companies will decline to register a company. The directors will be required to register the company a fresh with similar names in all the registration on documents. The registrar of companies will issue sane with the certificate of incorporation he complies with the entire company requirement. Unlike the public company, a private company start business after receiving the certificate of incorporation. Certificate of incorporation contains the provision of the Companies Act pertaining the private companies. In accordance with the Company Act, a private company has two to three directors. Sane should appointthe Derek, Cristina, and himself as directors of the Eagles Marketing Ltd playing different roles in the company management. Members in the annual meeting of the private company elect the directors of a private company. The three directors will be agents of members of the company who are not taking part in the day-to-day management of the business. In Eagle Ltd, Meredith is a member of a company who is not taking part in activities of the company, but will receive a share of profit by virtue of being capital contribution. The directors should take care of the interest of members of the company by accounting for all the company revenue and expenses. In accordance to the company act, the statute provides the role of the company’s directors. The directors of a company should make sure the company complies with the preparation of proper books, preparation of annual report and auditing of the company books as per the auditing standards. The director’s chair the annual general meeting and an extra ordinary meeting. The minutes from both the meetings are maintained by the director until the next meeting to be read to members for confirmation. The directors file annual reports of the company to the registrar of private companies as per the law of companies. Under thelaw, directors are not supposed to make any indisposed profit from the company dealings or disclose any company information to a third party. Sane should allow all the three to take part in the business. The directors get salary and share of profit while other members get a share of profit. Removal of a company director is a tedious process that requires the consent of the share holders. For a director to be removed from an office, a special resolution is passed during the annual general meeting. The shareholders vote to determine if the directors are removed or not, it require a majority vote of two-thirds. The directors should be given reasons for their removal from office. The reasons should be valid and call for their removal. Directors are given time to defend themselves during the meeting. Removal of the directors can negatively affect the performance of the company. The directors might have been providing strategic service to the company that makes it the best marketing consultant. Before the removal of the two directors of the company, the shareholders should send a neutral person to examine all the activities perform by the directors within and outside the company. Sane will have to pass a motion to the shareholders to remove the directors. He should write the resolution for the members to read during themeeting. The directors have the right to remove another director under special occasion. The directors remove the director if they believe they are not fit to serve the interest of the share holders. The companies act section 284 gives the director’s right to remove another director. The directors have a voting rights gives the directors of subsidiary power to make crucial decisions in the holding company. Subsidiary company shareholders have no voting rights hence directors need to vote for removal of an incompetent director from office. Same being the major shareholder of the company can remove Derek and Cristina from officefor their hidden dealings. The two have been conducting g meeting in secretand can amount to insider dealings, which is against the company provisions. The two can demand compensation for their removal from office. As per the company legislation, the two are entitled to compensation. Company meeting is an important tool of solving conflict and making the company decisions. Both the directors and shareholders to accomplish the mission of the company efficiently use the meeting. During the meeting, all the individuals in the company have a different role to play. The chair person chairs the meeting and makes sure the meeting performed in a fair and transparent way. The chairpersons make sure that the interest of all the groups is conducted in a transparent manner for effective decision-making. The company secretary is responsible for assist the chair to record the minutes of the meeting for future purpose. The shareholders and the directors are responsible for making decisions and resolving conflicts at the meeting. During the meeting, the decision-making should be fair and transparent to all members to arrive at the best decision. At the company meetings, the members resolve the inefficiency of the company by removing directors who are not efficient. The members will also focus on ways to manage the company effectively and efficiently. Conflict resolution in a company is necessary for efficient and efficient manner. The company is in constant conflict due to the agency problem. Agency problem arises due to different interest in the company stakeholders. The shareholders are in conflict with the shareholders of the company. Directors of the company are agents to the shareholders are required by the law to manage the company resources to serve the needs of the owner. There is also a conflict between the directors of the company. The conflict arises due to interest for more power in the organization (Hannigan2012).The company should be able to resolve the conflict for the company to work effectively. Company law assists the company to define the role of all the stakeholders to reduce conflict of interest. Directors of the company should formulate strategies to resolve conflict in the company. The best way of resolving conflict in the company understands the conflict and communication between the various parties in conflict. Running of the company affairs is the responsibility of all the company directors. For a private company, the three directors should be involved in all the company transaction. According to company law, the directors who exclude one of the Directors are answerable to the shareholders during the meeting. The three directors of a company should authorize all meetings and transaction within the company. Derek and Cristina excluded Sane in management of the company without informing him. Derek and Cristina organize meetings without the knowledge of the Sane, who is the director of the company. Sane has a right to attend all company meetings or send a proxy to represent him in the company meetings. Failure of the other directors to inform about the meetings will amount to a legal liability of the directors who hold the meeting. Sane as per the company law has the right to initiate a legal liability against Derik and Cristina for failing to involve him in the management of the company. Sane as director with majority shares in the company has the right to remove the two directors from office. Sane can pass a resolution during the annual general meeting for the removal of the directors. The meeting organize by the two directors is void as per the company law and call for the attention of the shareholders of the company to look into the minutes of the meeting (Griffin Hirst& Walton 2006).The board of directors meeting in the company is a requirement of the company law. There are certain procedures it should follow the procedure for it to be valid. The board meeting comprises all the three directors in the private company in attendance. The reasons of the board meeting are to formulate strategic decision of the company and approval of the company budget. All directors have the right to be given a prior notice to the meeting, and failure to do so should give the other director a valid reason. If at the meeting an important resolution is passed with absence of one director, there solution will be void as by the statute governing company law. Company law set out the duties and responsibilities of directors and failure to follow serious consequences. The company law provides the role of directors managing the affairs of the company in an open and transparent manner to avoid the directors misusing the company assets to their interest. The law requires all directors of both private and public company to be accountable in the company transaction that involve cash dealing. The directors are required to prepare final books accounts and present them to the shareholders during the annual general meeting. The director during the meeting read the financial position of the company and the total profit of the company. Directors explain all the sources of company revenue and explain the expenditure of the company. The shareholders will raise questions of concern in the statements of accounts, and the director should be in able to answer the questions. Failure of directors to answer the members question might cause removal of a director from the office. According to company law, an external auditor should audit the companies. An external auditor is an independent person appointed by the shareholders to look into their books to prove if the company state of affairs proves a truth and fair view. The auditor audits all the books of account from the original entry to the final books of account. The auditor proves if all the transactions recorded in the books took place or not. Auditors collect information from directors, employee, suppliers and the customers of the company. The auditors write an opinion basing on the findings. The opinion gives rise to a report to be read at the shareholders meeting. The auditor has a right to attend the meeting to read the report to the shareholders. If the report is positive, the shareholders can pass a resolution to remove the directors from office. Company law have made most directors to be responsible in dealing with the company assets, and have reduced abuse of office by the directors. Company law requires all the companies to hold an annual general meeting annually. All the stakeholders of the company have the right to attend the meeting, and participate fully during the meeting. During the meeting, the agenda is the normal business of the meeting and other business that might arises within the financial year (Pettet2005). The normal business of the meeting is the reappointment of directors and auditors into the company. The shareholders vote for reappointment and removal of directors and auditors. During the meeting, the directors read all the accounts of the company to the members. The directors are accountable to the members’ assets; Directors should be able to managethe assets effectively to avoidloss of office. During the meeting, the auditors read their report to the shareholders. If the auditor abuse power by working with the directors to give an opinion that do not prove the company state of affairs, the members have the right to remove an auditor. Reference Davies, P. L. 2010. Introduction to company law. Oxford: Oxford University Press. Griffin, S., Hirst, M., & Walton, P. 2006. Company law. Harlow (England: Pearson Longman. Hannigan, B. M. 2011. Company law. Oxford [u.a.: Oxford Univ. Press. Pettet, B. 2005. Company law. Harlow, England: Pearson Longman. Read More